CHANAKYA NATIONAL LAW

UNIVERSITY

Partnership Deed

Drafting, Pleading & Conveyancing

Submitted to: Submitted by:

Dr B R N Saksham
Sharma Dwivedi

(Faculty, Drafting, Pleading & Conveyancing)

Roll no. 605
8th Semester
i
 CONTENTS

ACKNOWLEDGEMENT......................................................................
.................................... 3

RESEARCH METHODOLOGY
...............................................................................................
. 4

INTRODUCTION ...........................................................................
........................................ 5

ELIGIBILITY.................................................................................
........................................ 6

ESSENTIALS OF PARTNERSHIP
............................................................................................ 7

GENERAL DUTIES OF A
PARTNER.....................................................................................
.... 8

RESTRICTIONS ON AUTHORITY OF PARTNER

.................................................................... 10

RIGHTS OF A MINOR
..............................................................................................
........... 11

DISSOLUTION OF A FIRM
..............................................................................................
..... 12

REGISTRATION ..............................................................................
.................................... 14

PROCEDURE FOR REGISTRATION

..................................................................................... 14

DRAFTING THE PARTNERSHIP

DEED ................................................................................ 16
MODEL DRAFTS
..............................................................................................
.................. 17

DRAFT
1..........................................................................................
.............................. 17

DRAFT
2..........................................................................................
.............................. 26

DRAFT
3..........................................................................................
.............................. 26

BIBLIOGRAPHY ............................................................................
..................................... 30
 ACKNOWLEDGEME
NT

Any project completed or done in isolation is unthinkable. This project, although prepared by

me, is a culmination of efforts of a lot of people. Firstly, I would like to thank our Professor for

DPC, Dr B R N Sharma for his valuable suggestions towards the making of this project.

Further to that, I would also like to express my gratitude towards our seniors who were a lot of

help for the completion of this project. The contributions made by my classmates and friends are,

definitely, worth mentioning.

I would like to express my gratitude towards the library staff for their help also. I would also like

to thank the persons interviewed by me without whose support this project would not have been

completed.

Last, but far from the least, I would express my gratitude towards the Almighty for obvious

reasons.

Saksham Dwivedi

3
 RESEARCH METHODOLOGY

1. Method of Research
The researcher has adopted a purely doctrinal method of research. The researcher has made
extensive use of the available resources at library of the Chanakya National Law University and
also the internet sources.
2. Aims and Objectives
The aim of the project is to present an overview of various aspects of partnership deed in the
country on an analysis of the various case laws and juristic opinions in this regard.
3. Scope and Limitations
Though the current topic is an immense project and pages can be written over the topic but due
to certain restrictions and limitations the researcher has not been able to deal with the topic in
great detail.
Sources of Data:
The following sources of data have been primarily used in the project-
1. Books

2. Journals

3. Cases

Method of Writing:
The method of writing followed in the course of this research paper is primarily analytical.
Mode of Citation
th
The researcher has followed the bluebook method of citation (19 ed.) throughout the course of
this research paper. The author has followed the foot note system for citation.

4
 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. The term 'partnership' is defined under section
4 of Indian partnership act 1932 as under "Patnership is an agreement between two or more
persons who have agreed to share profits and loses of the business carried on by all or any one of
1
them acting upon all."
Partnership refers to an agreement between persons to share their profits or losses arising on
account of actions carried by all or one of them acting on behalf of all. The persons who have
entered such an agreement are called partners and give their collective business a name, which is
necessarily their firm-name. This relation between partners arises out of a contract or an
agreement, which means a husband and wife carrying on a business or members of a Hindu
undivided family re not into partnership. The share of profits received by any individual from the
firm, money received by a lender of money, salary received by a worker or a servant, annuity
2
received by a widow or a child of a deceased partner, does not make them a partner of the firm.

