Question

Assertion (A): The maximum number of partners in a partnership firm is 50.
Reason (R): By virtue of the Companies Act 2013, the Central Government is empowered to prescribe maximum number of partners in a firm. The Central Government has prescribed the maximum number of partners in a firm to be 50.
Choose the correct option from the following:

• A. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
• C. Assertion (A) is true, but Reason (R) is false.
• D. Both Assertion (A) and Reason (R) are false.

Hint:

The maximum limit on the number of partners (currently 50) is not defined in the Partnership Act, 1932 itself, but comes from the Companies Act, 2013, which prohibits associations/partnerships exceeding a certain number (prescribed by the Govt., currently 50) unless registered as a company or formed under another law.

Answer 1

The Correct Option is A

Assertion (A): The statement that the maximum number of partners in a partnership firm is 50 is correct.
Reason (R): The Indian Partnership Act, 1932 does not specify the maximum number of partners. However, Section 464 of the Companies Act, 2013 empowers the Central Government to prescribe the maximum number of partners in an association or partnership, provided it does not exceed 100. Rule 10 of the Companies (Miscellaneous) Rules, 2014, framed under the Companies Act, 2013, prescribes this maximum limit as 50.
Therefore, the Reason (R) correctly states the legal basis (Companies Act, 2013 and subsequent rules by Central Government) and the prescribed limit (50), which directly explains why the Assertion (A) is true.
Both statements are true, and the Reason provides the correct legal explanation for the Assertion.