The following are the points of distinction between a partnership and a joint Hindu family firm:—
(1) Dissolution by Death:
A partnership is dissolved with the death of a partner whereas a joint Hindu family firm is not dissolved on the death of its members.
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(2) Dissolution by Separation:
ADVERTISEMENTS:
When there is severance in the joint family at any time, the joint family firm is dissolved, whereas an ordinary partnership cannot be dissolved before the expiry of the term of partnership except under certain circumstances. Severance in the joint family could be effected by the intimation of definite and unequivocal intention.
(3) Shares in The Business:
In a joint family firm no member can claim any specific share in the business as there is a community of interest among the members, whereas in an ordinary partnership each partner has a definite share by virtue of a contract between the partners.
(4) Acquisition of interest by male descendants:
In an ordinary partnership the male descendants of a partner do not acquire any interest in the firm by birth while in the case of joint family firm, the male descendants of a coparcener i.e., sons, grandsons, great grandsons acquire an interest in the joint family firm-property by birth.
(5) Extent of liability:
In the case of an ordinary partnership all the partners are liable not only to the extent of their shares in the partnership property but are also personally liable, whereas in a joint family firm there is no personal liability.
ADVERTISEMENTS:
In Manchanda Gangaram v. Mallappa Mahalingappa, the Supreme Court while pointing out the distinction between the joint family business and partnership firm observed: “In a joint Hindu family business no member of the family can say that he is the owner of one half, one-third or one fourth.
The essence of joint Hindu family property is unity of ownership and community of interest, and the share of members are not defined. Similarly the pattern of the account of a joint Hindu family business maintained by Karta is different from those of a partnership. In the case of the former the shares of the individual members in the profits and losses are not worked out, while they have to be worked out in the case of partnership accounts.”