1
BANGIA, R.K., Contract-1, Central law Agency, Allahabad (2009), p. 34
2
Ibid.

5
 ELIGIBILITY
A partnership agreement can be entered into between persons who are competent to contract.
Every person who is of the age of majority according to the law to which he is subject and who is
of sound mind and is not disqualified from contracting by any law to which he is subject can
3
enter into a partnership.
The following can enter into a partnership
1. INDIVIDUAL
2. FIRM
3. HINDU UNDIVIDED FAMILY
4. COMPANY
4
5. TRUSTEES
INDIVIDUAL: An individual, who is competent to contract, can become a partner in the
partnership firm. If there are more than two partners in a firm, an individual can be a partner in
his individual capacity as well as in a representative capacity as Karta of the Hindu undivided
family.
FIRM: A partnership firm is not a person and therefore a firm can not enter into partnership with
any firm or individual. But a partner of the partnership firm can enter into partnership with other
persons and he can share the profits of the said firm with his other co-partners of the parent firm.
HINDU UNDIVIDED FAMILY: A Karta of the Hindu undivided family can become a partner
in a partnership in his individual capacity, provided the member has contributed his self acquired
or personal skill and labour.
COMPANY: A company is a juristic person and therefore can become a partner in a partnership
firm, if it is authorised to do so by its objects.
TRUSTEES: Trustees of private religious trust, family trust and trustees of Hindu mutts or other
religious endowments are juristic persons and can therefore enter into partnership, unless their
constitution or objects forbid.
NUMBER OF PARTNERS
The number of partners in a firm shall not exceed 20 and a partnership having more than 20
persons is illegal.

3
KAPOOR, S.K, Contract with specific Relief Act, Central law Agency, Allahabad (2004), p. 98
4
Ibid.

6
 ESSENTIALS OF PARTNERSHIP
AGREEMENT- The relationship between partners arises from contract and not status. If after the
death of sole proprietor of a firm, his heirs inherit firm they do not become partners, as there is
5
no agreement between them.
SHARING OF PROFITS- The partners may agree to share profits out of partnership business,
but not share the losses. Sharing of losses is not necessary to constitute the partnership. The
6
partners may agree to share the profits of the business in any way they like.
BUSINESS- Business includes every trade, occupation, or profession. There must be course of
dealings either actually continued or contemplated to be continued with a profit motive and not
for sport or pleasure.
RELATION BETWEEN PARTNERS- The partner while carrying on the business of the
partnership acts a principle and an agent. He is a principal because he acts for himself, and he is
7
an agent as he simultaneously acts for the rest of the partners.

5
Ibid.
6
BEATSON.J, ANSONS law of contract, Oxford University Press, Oxford (2005), p. 98
7
MULLA, The Indian Contract Act, Lexis Nexis Butterworth Nagpur (2006), p. 343

7
 GENERAL DUTIES OF A PARTNER
Subject to a contract to the contrary between the partners the following are the duties of a
8
partner .
1. To carry on the business of the firm to the greatest common advantage. Good faith
requires that a partner shall not obtain a private advantage at the expense of the firm.
Where a partner carries on a rival business in competition with the partnership, the other
partners are entitled to restrain him.
2. To be just and faithful. Partnership as a rule is presumed to be based on mutual trust and
confidence of each partner, not only in the skill and knowledge, but also in the integrity,
of each other partner
3. To render true accounts and full information of all things done by them to their co-
partners.
4. To indemnify for loss caused by fraud. Every partner shall indemnify the firm for loss
caused to it by his fraud in the conduct of the business of the firm.
5. Not to carry on business competing with 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.
6. To indemnify the firm for wilful neglect of a partner. A partner shall indemnify the firm
for any loss caused to it by his wilful neglect in the conduct of the business of the firm.
7. To carry out the duties created by the contract. The partners are bound to perform all the
duties created by the agreement between the partners.
8. Rights of the partners
9. Subject to a contract to the contrary a partner has the following rights.
10. To take part in the conduct and management of the business
11. To express opinion in matters connected with the business. He has a right to be consulted
and heard in all matters affecting the business of the firm
12. To have free access to all the records, books of account of the firm and take copy from
them.
13. To share in the profits of the business. Every partner is entitled to share in the profits in
proportion agreed to between the parties.

8
SAHRAY.H.K, DUTT on Contract, Eastern law Publication, Delhi(2006), p. 98

8
 14. To get interest on the payment of advance. Where a partner makes for he purpose of the
business, any payment or advance beyond the amount of capital he has agreed to
subscribe, he is entitled to interest thereon at the rate of 6% per annum.
15. To be indemnified by the firm against losses or expenses incurred by him for the benefit
9
of the firm.

9
Ibid.

9
 RESTRICTIONS ON AUTHORITY OF PARTNER
Restrictions are governed by Contract and by the Partnership Act. The partners may by contract
extend or restrict the implied authority of any partner.

