Contributory’s Petition [Section 439(1)©]

A ‘contributory’ means any person liable to contribute to the assets of a company in the event of its being wound up. Except for this purpose, the term ‘contributory’

includes a holder of fully paid shares. .

A ‘contributory’, however, may petition:

(i) On the ground that the number of members is reduced below the statutory

minimum of seven members in case of public company and two in case of private company.

(ii) on any other ground, if the shares in respect of which he is a contributory or some of them were originally allotted to him or have been held by him and registered in his name for at least six out of the eighteen months preceding the commencement of the winding-up, or have devolved upon him through the death of the former holder.

Thus, in Re Gattapardo Ltd. [1969] 2 All ER 344, a transfer though executed and stamped in June 1967, was registered in October 1968, the shareholder presented a winding up petition in December, 1968. Held, the petition was not valid since she had not held shares for six months as required by the Act.

A holder of fully paid shares is a contributory for the purpose of a petition not because he is liable to contribute (which he is not) but because he may have an interest in the assets in a winding up. In Re.othery Construction Co. [1966] 1 All ER 145. Buckley, f. observed, “In my judgement it remains a rule of this Court that where a fully paid shareholder petitions for compulsory winding up, he must show, on the face of his petition, a prima facie probability that there will be assets available for distribution amongst the shareholders. But in India this judgement is not applicable in view of

Corporate Laws &: Secretarial Practice

Section 439(3). “A contributory shall be entitled to present a petition for winding-up a company notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of the liabilities.” This position presumably stems from the proposition that a shareholder as such has a stake in the affairs of the company irrespective of whether he is holder of fully paid shares. However, the Court has complete discretion whether to order winding up on taking totality of circumstances into account.