Repudiation of allotment must be followed by prompt legal action; failure bars post winding rectification of the register.

An allottee who repudiated an allotment within the statutory meeting period but failed to institute prompt legal proceedings cannot obtain rectification of the share register or list of contributories after the company enters liquidation; repudiation under section 102(1) is voidable at the applicant's instance but must be followed by timely legal action, and once winding up commences courts protect third party and creditor rights and will not permit rescission unless the allotment was void ab initio or proceedings were begun before or promptly after commencement of winding up.

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Issues: Whether an allottee who gave notice of repudiation of an allotment before the statutory meeting but did not institute prompt legal proceedings is entitled, after the company has gone into liquidation, to have the register of shareholders and list of contributories rectified to remove her name.

Analysis: Section 102(1) makes an allotment voidable at the instance of the applicant within one month after the statutory meeting. The allotment here was conceded to be in contravention of section 101(7). The applicant gave an initial notice of repudiation on September 13, 1946, and later stated the grounds on January 3, 1947; the statutory meeting occurred on March 12, 1947, so repudiation fell within the statutory period. However, established authority requires that repudiation must be followed up by prompt legal proceedings to seek removal from the register, especially once winding up intervenes. After commencement of winding up, third party and creditor rights arise and the courts will not ordinarily permit rescission of share allotments unless the contract was void ab initio or proceedings were instituted before winding up or promptly thereafter. The applicant did not initiate such proceedings and the company was in liquidation when the chamber summons was filed; consequently the applicant cannot rely on prior notice alone to obtain rectification.

Conclusion: The applicant is not entitled to have the register of shareholders or the list of contributories rectified after the commencement of winding up where she failed to follow up her repudiation with prompt legal proceedings; the chamber summons is dismissed with costs in favour of the respondent.

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