Under the Partnership Act in the absence of any usage of trade to the contrary, the implied
authority of a partner does not empower him to do the following acts:
1. Submit a dispute relating to the business of a firm to arbitration
2. Open a bank account in his own name
3. Compromise or relinquish any claim of the firm
4. Withdraw a suit or proceeding on behalf of the firm
5. Admit any liability in a suit or proceeding against the firm
6. Acquire immovable property on behalf of the firm
7. Transfer immovable property belonging to the firm, or
10
8. Enter into partnership on behalf of the firm.

10
SAHRAY.H.K, DUTT on Contract, Eastern law Publication, Delhi(2006), p. 981

10
 RIGHTS OF A MINOR
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.
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 of the accounts of the firm.
Such minor's share is liable for the acts of the firm, but the minor is not personally liable for any
such act.
Such minor may not sue the partners for an account or payment of his share of the property or
profits of the firm
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 firm on the expiry of the said six months.
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
11
asserting that fact.
Where such person becomes a partner-
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 the partnership, and
his share in the property and profits of the firm shall be the share to which he was entitled as a
minor.
Where such person elects not to become a partner-
his rights and liabilities shall continue to be those of a minor upto 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.

11
MULLA, The Indian Contract Act, Lexis Nexis Butterworth Nagpur (2006), p. 32

11
 DISSOLUTION OF A FIRM
A firm may be dissolved in the following manner
1. Dissolution by Court
2. Dissolution by agreement
3. Dissolution by operation of law
4. Dissolution on the happening of certain contingencies
12
5. Dissolution by notice

DISSOLUTION BY COURT
The court may dissolve a firm at the suit of any partners on any of the following grounds namely:
INSANITY OF A PARTNER: that a partner has become of unsound mind. The insanity of a
partner does not ipso facto dissolve the firm and the next friend or continuing partners has to file
suit foe dissolution.
PERMANENT INCAPACITY OF A PARTNER: that a partner has become permanently
incapable of performing his duties as partner.
CONDUCT AFFECTING PREJUDICIALLY THE BUSINESS: that a partner is guilty of
conduct, which is likely to affect prejudicially the carrying on the business of the firm.
BREACH OF PARTNERSHIP AGREEMENT:that a partner wilfully or persistently commits
breach of agreements relating to the management of the affairs of the firm or the conduct of it's
business or otherwise conducts himself in matters relating to the business, that it is not
reasonably practical for the other partners to carry on the business with him.
TRANSFER OF INTEREST OF A PARTNER: that a partner has in any way transferred the
whole of his interest in the firm to a third party.
LOSS: that the business of the firm cannot be carried on save at a loss
JUST AND EQUITABLE: on any other ground that renders it just an equitable that the firm
should be dissolved.
DISSOLUTION BY AGREEMENT

12
Ibid.

12
A firm may be dissolved with the consent of all the partners or in accordance with the contract
between the partners. The partnership agreement may contain a proviso that the firm will be
dissolved on the happening of certain contingency.

DISSOLUTION BY OPERATION OF LAW

A firm is compulsorily dissolved on the following grounds
Insolvency of partners
By the happening of any event which makes it unlawful for the business of the firm to e carried
on.
DISSOLUTION ON THE HAPPENING OF CERTAIN CONTINGENCIES
Subject to contract between the partners a firm is dissolved on the happening of the following
contingencies.
If constituted for a fixed term, by the expiry of that term
If constituted to carry out one or more adventures or undertakings, by its completion.
By the death of a partner
On insolvency of a partner
DISSOLUTION BY NOTICE
If the partnership is at will, the same may be dissolved by service of a notice by one partner to
13
dissolve the firm.

13
BANGIA, R.K., Contract-1, Central law Agency, Allahabad (2009), p. 121

13
 REGISTRATION
It is not compulsory to register the firm. However there are serious effects of non-registration.
No suit to enforce a right arising from a contract or conferred by the Indian Partnership Act shall
be instituted in any court by or on behalf of any person suing as partner in a firm against the firm
or any person suing as a partner in a firm against the firm or any person alleged to be or to have
been a partner in the firm, unless the firm is registered and the person suing is or has been shown
on the Register of firms as a partner in the firm. Similarly, no suit to enforce a right rising from a
contract shall be instituted in any court by or on behalf of a firm against any third party unless
14
the firm is registered.

