Section Summary
The Partnership Act, 1932
The Indian Partnership Act, 1932 –Section Summary
SECTION SUMMARY
CHAPTER I PRELIMINARY (Section 1 to 3)
CHAPTER II NATURE OF PARTNERSHIP (Section 4-8)
CHAPTER III RELATIONSOF PARTNERS TO ONE ANOTHER (Section 9-17)
CHAPTER IV RELATIONS OF PARTNERS TO THIRD PARTIES (Section 18-30)
CHAPTER V INCOMING AND OUTGOING PARTNERS (Section 31 to 38)
CHAPTER VI DISSOLUTION OF A FIRM (Section 39-55)
CHAPTER VII REGISTRATION OF FIRMS (Section 56-71)
CHAPTER VIII SUPPLEMENTAL (Section 72-74))
Section No. Section Heading Provisions
Section 1 Short title, extent, Extends to the whole of India
commencement Enforcement date 1st October, 1932
and application
Section 2 Act of a Firm Any act or omission by all the partners, or
(a) By any partner or agent of the firm
which gives rise to a right enforceable by or against the firm
Section 2 Business Includes every trade, occupation and profession
(b)
Section 4 Definition of Partnership:
“partnership”, --relation between persons who have agreed to share the
“partner”, “firm” and profits of a business carried on by all or any of them
“firm name” acting for all
Persons who have entered into partnership with one
another are called:
--individually Partners and
--collectively "a firm", and
--name under which their business is carried on is called
the "firm name"
Section 5 Partnership not Partnership arises from contract not status
created by status Not partners:
--Members of a Hindu undivided family
--Burmese Buddhist husband and wife
Section 6 Mode of Actual relation between the parties should be considered
determining Depends upon the agreement entered between them and
existence of their real intention
partnership
Section 7 Partnership at will When no provision is made by contract between the
partners for:
--the duration of their partnership or
--the determination of their partnership
Section 8 Particular In particular adventures or undertakings
partnership
Section 9 General duties of To carry on the business of the firm to the greatest
partners common advantage
To be just and faithful to each other and
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The Indian Partnership Act, 1932 –Section Summary
Section No. Section Heading Provisions
To render true accounts and full information of all things
affecting the firm to any partner or his legal representative
Section 10 Duty to indemnify Partner to indemnify the firm for any loss caused to it by
for loss caused by his fraud in the conduct of the business of the firm
fraud
Section 11 Determination of Mutual rights and duties of the partners be determined by:
rights and duties of --contract between the partners, and
partners by --contract may be expressed or may be implied by a
contract between course of dealing
the partners --contract may be varied by consent of all the partners
Section 12 Conduct of Subject to Contract between parties:
Business --partners have a right to take part in the conduct of the
business;
--partners are bound to attend diligently to his duties;
--any difference arising may be decided by a majority of
the partners, and
--partners have the right to express their opinion before
the matter is decided, no change be made without the
consent of all the partners; and
--partners have a right to access to and to inspect and
copy any of the books of the firm
Section 13 Mutual Rights & Partner not entitled to receive remuneration for taking part
Liabilities in the conduct of the business;
Partners entitled to share equally in the profits earned,
and contribute equally to the losses sustained by the firm;
Partner entitled to interest on the capital subscribed by
him such interest be payable only out of profits;
Partner making, for the purposes of the business, any
payment or advance beyond the amount of capital he has
agreed to subscribe, is entitled to interest at the rate of
6% per annum;
Firm indemnify a partner for payments made and liabilities
incurred by him:
--in the ordinary and proper conduct of the business, and
--in doing such act, in an emergency, for the purpose of
protecting the firm from loss; and
--partner shall indemnify the firm for any loss caused to it
by his wilful neglect in the conduct of the business of the
firm
Section 16 Personal profits Partner deriving any profits for himself from any
earned by partners transaction of the firm, or from the use of the property or
business connection of the firm or its name, he shall
account for that profit and pay it to the firm;
If a partner carries on any business of the same nature as
and competing with that of the firm, he shall account for
and pay to the firm all profits made by him in that
business
Section 17 Rights and duties If change occurs in the constitution of a firm, the mutual
of partners— after rights and duties of the partners in the reconstituted firm
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The Indian Partnership Act, 1932 –Section Summary
Section No. Section Heading Provisions
a change in the remain the same as they were immediately before the
firm, after the change, as far as may be;
expiry of the term If firm constituted for a fixed term continues to carry on
of the firm, and business after the expiry of that term, the mutual rights
where additional and duties of the partners remain the same as they were
undertakings are before the expiry, so far as they may be consistent with
carried out the incidents of partnership at will; and
Firm constituted to carry out adventures or undertakings
carries out other adventures or undertakings, the mutual
rights and duties of the partners in respect of the other
adventures or undertakings are the same as those in
respect of the original adventures or undertakings
Section 18 Partner to be agent Partner is the agent of the firm for the purposes of the
of the firm business of the firm
Section 19 Implied authority of The act of a partner which is done to carry on, in the
partner as agent of usual way, business of the kind carried on by the firm,
