Section1 SHORT TITLE EXTENT AND

COMMENCEMENT.
(1)This Act may be called the Indian Partnership
Act, 1932.

(2) It extends to the whole of India except the

State of Jammu and Kashmir.

(3) It shall come into force on the 1st day of

October, 1932, except section 69 which shall
come into force on the 1st day of October, 1933.
Section4
DEFINITION OF "PARTNERSHIP",
"PARTNER",
"FIRM" AND "FIRM-NAME".
"Partnership" is the relation between persons
who have agreed to share the profits of a
business carried on by all or any of them acting
for all.
Persons who have entered into partnership with
one another are called individually, "partners"
and collectively "a firm", and the name under
which their business is carried on is called the
"firm-name".
Section6
MODE OF DETERMINING EXISTENCE OF
PARTNERSHIP.
In determining whether a group of persons is or is not
a firm, or whether a person is or is not a partner in a
firm, regard shall be had to the real relation between
the parties, as shown by all relevant facts taken
together.
Explanation I :
The sharing of profits or of gross returns arising from
property by persons holding a joint or common
interest in that property does not of itself make such
persons partners.
Explanation II : The receipt by a person of a
share of the profits of a business, or of a
payment contingent upon the earning of profits
or varying with the profits earned by a
business, does not itself make him a partner
with the persons carrying on the business;
and, in particular, the receipt of such share or
payment –
(a) by a lender of money to persons engaged
or about to engage in any business
(b) by a servant or agent as remuneration,
(c) by the widow or child of a deceased
partner, as annuity, or
(d) by a previous owner or part-owner
of the business, as consideration for
the sale of the goodwill or share
thereof, does not of itself make the
receiver a partner with the persons
carrying on the business.
What is the test of partnership?
Though the partnership is an association of
persons, all association of persons need not
constitute a partnership.
The status of the partnership is determined
by the test of the guidelines given in sec 6 i.e.
sharing of profit,
Then ALL sharing of profit need not be a
partnership
Then what is the real test?
The real test is that there must be a business
for profit, SHARING OF PROFIT AND THE
AGENCY RELATION MUST BE THERE BETWEEN
PERSONS TO DETERMINE THE PRATNERSHIP.
As a matter of fact registration of the partnership is
not compulsory. The partnership firm may or may
not be registered.

The registration means, the

registering the firms name with the
registrar of firms by filing an
application duly signed by the
partners and by paying the prescribed
fee.
Application for registration-

(1) The registration of a firm may be effected at any time by

sending by post or delivering to the Registrar of the area in
which any place of business of the firm is situated or
proposed to be situated, a statement in the prescribed form
and accompanied by the prescribed fee, stating-

(a) the firm name

(b) the place or principal place of business of the firm

(c) the names of any other places where the firm carries on
business

(d) the date when each partner joined the firm.

(e) the names in full and permanent address of the partners, and

(f) the duration of the firm.

TABLE OF FEES UNDER THE INDIAN PARTNERSHIP ACT, 1932

1) Statement under section 58 100-00

2) Statement under section 60 50-00

3) Statement under section 61 to 64 25-00

4) Search fee under section 66(1) 20-00

5) Search fee under section 66(2) 10-00

Effects of non registration
1.If the firm is not registered then the
partners cannot file a suit against the firm
or against other partners
If the firm is not registered the main disability is that
the partners cannot sue inter-se –[the firm or other
partners].

2.The firm cannot file suit against other

parties
3.But third parties can file suit against firm
4.The partners cannot claim set off
Partner by holding out means
If any person is not a partner in the
partnership agreement and conduct
himself as a partner with outsiders
either by words or by action represents
himself or knowingly represents himself
as a partner of a partnership firm , he is
know as a partner by estoppels or
holding out, He is liable along with other
partners but not eligible for any profit
as he is a stranger to the agreement.
1. Every partner has a right to take part in the conduct of
business of the firm
2. Has a right to express him opinion on any matter
however, he is bound by the majority decision
3. Has a right to have access to and inspect and copy any of
the books of the firm
4. Has a right to get equal share in the profit in the absence
of an agreement
5. Is the join owner of the property of the firm
6. Has a right to do in emergency all such act as arte
necessary and reasonable to protect the firm from loss
7. He is entitle to claim interest @6% PA on any amount
advanced to the firm beyond his share of capital
8. Is entitled to be indemnified by the firm in respect
of liabilities incurred by him in the ordinary course
of business
9. Has a right to resist the introduction of new
partner
10. Has a right not to be expelled
11. Has a right to be retired as per agreement or
with consent of all other partners
12.Has a right to carry on similar business after
ceasing to be partner but there can be reasonable
restrictions
13.Has a right as an out going partner a share in the
profit of business or interest at 6% when the firm
carry on business after his parting before
Section30

MINORS ADMITTED TO THE BENEFITS OF

PARTNERSHIP.
(1)A person who is a minor according to the law
to which he is subject may not be a partner in
a firm, but, with the consent of all the
partners for the time being, he may be
admitted to the benefits of partnership.