PROCEDURE FOR REGISTRATION

The registration of a firm may be effected at any time by sending by post or delivering to the
Registrar of Firms 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:
the firm name;
the place or principal place of business of the firm;
the names of any other places where the firm carries on business;
the date when each partner joined the firm;
the names in full and permanent addresses of the partners; and
the duration of the firm.
The statement shall be signed by all the partners or by their agents specially authorised in this
behalf. Each person signing the statement shall also verify in the manner prescribed.
A firm name shall not contain any of the following words viz. "Crown", "Emperor", "Empress",
"Empire", "Imperial", "King", "Queen", "Royal", or words expressing or implying the sanction,
approval or patronage of Government, except when the State Government signifies its consent to
the use of such words as part of the firm name by order in writing.

14
Ibid.

14
All the States have framed rules prescribing the forms, fee for registration and verification of the
statement. The application for registration has to be made to the Registrar of Firms in the
15
prescribed form.

When the Registrar is satisfied that the provisions have been complied with, he shall record and
entry of the statement in a register called the Register of Firms and shall file the statement. The
Registrar is the competent authority and if he acts bona fide and follows the procedure, his
16
satisfaction cannot be challenged.

15
Supra Note. 2
16
Ibid.

15
 DRAFTING THE PARTNERSHIP DEED

The Partnership Deed, must contain:

The amount of capital contributed by each partner

Profit or loss sharing ratio

Salary or commission payable to any partner, if any

Duration of business, if any

Name and address of the partners and the firm

Duties and powers of each partner

Nature and place of business; and

Any other terms and conditions to run the business

16
 MODEL DRAFTS

DRAFT 1

th
THIS DEED OF PARTNERSHIP IS MADE on this 12 day of January, 2008 by and between
Mr. A S/o C R/o XYZ hereinafter referred to as Party of the FIRST PART (which expression
shall deem and include his heirs, executors, administrators, representatives, assigns and agents),
AND
Ms. B D/o D R/o XYZ, Party of the SECOND PART (which expression shall deem and include
his heirs, executors, administrators, representatives, assigns), AND

WHEREAS the above named partners have decided to start the partnership business of
th
Recruitment Services in the name and style of M/s SSS with effect from day of January,
20.. on the terms and conditions hereinafter mentioned and have desired to reduce the terms and
conditions into writing.

NOW THIS INDENTURE IS WITNESSETH AS FOLLOWS :

1. THAT the PARTIES referred above shall carry on the business of Recruitment Services in
the PARTNERSHIP FIRM under the name and style of M/s SSS hereinafter referred to as
the FIRM) XYZ, But by their mutual consent may start and carry on any other business or
businesses under any other name or names at any other place or places.
2. THAT the business of the PARTNERSHIP pursuant to this DEED of PARTNERSHIP shall
th
be deemed to have commenced with effect from day of January, 20...
3. That the capital required for the business of Partnership shall be contributed time to time by
the PARTIES in such manner in all respect as may be agreed to between them and such
capital may be paid interest as may be mutually agreed from time to time at the rate of rates
not exceeding 12% (Twelve Percent) per annum.
4. That all the PARTIES referred above shall be Working Partners and shall attend diligently to
the business of the Partnership and carry on the same for the greatest advantage of the Firm.

17
5. That all the WORKING PARTNERS may be paid Salary w.e.f. day of Feb., 2008, for the
work of the FIRM as may be agreed mutually from time to time between the PARTIES in
accordance with the provisions of the Income Tax Laws as well as business necessities and
other factors, subject however, that the monthly Salary to each such Partner shall not exceed
as under:

NAME OF WORKING PARTNER MAXIMUM BASIC SALARY NOT TO EXCEED

a. Mr. A Rs. 12,000/- per month
b. Ms. B Rs. 12,000/- per month
6. That all business expenses shall be borne by the FIRM.
7. That the Profits or Losses, as the case may be, of the Partnership business shall be divided
among the Partners as under :
NAME OF WORKING PARTNER SHARE OF PROFIT SHARE OF LOSS
a. Mr. A 50% 50%
b. Ms. B 50% 50%
8. That the duration of the PARTNERSHIP shall be at WILL subject to Clause 9.
9. That any Partner may retire from Partnership after giving a notice to the other Partner (s) of
not less than one month in writing and at the expiry of such notice period he shall be deemed
to have retired.
10. Upon mutual understanding, each Partner or his duly authorised agent shall have free access
to the account books of the Partnership and shall be entitled to take copies or extracts from
any or all such books and records of the Partnership Business.
11. That no Partner shall have the right to sell, mortgage or transfer his share of interest in the
FIRM to any one else except to his heir or heirs or any one of the existing Partners or to their
heir (s). In the event of heir (s) selling his/her share to any one else, the existing Partners shall
have a right or pre-emotion in respect of such share (s) sold.
12. That the Partners shall keep or cause to be kept the books of account of the FIRM at the
principal places of its business and make all entries therein, and that all such books of account
st
kept shall be closed on 31 March every year or in the case of any necessity on any other date
as the Partners may mutually decide.

