Topic on

RIGHTS OF PARTNER

Presented by
Fajal Hussain
Roll No. 1705230004
Course LL.B(H) 2nd year
Semester IV
 Definition of Partner
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.

Right of Partner

• Right to participate in business.

• Right to express opinions.
• Right to access books and acopinion.
• Right to share profits.
• Right to be indemnprofit.
• Right to interest on capital and advances.
• Right to remuneration

• Right to retire.

• Right of not to be expelled.

• Right of outgoing partner to carry on competing business.

• Right to share subsequent profits.

 Duties of Partners
• General duties:

• Duty to indemnify for fraud:

• Duty to act diligently: Every partner must attend to his duties towards the firm as diligently as possible
because his not functioning diligently affects other partners as well. He is liable to indemnify others if his
willful neglect causes losses to the firm.

• Duty to use the property properly:

• Duty to not earn personal profits or to compete:

• Case 1– Purushottam Umedbhai & Co. v. Manilal and Sons AIR 1961 SC 325
• Facts- The plaint filed suit in the name of Manilal & Sons, a firm carrying on business at No. 11A, Malacca
Street, Singapore. The defendant was the firm of Purushottam Umedbhai & Co. a firm registered under the
Indian Partnership Act, 1932 – carrying on business at No. 55 Canning Street, Calcutta. In July, 1949, there
was a contract between the plaintiff and the defendant under which the defendant was to sell to the former,
subject to certain conditions, 950 bales of Heavy Cees gunny bags c.i.f. Singapore to be shipped from
Calcutta in August, 1949. It was also agreed between the plaintiff and the defendant in July-August, 1949, that
the latter would sell, subject to certain conditions, 600 bales of Heavy Cees gunny bags c.i.f. Hong Kong to be
shipped from Calcutta in August, 1949. According to the plaintiff, the defendant did not perform the contract
entered into by the parties and as a result of the default on the part of the defendant the plaintiff had suffered
loss. The appellant filed a complaint against the respondent alleging that the complaint was not valid on the
account of it being filed by an attorney employed by one of the partner and thus alleged that the complaint is
null and void.
• Legal Issue- whether the attorney employed by one of the partner was acting within the implied authority of
all the partners of the firm.
• Judgment-The Supreme Court of India held that the attorney is legally authorized to institute a complaint on
the part of the firm, notwithstanding the fact that it was employed by one of the partner with or without the
consent of the other partners. Justice Imam further reiterated the fact that since such attorney was acting for
the benefit of the firm and thus is entitled as per law to file such complaint. In addition, such partner acting on
the behalf of other partners was under an implied authority to employ such legal attorney to settle dispute.
Hence, such complaint was allowed by the Court and finally turned in the favor of appellant.
 Case 2- Motilal v. Unnao Commercial Bank (1930) 32 Bom LR 1571.

• Facts- In a partnership firm, one of the partners borrowed a sum of money by accepting a bill of exchange
from the defendant. This was contrary to the partnership agreement signed between the partners which
disabled any of its members from borrowing money by accepting bill of exchange from any third party. As a
result, other partners filed a suit against that partner on the ground that they would not be liable for the loss
suffered to the third party on account of non-payment of such amount.
• Legal Issue- It was argued whether a contract to the contrary contained in the partnership deed prevented
other partners from incurring any liability on account of such act committed by one of the partner.
• Judgment- The trading firm was held liable by the Bombay High Court, when one of the partners borrowed
money by accepting a bill of exchange despite restrictions on borrowing contained in the partnership deed, the
other party knowing nothing of the restriction. The Court further held that section 20 of the Indian Partnership
Act, 1932 clearly specifies that notwithstanding any restriction on the express and implied authority of a
partner, any act done a partner on the behalf of the firm which falls within his implied authority binds the
firm.