Section 498 — Liability of directors for allotment of shares for inadequate consideration

(1) Any director, creditor or member of a company may apply to
the Court for a declaration that any shares of the company specified in the
application have been allotted for inadequate consideration.

(2) Every director of the company who is a party to making the
allotment of such shares shall be liable, jointly and severally with his co-directors,
to make good to the company the amount by which the consideration actually
received by the company for the shares is found by the Court, after full inquiry into
the circumstances of the transaction, to be less than the consideration that the
company ought to have received for such shares, if it is proved, as to any such first
mentioned director, that such director−
(a) had knowledge that the consideration so received by the company
was inadequate; or

(b) failed to take reasonable steps to ascertain whether such
consideration so received by the company was in fact adequate.