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1970 (2) TMI 69 - SUPREME COURTWhether the consideration for 18,000 shares of the Vikram Sugar Mills Ltd. (now under liquidation) valued at ₹ 18 lakhs was not fully paid up by the shareholders, namely, the present appellants? Held that:- Where, however, the contract is fraudulent or shows on the face of it that the consideration given to the company is illusory or is clearly not equivlent to the nominal value of the shares the shares cannot, to this extent, be treated as fully paid and the shareholder may be held liable to pay for them in full. It is significant that no steps were taken by the liquidators to have, the register rectified or the contract entered into by the company with the appellants avoided by means of appropriate proceedings. Even in the application filed by respondent No. 1 in October, 1961, there was no allegation of fraud. The fact stated related more to inadequacy of price or consideration and not to its being illusory or the like. In our judgment the learned single judge was right and the Division Bench was in error in directing an inquiry into the question whether the appellants had paid consideration which was inadequate. Appeal allowed.
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