Before forfeiture of Rahul's shares, who are required to issue notice…

Eicher Ltd. issued 50,000 shares of ₹10 each at a premium of ₹5 per share payable as follows:

On application	₹3 per share
On allotment	₹5 (including ₹3 Premium)
On First Call	₹5 (including ₹2 Premium)
On Final Call	Balance amount

Application were received for 72,000 shares. Directors allotted 50,000 shares to the applicants applying for 65,000 shares, the remaining applications being refused. Money overpaid on application was utilised towards sum due on allotment. All the money was duly received with the exception of first call from Rahul, who applied for 2,600 shares. Due to non payment of 1^st call his share were forfeited immediately. Later on these share were re-issued at minimum issue price.

On the basis of following case study, answer the question.

Before forfeiture of Rahul's shares, who are required to issue notice in this regard.

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Directors

Forfeiture is done by the Board of Directors under the company’s Articles (based on Table F). Before forfeiting, the directors must send the defaulting shareholder a notice asking him to pay the unpaid call, and only if he still does not pay can the shares be forfeited.

Promoters only form the company, employees act on the Board’s instructions, and members are the shareholders themselves, so none of them issues the notice.

NCERT (2026-27 edition):
Forfeiture of Shares – “It may happen that some shareholders fail to pay one or more instalments, viz. allotment money and/or call money. In such circumstances, the company can forfeit their shares, i.e. cancel their allotment and treat the amount already received thereon as forfeited to the company within the framework of the provisions in its articles. These provisions are usually based on Table F which authorise the directors to forefeit the shares for non-payment of calls made. For this purpose, they have to strictly follow the procedure laid down in this regard.”