18
13. That no Partner shall do any act or thing whereby FIRM or the FIRM property may be
prejudicially effected.

14. That the terms of the Partnership Deed may be altered, added to or cancelled by the
written consent of the Parties to this DEED.
15 That the partners can open the bank account of the firm, in any bank and bank account
shall be operated by the partners jointly or individually, as the case may be.
16. That the partners shall not take any loan from any person/Financing Company, bank or
any other Govt./Pvt. Department in any case, without the written consent of each other.
17. That in the case of any dispute arising out of this DEED between the Parties of this
DEED, it shall be decided by Arbitration as provided for under the Indian Arbitration Act.
IN WITNESS WHEREOF the Parties hereto have set and subscribed their respective
hands to these presents the day, month and year first written above.

WITNESSES :

1. Mr. A ( Party of the First Part )

2. Ms. B ( Party of the Second Part )

19
 Draft 2

1
DEED OF PARTNERSHIP
THIS INDENTURE made this day of in the year
BETWEEN
1. SHRI/SMT. . (M/.) son/daughter/wife of
, holding Certificate of Practice issued by The Institute of Cost
Accountants of India residing at , hereinafter referred to as the
Party of the First Part,
2. SHRI/SMT. . (M/.) son/daughter/wife of
, holding Certificate of Practice issued by The Institute of Cost
Accountants of India residing at , hereinafter referred to as the
Party of the Second Part,
3. SHRI/SMT. . (M/.) son/daughter/wife of
, holding Certificate of Practice issued by The Institute of Cost
Accountants of India residing at , hereinafter referred to as the
Party of the Third Part,
4. (The expression the party of the First Part, the party of the Second Part and the party of the
Third Part unless they are repugnant to the context or meaning thereof, mean and include their
respective heirs executors, administrators and assigns.)
2
THAT ALL the parties hereto being the parties of the First Part, Second Part and Third Part have
agreed to practice as Cost Accountants in Partnership with each other on the terms and
conditions contained herein, and the parties hereto have desired to put in writing the terms and
conditions of their said partnership.
NOW THIS INDENTURE WITNESSETH and it is hereby covenanted and finalized by and
between the parties as follows:
1. The Partnership business/profession shall be carried on under the name and style of
presently from [address of head office] as the Head Office of the Firm
and/or at any other place/s as will be decided mutually by the parties hereto and/or to open its

20
branches at any other place or places and/or form Associateship with any other Cost
Accountant/s or other firm of Cost Accountants subject to the approval of the Council of ICWAI.
2. The Partnership shall be deemed to have commenced on and from the day approval is received
from the Council of The Institute of Cost Accountants of India as per the provisions of
Regulation 113 of The Cost and Works Accountants Regulations, 1959.
3. The business/profession of Partnership shall be all those activities that can be carried on by a
Cost Accountant within the meaning of the Cost and Works Accountants Act, 1959.
4. The Partners will be/will not be allowed to continue with t eir independent practice. (Optional
Clause)
5. The Net Profit or Loss of the Partnership business/profession as arrived at after adjustment of
salary, bonus, commission and interest to the partners, shall be divided between the parties as
follows: a) Name of the First Part :%
b) Name of the Second Part :%
c) Name of the Third Part :%
6. The partners shall be entitled to increase or reduce the above profit sharing ratio and may
agree to pay remuneration to the partner or partners. The parties hereto may also agree to revise
the mode of calculating the remuneration and decide to pay salary and grant the benefit of house
rent allowance, medical expenses, accident and/or Life Insurance Policy Premium, Provident
fund, gratuity, bonus, commission and/or other benefits to the above and/or the other partner or
partners either on monthly or yearly basis as they may mutually agree upon.
7. The partners shall be entitled to modify the above terms relating to remuneration, interest etc.,
payable to the partners by executing a supplementary deed, subject to the approval of the Council
of the Institute and any such deed when executed shall have effect, unless otherwise provided,
from the first day of the accounting period in which such supplementary deed is executed and the
same shall form part of this deed of partnership.
8. The accounting year of the Partnership shall be the year ending on the last day of March every
year. The Final Accounts as will be drawn up at the close of the year shall be countersigned by
all the parties hereto as a token of acceptance.
9. Bank Account or Accounts shall be opened in the name of the Partnership Firm. All account/s
shall be operated upon by either of the parties/jointly by any two parties hereto/jointly by party
of the First Part and any other party hereto. All moneys or negotiable instruments received from

