Hindu Undivided Family and Partnership: Exercise Solutions
How to Use This Page
Read the Samacheer Kalvi textbook chapter first. Then use this page to revise: attempt the textbook questions on your own, then compare with the model answers below. Pay special attention to the Common Mistakes section and the Exam Checklist before your test.
Key Concepts (Quick Recap)
| Term | Definition |
|---|---|
| HUF (Joint Hindu Family) | Business owned and controlled by members of a Hindu Undivided Family, governed by Hindu law |
| Karta | Senior-most male member who controls and manages all affairs of the Joint Hindu Family |
| Coparcener | Person who acquires right in ancestral property by birth and can demand partition in HUF |
| Ancestral Property | Property inherited up to 4 generations of male lineage; right to share accrues by birth |
| Mitakshara Law | Hindu law prevalent in most of India; inheritance by birth, partition possible during father's lifetime |
| Dayabhaga Law | Hindu law prevalent in Bengal and Assam; inheritance based on propinquity |
| Partnership | Relation between persons who agree to share profits of a business carried on by all or any of them |
| Partnership Deed | Written agreement containing terms of partnership; also called Articles of Partnership |
| Sleeping Partner | Contributes capital, shares profits/losses but does not participate in management |
| Nominal Partner | Lends their name to the firm without contributing capital or sharing profits |
| LLP (Limited Liability Partnership) | Only business assets used to pay debts; personal properties are protected. Came to India in 2008 |
I. Choose the Correct Answer (MCQ)
Q1. HUF firm managed by ……… (a) Coparceners (b) Karta ✓ (c) Partner (d) Director
Q2. How one gets membership in HUF ……… (a) By Agreement (b) By Birth ✓ (c) By Registration (d) By Will
Q3. Members in joint Hindu family are called ……… (a) Partners (b) Coparceners ✓ (c) Shareholders (d) Directors
Q4. 'Only male members get right of inheritance by birth' as per ……… (a) Dayabhaga Law (b) Mitakshara Law ✓ (c) Both (d) None
Q5. Partnership formed by ……… (a) Agreement ✓ (b) Birth (c) Registration (d) Will
Q6. Registration of partnership is ……… (a) Compulsory (b) Optional ✓ (c) Mandatory (d) None
Q7. Temporary partnership for specific job ……… (a) Partnership at will (b) Particular partnership (c) Limited partnership (d) Joint Venture ✓
Q8. Partnership deed also called ……… (a) Partnership agreement (b) Articles of Partnership ✓ (c) Memorandum (d) Prospectus
Q9. Partnership registered with ……… (a) Registrar of Companies (b) RBI (c) Registrar of Firms ✓ (d) Supreme Court
Q1 (Additional). Form of business owned and controlled by single individual ……… (a) Sole trading concern ✓ (b) Partnership (c) Joint Stock Company (d) HUF
Q2 (Additional). Partner who participates only in profit ……… (a) Active partner (b) Partner in profit only ✓ (c) Sleeping partner (d) Nominal partner
Q3 (Additional). Paying from personal property when business assets insufficient ……… (a) Unlimited Liability ✓ (b) Limited Liability (c) Joint Liability (d) No Liability
Q4 (Additional). Interest rate on partner's loan advances ……… (a) 5% (b) 6% ✓ (c) 8% (d) 10%
Q5 (Additional). The maximum number of partners in a banking business is ……… (a) 5 (b) 10 ✓ (c) 20 (d) 50
Q6 (Additional). A partner who lends his name to the firm without contributing capital is called ……… (a) Active partner (b) Sleeping partner (c) Nominal partner ✓ (d) Partner in profits only
Q7 (Additional). In HUF, the liability of the Karta is ……… (a) Limited (b) Unlimited ✓ (c) Joint (d) None
Q8 (Additional). The registration fee for a partnership firm is ……… (a) Rs. 1 (b) Rs. 2 (c) Rs. 3 ✓ (d) Rs. 5
II. Fill in the Blanks
1. The senior-most male member who manages the Joint Hindu Family is called the Karta. 2. Members of a Joint Hindu Family are called coparceners. 3. Membership in HUF is acquired by birth. 4. Registration of partnership is optional under the Indian Partnership Act. 5. The partnership deed is also called Articles of Partnership. 6. Interest on partner's loan advances is 6% per annum when the deed is silent. 7. The maximum number of partners in a banking business is 10. 8. The maximum number of partners in other businesses is 20. 9. LLP came into existence in India in 2008. 10. Under Mitakshara law, only male members get the right of inheritance by birth. 11. The minimum number of partners in a partnership firm is 2. 12. A secret partner participates in business without disclosing their status to the public. 13. Partnership is governed by the Indian Partnership Act, 1932. 14. HUF is governed by Hindu law (Mitakshara or Dayabhaga). 15. The registration fee for a partnership firm is Rs. 3.
