Representative partnership by coparceners with strangers can be valid, supporting firm registration where statutory requirements are met.

A partnership with strangers entered into by one or more coparceners in a representative capacity on behalf of a Hindu undivided family is valid in law, and the family does not become a partner merely because joint family funds contribute to the capital. The members who actually contract are the partners under the Partnership Act, while the beneficial interest in profits may remain with the family. Registration under section 26A therefore depends on the existence of a genuine and valid partnership, and where that requirement is met, cancellation of registration is unjustified and the firm is entitled to registration.

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Issues: Whether a firm was entitled to registration where two coparceners of a Hindu undivided family, acting in a representative capacity, entered into a partnership with strangers and the partnership capital was derived in part from joint family funds.

Analysis: Registration under section 26A depended upon the existence of a genuine and valid partnership. Under Hindu law, the karta or adult members authorised to act for the family may enter into a partnership with strangers, and the family as a unit does not thereby become a partner. The members who actually contract with the strangers alone are partners qua the Partnership Act, while their beneficial interest in the profits may belong to the joint family. The rule that coparceners cannot at the same time be partners in respect of coparcenary property does not prohibit adult coparceners from joining with strangers in a representative capacity. The earlier authorities relied upon by the revenue were distinguishable because they did not involve such a representative partnership with strangers.

Conclusion: The partnership was valid in law, the cancellation of registration was unjustified, and the firm was entitled to registration under section 26A.

Ratio Decidendi: A partnership with strangers entered into by one or more coparceners in a representative capacity on behalf of a Hindu undivided family is valid, and such a firm is entitled to registration if the statutory requirements are otherwise satisfied.

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