Step 1: Think of it as the company's penalty for default:
When an investor doesn't pay the remaining instalments he promised on his shares, the company doesn't simply wait forever — its Articles usually give it the power to reclaim those shares.
Step 2: Trace the two effects on the defaulting member:
He stops being a shareholder for those shares (losing all rights, including any dividend), and whatever application/allotment money he already paid on them is, as a rule, kept by the company rather than refunded.
Step 3: Note the company's benefit:
The company regains full ownership of these shares and is free to reissue them to a new applicant, which also helps recover part of the unpaid capital.
Final Answer:
It is the compulsory cancellation of shares for failure to pay call money, under which the defaulter forfeits both membership and money already paid, and the company becomes free to re-issue those shares.