Past member liability in winding up crystallises only on a valid call; release of debts before then reduces liability.

A past member's liability in a winding up does not crystallise until the statutory preconditions are met and a valid call is made in accordance with the winding-up rules. A notice that does not comply with the prescribed formal requirements is not an effective call, and an earlier call cannot bind B contributories before their statutory liability has arisen. Section 214 did not create an enforceable debt at that stage. Because no valid call had been made before the relevant pre-transfer debts were released, the release reduced the B contributories' liability pro tanto, and the appeal succeeded.

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Issues: Whether the liability of B contributories in a winding up became fixed on the making of the call, and whether release or extinction of the relevant pre-transfer debts before any effectual call reduced that liability.

Analysis: The liability of past members under section 212 of the Companies Act, 1948 arose only where the existing members were unable to satisfy the required contributions, and a valid call had to comply with rule 88 of the Companies (Winding Up) Rules, 1949. The notice of May 3, 1957 was not an effective call because the prescribed form had not been filed, and the earlier call of December 20, 1955 could not operate against the B contributories because their statutory liability had not yet arisen. Section 214 did not create an enforceable debt against them at that stage. Since no valid call had been made before the old debts were released, the release operated to reduce the B contributories' liability pro tanto.

Conclusion: The liability of the B contributories had not crystallised by an effectual call, and the release of the old debts reduced their liability. The appeal succeeded.

Ratio Decidendi: In a winding up, a past member's liability cannot be enforced, or treated as crystallised, until the statutory preconditions to liability are satisfied and a valid call is made; if the relevant debts are released before that stage, the past member's liability is reduced accordingly.

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