21
and on behalf and/or on account of the Partnership business/profession shall be paid/deposited
into such banking account or accounts in the name of the Partnership.
10. Proper books of accounts shall be maintained by the Parties hereto in which all the
transactions relating to the partnership business shall be entered into and recorded and such
books together with all documents, letters, vouchers of and belonging to the partnership shall be
kept at the place of business of the partnership or at such other place or places as the parties
hereto may from time to time mutually decide in writing. Each partner shall have full and free
right and liberty to inspect such books of accounts, documents, letters, vouchers and of making
extracts or copies therefrom.
11. The partners may contribute capital as and when considered necessary and expedient for the
purpose of carrying on the business/profession and the same shall carry interest at %
(.. Percent) per annum or such other rate as may mutually be agreed upon by the parties
hereto from time to time. The partners hereto shall be entitled to draw out in advance, against
their drawing accounts of such sums from time to time as may be mutually agreed upon and on
taking account for the year, the excess, if any, drawn by any partner over his share of the profits
shall be refunded to the firm within a period of or be treated as loan to him which shall
carry interest at ....% (.. Percent) per annum or any other rate mutually agreed
upon.
12. That all the parties hereof shall be the working partners and take active part in the day-to-day
Part, Part (etc.) shall be the working
conduct of the business of the firm/Party of the

partners and take active part in the dayto-day conduct of the business of the firm.
13. Party of the Part(s) shall be entitled to a salary of Rs. per month. The
parties hereof shall also be entitled to bonus and commission at a rate as will be mutually
determined and fixed by the parties hereof at the close of the year. Besides, the parties hereof
will be entitled also to draw interest on capital at a percentage not exceeding % per annum.
That in no case the aggregate salary, bonus and commission per year shall exceed the limit as
fixed by the Income Tax Act, 1961 as amended from time to time. That the quantum of salary
can be increased or reduced to a sum as will mutually be decided by the parties hereof. Any
drawings by the parties hereof as salary, bonus or commission in excess of the permissible limit
as fixed by the Income Tax Act, 1961, from time to time, such amount/s shall be refunded to

22
and/adjusted in the accounts at the close of the year and will be debited to their respective capital
account/s as will be mutually be agreed by the partners, the parties hereof.
14. THAT THE PARTNERSHIP shall be AT WILL.
15. IF ANY partner is desirous of retiring from the said Partnership he shall be entitled to do so
by giving months notice in writing to the other Partners of his intention to retire and on
expiration of months from the date of such notice, he shall cease to be a partner and his
interest in the Partnership shall cease on and from that date. Immediately on receipt of the
aforesaid notice his accounts including Goodwill shall be drawn upon and settled forthwith.
16. The retiring partner will handover the property of the Partnership under his possession and/or
any other books/documents etc. belonging to the Partnership or any of its clients to the remaining
Partners upon due receipt forthwith and the Partnership Firm shall also issue to the retiring
Partner a no claim receipt to this effect. On retirement, a retiring Partner shall not in
any way interfere with the business of the Partnership.
17. The death, insolvency or lunacy of any partner shall not automatically dissolve the
Partnership.
18. Death or Insolvency of any partner shall not dissolve the Firm but at the happening of such
contingency arising in the case of parties hereto, such partner shall be deemed to have retired
from the partnership as on the date of such contingency and his heir shall be paid by or shall pay
to the Firm the amount due as if such partner has retired on the date of such contingency. In the
case of such contingency even sole surviving partner shall carry on business for a maximum
period of 60 days within which either the business is discontinued or new partner is taken and his
inclusion is approved by appropriate authorities.
19. Each partner shall be entitled to draw against his share of profit the amount agreed to
between the partners.
20. The parties hereto may admit a new partner or partners only with the consent of all the
existing partners in writing and on such terms and conditions as may be mutually agreed upon
subject to the approval of the Council of The Institute of Cost Accountants of India.
21. No partner or the Partnership firm shall be liable and/or responsible for the personal debt
and/or liabilities of any other partner or partners.
22. Each Partner shall :

