Q. Name the head of Joint Hindu Family Business. (1mark) (2016/2019)
Q. State any three features of sole proprietorship business. (3marks) (2016/2019)
-> 1. Control- The right to run the business and make all decisions lies absolutely with the sole proprietor. He can carry out his plans without any interference from others.
2. No separate entity- In the eyes of the law, no distinction is made between the sole trader and his business, as business does not have an identity separate from the owner. The owner is, therefore, held responsible for all the activities of the business.
3. Liability- Sole proprietors have unlimited liability. This implies that the owner is personally responsible for payment of debts in case the assets of the business are not sufficient to meet all the debts.
Q. Discuss the modes if dissolution of partnership business. (5marks) (2016)
-> Modes of Dissolution of a Partnership Firm:-
1. Compulsory dissolution- A firm is dissolved compulsory by the adjustication of all the partners or of all the partners but one as insolvent, or by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership.
2. Dissolution on the Happening of Certain Contingencies- Subject to contract between the partners, a firm is dissolved:
- If constituted for a fixed term, by the expiry of that term;
- If constituted to carry out one or more adventures or undertaking, by the completion thereof;
- By the death of a partner; and
- By the adjudication of a partner as an insolvent.
3. Dissolution by Notice of Partnership at Will- Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.
4. Dissolution by Court- A court may order a partnership firm to be dissolved in the following cases:
- When a partner becomes of unsound mind,
- When a partner becomes permanently incapable of performing his/her duties as a partner,
- When partner deliberately and consistently commits breach of agreements relating to the management of the firm;
- When a partner’s conduct is likely to adversely affect the business of the firm;
- When a partner transfer his/her interest in the firm to the third party;
- When the court regards dissolution to be just and equitable.
Q. What is a partnership deed? Explain the contents of a partnership deed? (2+6=8) (2016)
-> Partnership deed is a written agreement between the partners of a firm. It contains several clauses regarding name and address of partners, nature of business, Capital, profit sharing ratio etc.
Contents of Partnership Deed:
- Names and address of partners
- Nature and scope of business
- Duration of partnership
- Contribution of capital by the partners
- Sharing of profit or loss
- Loans to and by the partners
- Amount of drawings and interest on drawings for each partner.
- Commission and salary of partners
- Rights, duties and liabilities of partners
- Admission and retirement of partners.
Q. Explain the process of registration of a partnership firm. State the effects of non-registration of such a firm. (5+3=8) (2018)
-> The registration of the firm is not compulsory but it should register with the Registrar of Firm soon after its formation. Because an unregistered firm cannot sue outsiders although outsiders can sue the firm.
Procedure of Registration: A partnership firm can be registered providing the following information to the Registrar of Firms-
- The name of the firm.
- The principal place of the business of the firm.
- The names and address of the partners.
- The names and addresses of the partners.
- The names of the places where the firm has its branches.
- Date of the commencement of the business of the firm.
- Dates on which the various partners jointed the partnership firm.
- The director of the partnership firm.
The statement providing the above mentioned information should be submitted along with prescribed fees and must be signed by all the partners. Registrar shall make an entry of the statement in a register and shall file the statement when he will be satisfied that all legal formalities have been completed.
Effects of Non-Registered: In firm is not registered, and then the firm and partners will have to be deprived of the following advantages.
- The firm cannot file a suit against the third party.
- No partners can file a suit against other partners of the firm.
- The firm cannot file a suit to enforce a right rising from the contract.
- A partner cannot file a suit enforce a right rising from the contract or conferred by the partnership Act against the firm.
- Third parties can file a suit against the firm to enforce their rights.
Rights not Affected by Non-Registration: Non-Registration of the firm does not affect the following-
- The right of the partner to sue for dissolution of the firm or for accounts of, and his shares, the dissolved firm.
- The rights of the firm or its partners having no place of business in India.
- Suits not exceeding Rs. 100
- The power of an official assignee to realize the property of an insolvent partner.
- Suits arising otherwise than under a contract, for example, a suit against the third party for infringement of trademarks of the firm.