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Karan, Lata and Mohan, all members of one HUF, carry on the family business as such. Karan sends Lata and Mohan a written notice dissolving the 'firm' under the provision for partnership at will and claims the business must stop. Which analysis is correct?

The notice has no effect as a dissolution because HUF members carrying on the family business as such are not partners. Partnership arises from contract and not from status. Notice under the partnership-at-will provision presupposes a firm, and none exists here.

  1. ADissolution works only from the date of the notice, so the business stops at once
  2. BThe notice is valid because no duration was fixed, so the partnership is at will
  3. CThe notice needs the consent of the karta, otherwise it is void
  4. DNo partnership exists between them as HUF members, so the notice dissolving a firm has no effectCorrect

Explanation

Section 43 allows a partner to dissolve a partnership at will by notice, but only where a partnership exists. Under Section 5, HUF members carrying on the family business as such are not partners. So there is no firm to dissolve, and the notice has no effect as a dissolution.

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