INDIAN PARTNERSHIP ACT, 1932

Submitted by:
Group-8 , Section-D
Amaya Kak (PGP10189)
Ankit Ambesh (PGP10191)
Arindam Animesh (PGP10193)
Ashutosh Dubey (PGP10193)
Divya Giri (PGP10201)
Hassan Ahmed (PGP10205)
Sujeet K Pal (PGP10238)
 INTRODUCTION
A partnership is the relationship between persons who have agreed to
share the profits of a business carried on by all or any of them acting or all.
In India it is governed by the Indian Partnership Act, 1932, which extends to
the whole of India except the State of Jammu and Kashmir. It came into
force on 1st October 1932.

According to Section 4 of the Partnership Act,1932:

“Partnership is the relation between persons who have agreed to share the profits of
a business carried on by all or any one of them acting for all”.

A partnership firm is not a legal entity apart from the partners constituting it.
It has limited identity for the purpose of tax law as per section 4 of the
Partnership Act of 1932.
 ESSENTIAL ELEMENTS OF
PARTNERSHIP

1 2 3 4 5

Contract Association Carrying on Profit Mutual

for of two or of Business Sharing Agency
Partnership more
persons
 TYPES OF PARTNERSHIPS
General Partnerships assume that profits,
liability, and management duties are divided
equally among partners. If you opt for an
unequal distribution, the percentages
assigned to each partner must be
documented in the partnership agreement.
Joint Ventures act as general
partnership, but for only a limited period
of time or for a single project. Partners
in a joint venture can be recognized as
an ongoing partnership if they continue
the venture, but they must file as such

Limited Silent
Partnerships partner 

General Partnership Joint Ventures

Limited Partnerships (also known as a
partnership with limited liability) are more
complex than general partnerships.
Limited partnerships allow partners to
have limited liability as well as limited
input with management decisions. These
limits depend on the extent of each
partner’s investment percentage
Silent partner is one who still shares
in the profits and losses of the
business, but who is uninvolved in
its management, and/or whose
association with the business is not
publicly known; these partners
usually provide capital.
 Pros
• The workload can be shared between
partners
• Each partner may specialize in their
own area of the business
• More finance can be raised then, say
sole-traders, due to more owners
investing in the business
• Due to the business being generally
larger than a sole-trader, it has a better
chance at generating other sources of
finance e.g. bank loans, etc
• There are no legal formalities to
complete prior to starting the business
• Partners can cover each other during
times of absence, e.g. holidays or
illness
Cons
• Profits are shared between partners
• Decisions may take time to reach due
to other partners disagreeing
• Partners are equally responsible for
liability
• Any actions and decisions based on
the business are legally binding to ALL
partners
• A partnership is terminated when a
partner dies and therefore the process
of forming a new partnership has to be
taken
 RIGHTS OF THE PARTNERS
● Right to participate in the conduct of business 
● Rights to access and inspect books and accounts
● Right to be indemnified
● Rights to express his opinion
● Rights to get interested in capital or advances
● Right to share profit and loss
 Section 12(b)
01 Duty to act diligently 

Section 10
02 Duty to indemnify fraud 

03
Section 15
Duty to use the firm property exclusively for the
purpose of business 
DUTIES OF
PARTNERS
Section 16
04 Duty to hand over personal gains 

Section 09
05 General duties 
REGISTRATION OF PARTNERSHIP FIRM
Entrepreneurs desirous of setting a partnership firm should apply in the prescribed form
(Form No. 1) to be submitted to the Registrar of Firms on their jurisdiction with prescribed
fee. The application must be signed by all the partners or their authorized agents.

The application contains the following details:

● Name of the firm
● Place of Business.
● Name and Address details of a Partner
● Date of formation of business
● Date of Joining the Firm.
● Duration of the firm.

The duly filled Form 1 shall be submitted along with the required proof before the Registrar of Firms.
The details will be verified and then the register will issue the certificate of registration.
 DIFFERENCE BETWEEN
PARTNERSHIP AND CLUB
Contract
Partnership is based on contractual
relationships among partners. Co-
ownership may be by the operation of
law. On the death of father, sons
become co-owners of his property. On
the other hand, partnership is the
outcome of an agreement.
Agency Relationship
Partners can act as agents of the
business. They have implied authority
to bind the firm by their acts. No
agency relationship exists in co-
ownership. Every co-owner is
responsible for his own deeds only.
Object
The object of partnership is to enter
into some business and earn profits.
Co-ownership is not meant for
business purposes.
Right of Investment
If a partner spends some money for
the business he can demand its
reimbursement. On the other hand, if
a co-owner spends money for the
improvement of property he cannot
claim it as a lien on property.
Transfer of Income
No partner can transfer his interest
(share) without the consent of all other
partners. A co-owner can transfer his
interest at any time and without asking
from other co-owners.
Act
Partnership is formed under
Partnership Act, 1932 but there is no
such act governing co-owners.
 DIFFERENCE BETWEEN
PARTNERSHIP AND CLUB
Definition
A club is in association of persons formed with the
object not of earning profit, but of promoting some
beneficial purposes such as improvement of health.
On the other hand partnership is an association of
persons formed for earning profits from a business
Interest in the property
Partner has interest in property of the firm
whereas member has no interest in the property
of the club
Relationship
The persons forming a partnership are called
partners and a partner is an agent for other
partners. Whereas the persons forming a club are
called members and the member of club is not an
agent for other members
Dissolution
A change in the partners of the firm affects its
existence whereas a change in the members of
a club doesn’t affects its existence