An Association which contravenes the provisions given under section 11 of the Companies Act 1956, is declared as an Illegal Association.
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- What does Section 11 says:
According to Section 11 -
1. No company, association or partnership consisting more than 10 persons which has been formed for carrying on the business in BANKING , unless registered as per Companies Act or any other INDIAN law. In simple words, a company which is going to do a banking business must not have more than 10 persons/ members in the formation of the company.
2. No company, association or partnership consisting 20 or more persons which is formed for the purpose of carrying out any other business which has an object of GAIN/PROFIT, unless registered under Companies Act or any or Indian Law. In simple words, a company carrying any other business must not have more than 20 persons/Members at the time of incorporation of the company.
When there is a contravention of Section 11 then every member carrying business shall be personally liable for all its liabilities incurred in such business. In addition to this, every person who is a member of the company is also liable for fine which can extend to ₹10,000.
POINTS TO REMEMBER:
1. No Contracts can be enforced by or against any illegal association.
2. such association cannot be wound up under the Companies Act.
3. The income generated out of such association, cannot escape the net of TAX.
An ILLEGAL ASSOCIATION is not an association for illegal purpose.
.jpg)
- What does Section 11 says:
According to Section 11 -
1. No company, association or partnership consisting more than 10 persons which has been formed for carrying on the business in BANKING , unless registered as per Companies Act or any other INDIAN law. In simple words, a company which is going to do a banking business must not have more than 10 persons/ members in the formation of the company.
2. No company, association or partnership consisting 20 or more persons which is formed for the purpose of carrying out any other business which has an object of GAIN/PROFIT, unless registered under Companies Act or any or Indian Law. In simple words, a company carrying any other business must not have more than 20 persons/Members at the time of incorporation of the company.
When there is a contravention of Section 11 then every member carrying business shall be personally liable for all its liabilities incurred in such business. In addition to this, every person who is a member of the company is also liable for fine which can extend to ₹10,000.
An ILLEGAL ASSOCIATION cannot sue to recover any debt or other property also it cannot be sued to recover any money lent to it to carry on any business.
POINTS TO REMEMBER:
1. No Contracts can be enforced by or against any illegal association.
2. such association cannot be wound up under the Companies Act.
3. The income generated out of such association, cannot escape the net of TAX.
You have interpreted the section wrongly.
ReplyDelete10 or 20 is the limit on members for an 'unincorporated' company/partnership,etc.
http://books.google.co.in/books?id=F8lvwoQVAi0C&pg=SA12-PA2&lpg=SA12-PA2&dq=10+members+is+the+limit+for+baking+business+under+indian+partnership+act&source=bl&ots=CRsRBS4zXZ&sig=ynIROlIq2pMW1Q1uMkewnw5FSPY&hl=en&sa=X&ei=02DAUs6lM9CqrAfA5oGoCA&ved=0CCoQ6AEwAA#v=onepage&q=10%20members%20is%20the%20limit%20for%20baking%20business%20under%20indian%20partnership%20act&f=false
Deletekindly check the following link.. i have read the book.. and i got the info from here..
DeleteTHE INDIAN PARTNERSHIP ACT, 1932