Winding Up of a Company
CHAPTER 24
Winding-Up (Sections 425 – 560)
Contributories
Liability as contributories of present and past members (Section 426)
Question 1
By an order of the Court M/s ABC Limited was wound up with effect from 15.3.2002. Mr.
Gupta, who ceased to be a member of the Company from 1.6.2001 received a notice from the liquidator to deposit a sum of ` 15,000 as his contribution towards the liability on the shares previously held by him. Mr. Gupta seeks your opinion about his liability.
Answer
Liability of Contributory
‘Contributory’ is a term used in the case of winding up of a company. A Contributory can be past or present member and is liable to contribute to the assets of the company in the event of winding up.
In the instant case, Mr. Gupta ceased to be a member of the Company when it went into liquidation from 15.3.2002. Thus, Mr. Gupta will be treated as a past member. He will not be required to contribute to the assets of the company if the following conditions are fulfilled:
(1) If Mr. Gupta had ceased to be a member of the company for a period of one year or upwards before the commencement of the winding up. In this case, since one year has not elapsed, Mr. Gupta will be liable to contribute to the assets of the company.
(2) If the debt or liability of the company was contracted or incurred after he ceased to be a member. (3) If the present members are able to satisfy the contributions required to be made by them under the Act.
In any case, the liability of the past or present member cannot exceed the unpaid amount on the shares and if the shares are fully paid up, no contribution is required to be made by the members past or present.
Question 2
X Ltd. had gone into liquidation and a liquidator was appointed to administer the assets and liabilities of the Company. The liquidator of the Company finds that the assets of the Company are not sufficient to meet out the liabilities. He therefore, calls on the contributories including
Winding-Up (Sections 425 – 560)
Contributories
Liability as contributories of present and past members (Section 426)
Question 1
By an order of the Court M/s ABC Limited was wound up with effect from 15.3.2002. Mr.
Gupta, who ceased to be a member of the Company from 1.6.2001 received a notice from the liquidator to deposit a sum of ` 15,000 as his contribution towards the liability on the shares previously held by him. Mr. Gupta seeks your opinion about his liability.
Answer
Liability of Contributory
‘Contributory’ is a term used in the case of winding up of a company. A Contributory can be past or present member and is liable to contribute to the assets of the company in the event of winding up.
In the instant case, Mr. Gupta ceased to be a member of the Company when it went into liquidation from 15.3.2002. Thus, Mr. Gupta will be treated as a past member. He will not be required to contribute to the assets of the company if the following conditions are fulfilled:
(1) If Mr. Gupta had ceased to be a member of the company for a period of one year or upwards before the commencement of the winding up. In this case, since one year has not elapsed, Mr. Gupta will be liable to contribute to the assets of the company.
(2) If the debt or liability of the company was contracted or incurred after he ceased to be a member. (3) If the present members are able to satisfy the contributions required to be made by them under the Act.
In any case, the liability of the past or present member cannot exceed the unpaid amount on the shares and if the shares are fully paid up, no contribution is required to be made by the members past or present.
Question 2
X Ltd. had gone into liquidation and a liquidator was appointed to administer the assets and liabilities of the Company. The liquidator of the Company finds that the assets of the Company are not sufficient to meet out the liabilities. He therefore, calls on the contributories including