As per Section 45 of Companies Act, 1956 – Reduction of Number of Members Below Legal Minimum

Section 45 of The Companies Act, 1956

Members severally liable for debts where business carried on with fewer than Seven Members in case of Public Company, or in the case of a Private Company, Two Members. If at any time the number of members of a company is reduced, in the case of a public company, below seven, or in the case of a private company, below two, and the company carries on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognizant of the fact that it is carrying on business with fewer than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor. Contracts and deeds, investments, seal, etc. which was contracted. 
When the basic conditions of Incorporation are not fulfilled, it is fair that the Entity be Deprived of the basic Benefit of Incorporation, namely Limited Liability.

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