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- Interpretation of section 4, Companies Act regarding formation of companies for gain - Determining if the Society's money-lending business aimed at individual gain - Impact of Society's business profitability on members' contributions Interpretation of section 4, Companies Act: The case involved a representative suit by the President of a society for the recovery of money lent to the defendant. Initially, the suit was dismissed by the Sub-Divisional Judge based on the Society being unregistered and falling within the ambit of section 4, Companies Act. However, the District Judge reversed this decision, holding that the Society did not contravene section 4. The critical question was whether the Society's objectives aligned with the provisions of section 4, which restrict the formation of companies for gain without registration. Determining individual gain from money-lending business: The Society's primary purpose was to assist indigent Chinese individuals in financial distress, not to benefit the association or its members. However, the Society engaged in a money-lending business for gain. The judgment analyzed whether this gain was intended for the company, association, or individual members. It was concluded that the money-lending business aimed at acquiring gain for the individual members who contributed to the Society, as evidenced by the obligation to make daily contributions for three years. The gains from the business were intended to reimburse these contributions and fund charitable projects, indicating an objective of individual gain. Impact of business profitability on members' contributions: The judgment highlighted the significance of the Society's money-lending business profitability on the members' contributions. It was emphasized that if the business operated at a loss, members would lose their contributions, whereas profits would result in members receiving back their contributions. The association's formation for the purpose of carrying on a money-lending business aimed at individual gain by the members, leading to the conclusion that the Society fell within the purview of section 4, Companies Act due to its unregistered status and the number of members exceeding the limit. In conclusion, the appeal was allowed, the District Court's decree was set aside, and the Sub-Divisional Court's decree was restored, resulting in the suit's dismissal. No order for costs was issued in the judgment.
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