(2) Such minor 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.

(3) Such minor's share is liable for the acts of

the firm but the minor is not personally liable
(4) Such minor may not sue the partners
for an account or payment of his share of
the property or profits of the firm, save
when severing his connection with the
firm, and in such case the amount of his
share shall be determined by a valuation
made as far as possible in accordance with
the rules contained in section 48 :
Provided that all the partners acting
together or any partner entitled to
dissolve the firm upon notice to other
partners may elect in such suit to dissolve
the firm, and thereupon 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
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 :
Provided that, if he fails to give such
notice, he shall become a partner in the
(6) Where any person has been admitted as a
minor 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 person asserting that fact.

(7) Where such person becomes a partner - (a)

his rights and liabilities as a minor continue
upto 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
(b) his share in the property and profits of the
(8)Where such person elects not be to
become a partner, -
(a)his rights and liabilities shall continue
to be those of a minor under the
section upto the date on which he
gives public notice;
(b) his share shall not be liable for any
acts for the firm done after the date of
the notice; and
(c) he shall be entitled to sue the
partners for his share of the property
and profits in accordance with sub-
section (4).
1. To carry on the business of the firm to the greatest
common advantage
2. To be jut and faithful to the other partners
3. To render true accounts and information of all things
affecting the firm
4. To indemnity for the loss caused by his fraud
5. To attend the firms business diligently without any
remuneration
6. To account for profit of a competing business
Duties of partnre

7. To account for any secret profit

made by him
8. To bear the loss equally
9. Not to assign his share
10. To reimburse the loss for his
negligent acts.
What are the implied authorities of the
partner?
The authority of the partner may be implied
or expressed
Express authority is as per the partnership
deed which is in writing.
As far as implied authority is concerned it is
not in writing in the deed but every partner
has implied authority to act
The implied authority is linked to the nature
of the business of the firm
All the partner have the following implied authority
1. Purchase the goods on behalf of the firm
2. Sell
3. Receive payment for firm and give receipts
4. Make payment and get receipts
5. Engage servants
6. Draw, accept endorse NI
7. Pledge the goods for borrowing money on behalf
the firm.
1. Submit a dispute relating to business to an
arbitrator
2. Compromise a claim or part there of
3. To withdraw suit already filed
4. Admit any liability in the suit
5. To purchase immoveable property in the firm
name
6. To transfer any immoveable property of the firm
7. To enter into partnership on behalf of the firm
8. Open a bank account of the firm on behalf of the
firm
The dissolution of partnership between all the
partners of the firm is called dissolution of the firm
when the firm is closed down it is dissolution of he
firm hence the business is closed and the relation
comes to an end.

There are two type of dissolutions

Without intervention With intervention

Of court Of court
 Without intervention
Of court

The means the firm gets dissolved

without the court intervention that is
the court will not come into picture in
the process of the dissolution.
The firm will close all its activities and
the assets and liabilities are disposed
off and the firm will be dissolved
When?
1. Dissolution by consent of all the
partners
2. Dissolution by contract
3. Dissolution by contingencies: death,
insolvency,
retirement, completion

4. Dissolution by notice
5. Dissolution at will
1.When the firm is dissolved the relationship
comes to end
2.When the firm is dissolved, ever the p/s was
unregistered the partners may file suit to
recover the share in the property of the firm.
3.When the firm is dissolved, the rules applicable
to p/s ends and persons can bring a suit for
claim etc
4.In order to absolve the liability after
dissolution, the partners must give public
notice about the dissolution
5.If notice is not given, even after dissolution, the
partners are liable for the acts done after
8.After dissolution if the assets of the
firm is insufficient to discharge the
loan the partners have to bear the
loss in the same proportion they
share profit.
9. The 3rd party dues must be first
cleared
10. If the firm is registered, on
dissolution the name of the firm
is removed from the register of firms
by the registrar of firms.
 With intervention
Of court

Some times the court will intervene

and ask the partnership to close its
business and partnership. This is
compulsory dissolution
If a partnership for a fixed period will
be dissolved by court if the
partnership firm is not closed even
after the time fixed is over
The court order dissolution of the firm on any
of the following grounds:
1.Partner has become incapable of
performing his duties
2.Partner is guilty of conduct which affect
the business
3.Partner persistently commits breach
4.Transferred his interest to the 3rd party
5.Persisting and continuous loss year after
year
6.Partner has become unbalanced