Shareholders and contributories:
A shareholder of a company is liable to pay the full amount on the shares held by him but nothing more. This liability continues even after winding-up, but for the purposes of winding-up, he is described by the Act as a contributory. Prior of a shareholder to the assets of the company is measured by the from membership. However, winding-up creates a new cause of action for the liquidator and the liquidator can demand of him the payment of the unpaid calls even if they had become time-barred before liquidation [Re. East Bengal Sugar Mills Ltd. (1982) 1 Cal. 1321]. The liability arises from the fact that his name appears on the register of members [K.L. Goenka vs. S.R. Majumdar (1958) 28 Comp.. Cas. 536]. According to Section 429, the liability of a contributory shall create a debt accruing due from him at the time when his liability commenced, but payable at the time specified in the calls made on him for enforcing that liability (by the liquidator). Thus, the liability of a contributory, though commencing at the date of the winding-up, is only contingent during the winding-up, since until a call is made, it is nothing more then a mere liability to contribute, if necessary, to the company for payment of the debts due to its creditors andexpenses of the winding-up. Such liability, however, creates a debt under Section 429 and it does not become payable until a call is made. It may be noted that the liability under this Section stands in striking contrast with the liability of a shareholder under Section 36(2) according to which all moneys payable by any member, to the company under the Memorandum or Articles shall be a debt due from him to the company. The debt under Section 36(2) arises ex contractu, whereas the debt under Section 429 arises e-x-lege i.e. as a result of the statute on the company going into liquidation. Thus, Section 429 gives the liquidator a new cause of action which a company itself might not have.
The estate of the deceased shareholder is liable to the same extent as, it would have been if he had been alive (Section 430). Section 431 lays down that if a contributory becomes insolvent after the commencement of the winding-up, he becomes a stranger to the company; although his name remains on the list of contributories, his assignee in insolvency represents him for all purposes and is to be deemed a contributory. Under Section 432, where a body corporate which is a contributory in itself is ordered to be wound-up, either before or after it has been placed on the list of contributories, the liquidator of body corporate shall represent it for all the purposes of winding-up of the company and shall be deemed a contributory.
A shareholder on the A list of contributories is liable to the extent to which his shares are not fully paid up. But the liability of a member on the B list arises only in certain specific circumstances, mentioned in Section 426. The A list comprises the present members and the B list the past members, who ceased to be members within one year prior to the winding -up. A past member is liable to contribute only when the present members have been unable to satisfy the contribution required from them in respect of their shares.
A person who is both a contributory and a creditor of the company (in respect of dividends, profits or otherwise), cannot set off the debt due and owing from the company against his liability for call even if there is an express agreement to do so. In other words, the contributory has to make his contribution to the assets of the company without any right to claim a set-off in regard to the amount due to him from the company [Pure Milk Supply Co. Ltd. vs. Hari Singh A.I.R. (1963) Punj 22].
In addition to the aforesaid liabilities, Section 536 imposes a sort of restriction on the members; namely that in the case of voluntary winding-up, no transfer of share except transfers made to or with the sanction of the liquidator shall be made and that every alteration in the status of the members after the commencement of such winding-up shall be void. In the case of winding-up by or subject to the supervision of the Court, every disposition of the property including actionable claims of the company and every transfer of shares or alteration in the status of its members made after the commencement of the winding-up shall be void unless the Court otherwise directs.