III. True or False (with corrections)
1. HUF membership is acquired by agreement. False. HUF membership is acquired by birth, not by agreement.
2. The Karta has unlimited liability. True. His separate property is equally attachable and debts can be recovered from his personal property.
3. A sleeping partner has limited liability. False. A sleeping partner has unlimited liability even though they do not participate in management.
4. Registration of partnership is compulsory in India. False. Registration of partnership is optional, not compulsory.
5. A minor can become a full partner in a partnership firm. False. A minor cannot become a full partner but may be admitted to the benefits of partnership.
6. Dissolution of partnership means the same as dissolution of firm. False. Dissolution of partnership ends the relationship between one partner and others, but the firm may continue. Dissolution of firm means the entire business ceases to exist.
IV. Match the Following
| Column A | Column B |
|---|---|
| 1. Karta | (e) Senior-most male member managing HUF |
| 2. Coparcener | (a) Person who acquires right in ancestral property by birth |
| 3. Sleeping partner | (d) Contributes capital but does not participate in management |
| 4. Nominal partner | (b) Lends name without contributing capital or sharing profits |
| 5. Partnership deed | (c) Written agreement of partnership terms |
V. Answer Briefly
Q1. Who is called KARTA? All affairs of a Joint Hindu Family are controlled and managed by one person known as 'Karta' or 'Manager'. He is the senior-most male member.
Q2. Two schools of Hindu law: Dayabhaga (prevalent in Bengal and Assam) and Mitakshara (prevalent in the rest of the country).
Q3. Who is a Partner? Persons who enter into partnership are individually called 'Partners'. They agree to carry on a lawful business in common with a view to private gain.
Q4. Sleeping partner: Contributes capital and shares in profits/losses but does not take part in management. Not known as a partner to outsiders. Liability is unlimited.
Q5. Who is a Minor? Under the Indian Majority Act, a person who has not completed 18 years of age.
Q6. Liability of Karta in HUF: Unlimited — his separate property is equally attachable and debts can be recovered from his personal property.
Q7. Four kinds of Partners: (1) Active partner, (2) Sleeping partner, (3) Nominal partner, (4) Partner in profits only.
Q8. Ancestral Property: Property inherited up to 4 generations of male lineage. Right to share accrues by birth.
Q9. Two types of dissolution through court: (1) When a partner becomes of unsound mind; (2) Permanent incapacity.
Q10. Limited Liability Partnership (LLP): Only business assets used to pay debts, not personal properties. Popular among CAs, lawyers, architects, engineers, doctors. Came into existence in India in 2008.
VI. Answer in Detail
Q1. Implied authority of Karta: Senior-most male member with unlimited liabilities. Only Karta entitled to deal with outsiders; has implied authority to enter into contracts for debts and pledge firm property for ordinary business purposes. Also has power to borrow loans.
Q2. Can a minor be admitted in HUF? In partnership, a minor cannot become a co-partner though may be admitted to benefits. In HUF, even a newborn baby can be a partner since membership is acquired by birth — male children become members as soon as they are born.
Q3. Contents of Partnership Deed: (i) Name of the Firm; (ii) Nature of proposed business; (iii) Duration of partnership; (iv) Capital contributed by each partner; (v) Amount withdrawable by each partner; (vi) Ratio for sharing profits or losses (if unspecified, shared equally).
Q4. Types of dissolution of partnership firm: Dissolution of partnership differs from dissolution of the firm. When the jurally relation between all partners ends, it is dissolution of the firm. When any partner becomes incapacitated, the partnership between that partner and others ends, but the firm may continue.
