illegal association and its consequences

Combination of persons for the achievement of some common objective is called an .association. Sec. 11 of the Act 1956 provides the
maximum statutory limit of members who may run their business as a business of the association. Otherwise, they must get their business registered
under the Companies Act or under any other law of the country. The main aim of this provision is to put check on the large size of partnership firms
because such finn may invite confusion and uncertainty concerning the rights and liabilities of members and their relations with others. It is therefore
necessary to provide that every business association having a certain number of members must be registerd either as a company or a society or any
other corporate body, failing which it shall be regarded as an illegal association.An illegal association means an association formed in contravention of
Sec. II of the Companies Act, 1956. The said section states that 'no company association or partnership consisting of more than 20 persons (10 persons
in case of banking business) shall be formed to carry on any business for gain unless it is registered under the Companies Act or under any other Indian
law. It should be noted here that an association having number of its members below the statutory maximum need not be required to be registered under
any of the Indian law.Thus, an illegal association means an association which consists of more than 20 persons (10 in case of a banking
company) as its members, which is conned to carry on any business for gain (i.e. the main object of such an association should be to earn profits)
which is neither registered under the Companies Act 1956 nor has been conned in pursuance of any other Indian law.