THE ALOTE ESTATE & ANR. vs R.B. SETH HIRALAL KALYANMAL & ORS

The Supreme Court held that a shareholder of fully paid-up shares cannot be made liable as a contributory in winding up proceedings unless the company's register is rectified to show that the shares were not fully paid. The Court found that there was no allegation of fraud in the application for inquiry regarding the value of land transferred for shares, and thus, the consideration could not be challenged as inadequate. The appeal was allowed, reversing the Division Bench's order for an inquiry into the adequacy of consideration paid for the shares.