the firm binds the firm
Authority of a partner to bind the firm is called his implied
authority
Implied authority of a partner does not empower him to:
-- submit a dispute relating to the business of the firm to
arbitration,
--open a banking account on behalf of the firm in his own
name,
--compromise or relinquish any claim or portion of a claim
by the firm,
--withdraw a suit or proceeding filed on behalf of the firm,
(e) admit any liability in a suit or proceeding against the
firm,
--acquire immovable property on behalf of the firm,
--transfer immovable property belonging to the firm, or
--enter into partnership on behalf of the firm
Section 22 Mode of doing act To bind a firm, an act or instrument done or executed by a
to bind firm partner or other person on behalf of the firm shall be done
or executed in the firm name, or in any other manner
expressing or implying an intention to bind the firm
Section 25 Liability of a Every partner is liable, jointly with all the other partners
partner for acts of and also severally, for all acts of the firm done while he is
the firm a partner
Section 26 Liability of the firm If by wrongful act or omission of a partner acting in the
for wrongful acts of ordinary course of the business of a firm, or with the
a partner authority of his partners, loss or injury is caused to any
third party, or any penalty is incurred, the firm is liable to
the same extent as the partner
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The Indian Partnership Act, 1932 –Section Summary
Section No. Section Heading Provisions
Section 27 Liability of firm for If Partner acting within his apparent authority receives
misapplication by money or property from a third party and misapplies it, or
partners A firm in the course of its business receives money or
property from a third party, and the money or property is
misapplied by any of the partners while it is in the custody
of the firm,
the firm is liable to make good the loss
Section 28 Holding out Anyone representing himself to be a partner in a firm, is
liable as a partner in that firm to anyone who has on the
faith of any such representation given credit to the firm,
whether the person representing himself or represented
to be a partner does or does not know that the
representation has reached the person so giving credit
Where after a partner's death the business is continued in
the old firm name, the continued use of that name or of
the deceased partner's name shall not itself make his
legal representative or his estate liable for any act of the
firm done after his death
Section 29 Rights of Transfer by a partner of his interest in the firm, either:
transferee of a --absolute or by mortgage, or
partner ’s interest --by the creation by him of a charge on such interest,
does not entitle the transferee, during the continuance of
the firm, to interfere in the conduct of the business, or to
require accounts, or to inspect the books of the firm, but
entitles the transferee only to receive the share of profits
of the transferring partner, and the transferee shall accept
the account of profits agreed to by the partners
On dissolution of firm or if the transferring partner ceases
to be a partner, the transferee is entitled as against the
remaining partners to receive the share of the assets of
the firm to which the transferring partner is entitled, and,
for the purpose of ascertaining that share, to an account
as from the date of the dissolution
Section 30 Minors admitted to Minor:
the benefits of --may not be a partner in a firm, but with the consent of all
partnership the partners for the time being, he may be admitted to the
benefits of partnership
--has a right to such share of the property and of the
profits of the firm as may be agreed upon, and he may
have access to and inspect and copy any of the accounts
of the firm
--shares are liable for the acts of the firm, but the minor is
not personally liable for any such act
--may not sue the partners for an account or payment of
his share of the property or profits of the firm, except
when severing his connection with the firm, and in such
case the amount of his share shall be determined by a
valuation made as per section 48
# all the partners acting together or any partner
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The Indian Partnership Act, 1932 –Section Summary
Section No. Section Heading Provisions
entitled to dissolve the firm upon notice to other
partners may elect in such suit to dissolve the firm,
and the Court shall proceed with the suit as one for
dissolution and for settling accounts between the
partners, and the amount of the share of the minor
shall be determined along with the shares of the
partners
-- at any time within six months of his attaining majority, or
of his obtaining knowledge that he had been admitted to
the benefits of partnership, whichever date is later, such
person may give public notice that he has elected to
become or that he has elected not to become a partner in
the firm, and such notice shall determine his position as
regards the firm. If he fails to give such notice, he shall
become a partner in the firm on the expiry of the said six
months
-- if admitted to the benefits of partnership in a firm, the
burden of proving the fact that such person had no
knowledge of such admission until a particular date after
the expiry of six months of his attaining majority shall lie
on the persons asserting that fact
If a minor becomes a partner:
-- his rights and liabilities as a minor continue up to the
date on which he becomes a partner, but he also
becomes personally liable to third parties for all acts of
the firm done since he was admitted to the benefits of
partnership, and
--his share in the property and profits of the firm shall be
the share to which he was entitled as a minor
If minor elects not to become a partner:
-- his rights and liabilities shall continue to be those of a
