Unregistered association carrying on business for members' gain falls within statutory prohibition and cannot maintain suit.
An association of more than twenty persons that carries on a money-lending business for the benefit of its members falls within section 4 of the Companies Act if the business is intended to yield gain to the individual members, even partly by restoring their contributions. The society here was formed for charitable assistance, but its lending activity was funded by members' contributions and designed to produce a surplus for both repayment and charity. On that basis, it was treated as an association formed for the acquisition of gain by its members, so the unregistered suit was not maintainable.
Issues: Whether the society fell within section 4 of the Companies Act so as to render the suit by an unregistered association not maintainable.
Analysis: The society was formed for charitable assistance, but it also carried on money-lending business. The contributions made by members funded that business, and the gains from it were intended partly to restore the members' contributions and partly to provide a charitable surplus. On that footing, the business was carried on not merely for the society's objects but also for the acquisition of gain by the individual members. An association of more than twenty persons carrying on such a business without registration fell within the prohibition in section 4.
Conclusion: The society was within section 4 of the Companies Act, and the suit was not maintainable.
Final Conclusion: The appeal succeeded, the decree of the lower appellate court was set aside, and the trial court's dismissal of the suit was restored.
Ratio Decidendi: Where an association of more than twenty persons carries on a business that is intended to yield a benefit to individual members, even partly by restoring their contributions, it is formed for the acquisition of gain by the members and falls within the statutory prohibition unless registered.
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