23
22.1 Punctually pay his personal and separate debts and indemnify the other partners and the
assets of the partnership against the same and pay all expenses on account thereof;
22.2 Forthwith pay all moneys, cheques, negotiable instruments received by him on account of
the Partnership into the Partnership Bank Account or Accounts;
22.3 Be just and faithful to others and at all times give to each other full information and truthful
explanations of all transactions relating to the Partnership business;
22.4 At all times give to the others a just and faithful account of the same and also upon every
reasonable request furnish a full and correct explanation thereof;
22.5 Afford every assistance and co-operation in his power and to use his best skill and
endeavour in the conduct, promotion and execution of the Partnership business/profession for
their mutual advantage and benefit; and,
22.6 No partner shall divulge any information of the partnership or of its
clients to any outsiders.
23. In respect of matters not specifically provided herein, the Partnership shall be governed by
the provisions of the Indian Partnership Act, 1932.
24. No partner shall, without the previous consent of all the existing Partners in writing, become
a partner of any other firm of Cost Accountants and/or any other firm and/or person or persons
carrying on a similar and/or competitive business/profession. (Optional Clause)
25. Any dispute or difference arising between the parties hereto in relation to the affairs of the
Partnership Firm or in regard to construction of any clause hereof in relation to the rights, duties
and obligations of the parties hereto shall be referred to the arbitration of Sri
son of residing at

who shall enter upon the reference and decide the matter and
award given by such arbitration shall be final and binding on the parties hereto subject to the
provisions of the Arbitration and Conciliation Act 1996.
26. It is hereby declared that all the partners are fully engaged in the practice of profession of
Cost Accountancy and engaged in no other occupation/salaried employment.
IN WITNESSETH WHEREOF the parties to the above presents have hereunto set and
subscribed their respective signatures and seals on the day, month and year first hereinabove
written.

24
SIGNED, SEALED & DELIVERED by the within named Party of the First Part SHRI/SMT.
Signature
SIGNED, SEALED & DELIVERED by the within named Party of the Second Part
SHRI/SMT. Signature
SIGNED, SEALED & DELIVERED by the within named Party of the Third Part
SHRI/SMT. Signature
In the presence of : 1. Shri/Smt. Signature
Address
2. Shri/Smt. Signature
Address

25
 DRAFT 3

This DEED OF PARTNERSHIP made on this day of between

1.
2.
hereinafter called the partners of the first part and Second Part respectively
AND
A company registered under the provisions of the Companies Act 1956 and having its registered
office at hereinafter called the party of Third part
WHEREAS the Parties of First and Second Part by virtue of their partnership deed dated
have been carrying on the business of manufacturing and marketing paints, colors and varnishes
etc. under the name and style of with factories at under the
same name and style.
AND WHEREAS the Party of Third Part Viz. the company is formed with the objects of
manufacturing dealing and marketing in paints, varnishes, colors etc.
AND WHEREAS the Party of the Second Part has expressed its desire and willingness
through the director to enter into Partnership and parties First, Second part have
mutually decided that the Party of the third Part shall be taken as Partner.
AND WHEREAS it is deemed necessary and desirable that a regular Deed of
Partnership be reduced in writing and executed on the terms and conditions mentioned
hereunder.

NOW THIS DEED WINTESSETH AS UNDER: -

1. The Partnership shall come into effect from and shall be for an indefinite period
unless it is determined.
2.That the name and style of the Patnership firm hereby formed shall be with
factories at under the same names and style or with branch or branches at such
place(s) as the parties may mutually decide.
3. That the business of the Partnership Firm hereby formed shall be that of manufacturing and
marketing of paints, colors and varnishes etc., as hereto before. The parties may, however, with