minor up to the date on which he gives public notice,
--his share shall not be liable for any acts of the firm done
after the date of the notice, and
--he shall be entitled to sue the partners for his share of
the property and profits
Section 31 Introduction of a No person shall be introduced as a partner into a firm
partner without the consent of all the existing partners
A person who is introduced as a partner into a firm does
not thereby become liable for any act of the firm done
before he became a partner
Section 32 Retirement of a A partner may retire:
partner -- with the consent of all the other partners,
--through an express agreement by the partners, or
--where the partnership is at will, by giving notice in
writing to all the other partners of his intention to retire
A retiring partner may be discharged from any liability to
any third party for acts of the firm done before his
retirement by an agreement made by him with such third
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The Indian Partnership Act, 1932 –Section Summary
Section No. Section Heading Provisions
party and the partners of the reconstituted firm, and such
agreement may be implied by a course of dealing
between such third party and the reconstituted firm after
he had knowledge of the retirement
The retiring partner and the partners continue to be liable
as partners to third parties for any act done by any of
them which would have been an act of the firm if done
before the retirement, until public notice is given of the
retirement
--a retired partner is not liable to any third party who deals
with the firm without knowing that he was a partner
--notices may be given by the retired partner or by any
partner of the reconstituted firm
Section 33 Expulsion of a A partner may not be expelled from a firm by any majority
partner of the partners, except in the exercise of good faith
conferred by contract between the partners
Provisions of section 32(2)(3)(4) shall apply to an
expelled partner as if he were a retired partner
Section 35 Liability of estate of Estate of a deceased partner is not liable for any act of
deceased partner the firm done after his death
Section 36 Rights of outgoing An outgoing partner may carry on a business competing
partner to carry on with that of the firm and he may advertise such business,
competing but, subject to contract to the contrary, he may not--
business --use the firm name,
--represent himself as carrying on the business of the
firm, or
--solicit the custom of persons who were dealing with the
firm before he ceased to be a partner
Section 41 Compulsory A firm is dissolved by:
dissolution --adjudication of all the partners or of all the partners but
one as insolvent, or
--happening of any event which makes it unlawful for the
business of the firm to be carried on or for the partners to
carry it on in partnership
# where more than one separate adventure or
undertaking is carried on by the firm, the illegality of one
or more shall not of itself cause the dissolution of the firm
in respect of its lawful adventures and undertakings
Section 42 Dissolution on the Be dissolved if:
happening of --constituted for a fixed term, by the expiry of that term;
certain --constituted to carry out one or more adventures or
contingencies undertakings, by its completion;
--there is death of a partner; and
-- a partner is adjudicated as an insolvent
Section 43 Dissolution by Dissolution by:
notice of --notice in writing to all the other partners of his intention
partnership at will to dissolve the firm
# firm is dissolved from the date mentioned in the
notice as the date of dissolution or, if no date is so
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The Indian Partnership Act, 1932 –Section Summary
Section No. Section Heading Provisions
mentioned, as from the date of the communication of the
notice
Section
Section 44 Dissolution by the Court may dissolve a firm at the suit of a partner on the
Court following ground:
--unsound mind of partner;
--partner became incapable;
--misconduct by a partner;
--breach of agreements relating to the management of the
affairs of the firm or the conduct of its business etc.;
--transfer of share;
--loss to business; or
--on any other ground which renders it just and equitable
Section 45 Liability for acts of Partners continue to be liable to third parties for any act
partners done after done until public notice is given of the dissolution
dissolution --notice be given by any partner
Estate of a partner who dies, or who is adjudicated an
insolvent, or of a partner who, not having been known to
the person dealing with the firm to be a partner, retires
from the firm, is not liable under this section for acts done
after the date on which he ceases to be a partner
Section 49 Payment of firm If joint debts are due from the firm, and also separate
debts and of debts due from any partner, the property of the firm shall
separate debts be applied:
--in the first instance in payment of the debts of the firm,
and, if there is any surplus, then
--the share of each partner shall be applied in payment of
his separate debts or paid to him
Separate property of any partner shall be applied first, in
the payment of his separate debts, and the surplus (if
any) in the payment of the debts of the firm
Section 52 Rights Where If contract of partnership is rescinded on the ground of
Partnership fraud or misrepresentation of any of the parties, the party
Contract is entitled to rescind is entitled to:
Rescinded for -- lien on, or right of retention of, the surplus of the assets
Fraud or of the firm remaining after the debts of the firm have been
Misrepresentation paid, for any sum paid by him for the purchase of a share
in the firm and for any capital contributed by him;
--rank as a creditor of the firm in respect of any payment
made by him towards the debts of the firm; and
--be indemnified by the partner guilty of fraud or
misrepresentation against all the debts of the firm