Q5. Differences between Dissolution of Partnership and Dissolution of Firm:
| Nature | Dissolution of Partnership | Dissolution of Firm |
|---|---|---|
| Meaning | Discontinuance of relationship between one partner and others | Entire firm ceases to exist |
| Nature | Voluntary | Voluntary or compulsory |
| Business | Business continues as before | Business comes to an end |
Q6. Procedure for Registration of a Firm: Statement includes: (1) Name of firm, (2) Principal place of business, (3) Other places of business, (4) Names and addresses of all partners, (5) Date each partner joined, (6) Duration of firm. Signed by all partners, produced to Registrar of Firms with registration fee of Rs.3. Changes must be communicated to Registrar within 14 days.
Q7. Rights of partners (Any 5): (i) Right to take part in business; (ii) Right to be consulted; (iii) Right of access to books; (iv) Right to share profit (in agreed ratio, or equally); (v) Right to receive interest on loans (6% p.a. if no rate stipulated). For fundamental matters like admission of new partner, decisions must be unanimous.
Q8. Duties of partners (Any 5): (i) Duty to carry on business to maximum advantage; (ii) Duty to be true, just, and faithful; (iii) Duty to render true accounts and produce vouchers; (iv) Duty to indemnify the firm for fraud/wilful negligence; (v) Duty to share losses in agreed ratio, or equally.
Q9. Types of Partnerships: (i) Partnership at will — formed for undefined period; (ii) Partnership for a fixed term — formed for definite period; (iii) Particular partnership — formed for a particular venture.
Q10. Limited Liability Partnership (LLP): Only business assets used to pay debts. Popular among CAs, CSs, lawyers, architects, engineers, doctors. Available in USA, Singapore, Thailand, UK. Came into existence in India in 2008.
Q11. Mitakshara Law: Based on 12th-century treatise by Vijnaneshwara. Key features: partition possible even while father is living; inheritance based on propinquity; property devolution by survivorship; coparceners' shares fluctuate with births and deaths. Practiced across most of India except West Bengal and Assam.
Q12. Dayabhaga Law: Hindu law treatise focusing on inheritance procedure. Strongest authority in Modern British Indian courts in Bengal region. Based on Jimutavahana's criticisms of Mitakshara.
Common Mistakes to Avoid
1. HUF membership is by BIRTH, partnership is by AGREEMENT — This is the fundamental distinction and a frequent MCQ question. 2. Mitakshara vs Dayabhaga — Mitakshara: inheritance by birth, partition possible during father's lifetime, prevalent in most of India. Dayabhaga: prevalent in Bengal and Assam. 3. Sleeping partner has UNLIMITED liability — Despite not participating in management, a sleeping partner's personal assets are at risk. 4. Interest on partner's loan = 6% p.a. — This is the statutory rate when the partnership deed is silent. 5. Registration of partnership is OPTIONAL — Not compulsory, but unregistered firms cannot file suits. 6. Dissolution of partnership ≠ Dissolution of firm — Partnership can end for one partner while the firm continues. Firm dissolution means business ends entirely. 7. Registration fee is only Rs. 3 — Very small, but important for exams. Changes must be communicated within 14 days. 8. Joint and several liability — Every partner is both jointly and individually liable. If assets are inadequate, personal properties can be used.
Exam Checklist
Exam Checklist
- [ ] Can explain HUF features: Karta, coparceners, membership by birth
- [ ] Can define partnership and list its features
- [ ] Can list and explain 4 types of partners (active, sleeping, nominal, profit-only)
- [ ] Know the contents of Partnership Deed
- [ ] Can list 5 rights and 5 duties of partners
- [ ] Can distinguish Mitakshara and Dayabhaga law
- [ ] Know registration procedure and Rs.3 fee
- [ ] Can distinguish dissolution of partnership vs dissolution of firm
- [ ] Understand LLP features and when it came to India (2008)
- [ ] Can explain implied authority of Karta (enter into contracts, borrow loans, pledge firm property)
- [ ] Can list 6 contents of Partnership Deed
- [ ] Can explain registration procedure (statement + Rs. 3 fee + 14-day change communication)
- [ ] Know the types of partnerships (at will, fixed term, particular)
- [ ] Can distinguish active, sleeping, nominal, and profit-only partners