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Issues: (i) Whether the allotment of the discount shares in the appellant's name was proved and, if so, whether any illegality in the issue prevented enforcement of contribution; (ii) Whether the appellant could avoid liability on the ground that some shares stood in the names of minors in his family.
Issue (i): Whether the allotment of the discount shares in the appellant's name was proved and, if so, whether any illegality in the issue prevented enforcement of contribution.
Analysis: The entries in the company records and the contemporaneous statement to the Registrar supported the finding that the shares were allotted to the appellant with his knowledge and consent. Any contravention of the control on capital issues under Rule 94A of the Defence of India Rules had been condoned by the Central Government, and therefore did not defeat the allotment. Even assuming non-compliance with Section 105A of the Indian Companies Act, the liability of a member on winding up arose under Section 156 as a statutory liability attached to the fact of membership and standing on the register, not merely from the original contract. The appellant had not sought correction of the register and could not resist contribution on the basis of the alleged invalidity of the allotment.
Conclusion: The allotment was established, and the liability to contribute was enforceable against the appellant.
Issue (ii): Whether the appellant could avoid liability on the ground that some shares stood in the names of minors in his family.
Analysis: The plea of minority had not been raised at the proper stage, and the evidence showed that the appellant himself controlled the purchases and payments. The court treated the family members' names as names used for the appellant's own transactions and held that, even if some of them were minors, the appellant could be substituted as the contributory in respect of those shares. The decision relied on the principle that the real purchaser or beneficial holder cannot escape liability by placing shares in another's name where the company was not shown to have knowingly issued them to minors as such.
Conclusion: The minority plea did not defeat liability, and the appellant remained liable as contributory in respect of those shares.
Final Conclusion: The appeal failed in substance, the list of contributories was maintained with the appellant's liability affirmed, and the challenge to contribution was rejected.
Ratio Decidendi: In a winding-up, a member's liability to contribute is a statutory liability arising from membership and entry on the register, and alleged defects in allotment do not defeat that liability once the person remains shown as a member and has not secured rectification of the register.
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