26
their mutual consent embark upon a new line or lines of business and may open branch or
branches or new factory.
4. That the amount standing to the credit of the personal accounts of the Parties of First and
Second Part in the books of above firm as on shall be treated as contribution by them
to the capital of the Partnership and the Party of the Third Part shall bring Rs. as
his share towards the capital of the firm.
5. That further finance required for the purpose of business of the firm shall be contributed by the
parties in such rate as may be mutually agreed upon. Interest at the rate of or at a rate
as may be mutually agreed upon between the parties from time to time shall be allowed on the
capital standing to his/her credit for the time being in the books of the partnership.
6. That the regular accounts books shall be kept in due course of business in which shall be
faithfully recorded all the transactions enter into by the firm and such books shall be closed on
or/on any other convenient or auspicious day as may be mutually agreed upon between the
parties hereto from time to time.
7. That on closing the account books in the aforesaid manner, a regular profit & Loss Account
shall be prepared and a balance sheet shall be drawn up.
8. That the Profits & Losses shall be divided between and borne by parties hereto in the
following proportions:
Partner % of share in Profits and Losses
1.
2.
9. That the partners will be paid a Salary of Rs.2500/- per month for the services rendered to the
rim and they will also be entitled to a bonus @ 12% on their salary.
10. That all the assets and liabilities of the firm as on t angible or otherwise,
would be taken over by the Partnership at its book value and shall be deemed to be assets and
liabilities of this Partnership and all the Parties hereto will have equal rights/liabilities thereon.
11. That all rights of the firm as on namely ISI marketing license, Trade
marks, Sales Tax registration, Telephone connections, Tenancy rights, Lease rights, Ownership
right etc. shall be deemed to be the rights of the partnership and all the parties hereto will have
equal rights/liabilities thereon.

27
12. That each partner shall: -
(a) Diligently attend to the business of the Partnership and devote his/her necessary time and
attention thereto.
(b) Punctually pay her/his separate debts and indemnify the other partner and the Assets of
the firm against the same and all expenses therefore.
(c) Upon every reasonable request inform the other Partner of all letters, accounts, writings
and such other things which shall come to her/his hands or knowledge concerning the
business of the Partnership.
13.That neither Partner shall without the consent of the others: -
(a) Lend any of the money or deliver upon credit any of the goods of the firm to any
person or persons whom the other Partners shall have previously in writing
forbidden her/him to trust.
(b) Raise or advance any loan in the name of or on behalf of the firm.
(c) Assign, charge or transfer her/his shares in assets or profits of the firm.
14. That the account in the name of the firm shall be opened with the Banks or bankers
as the Parties may mutually decide and the same shall be operated upon by the Parties hereto
singly.
15.That any partner may retire from the Partnership firm, hereby formed by giving two months
notice in writing to the others but none shall leave the firm until or unless all the pending
commitments are carried out, liabilities paid off, assets realized and accounts are rendered fully
and settled finally to the entire satisfaction of each of the parties hereto.
16.That the parties hereto may, however, with their mutual consent pay remuneration to any of
the parties hereto at a rate that may be mutually agreed upon between them from time to time.
They shall be at liberty to increase or decrease such rate of remuneration with their consent from
time to time.
17.That in the event of death or retirement of any of the parties hereto the partnership firm
hereby formed shall not dissolve, but shall continue. The legal heir or the representative of the
deceased shall step into her/his shoes.

28
18.That upon the dissolution of the partnership in any even not hereinafter provided for the said
business, the assets, goodwill and liabilities thereof should absolutely vest on any one partner
mutually decided by the parties to the partnership.
19.That it will always remain open to the parties hereto to amend, annul or change any term or
terms of this Deed of Partnership in the course of its business and in that event of amending,
annulling or changing any term or terms of this deed of Partnership no fresh deed shall be
required to be executed.
20.That without prejudice to the above terms and conditions the parties hereto in all other matters
shall be governed by the provisions of Indian Partnership Act, 1932.
21.That all the disputes or differences arising out of it and connected with the Partnership shall
be referred to the arbitrator in accordance with the Indian Arbitration Act.
IN WITNESS WHRE OF, the parties of the first and Second parts here have put
their respective hands on this DEED OF PARTNERSHIP on the day, month and year first
mentioned above.
IN WITNESSES WHEREOF, the common seal of the Third Partner viz.
was pursuance to the resolution of the Board of Directors passed in that behalf on
here into affixed in the presence of and signed these presents in token thereof in
the presence of the Witnesses:

WITNESSESS: Partners
1.
2
3.

29
 BIBLIOGRAPHY

BOOKS
BANGIA, R.K., Contract-2, Central law Agency, Allahabad (2009)

BEATSON.J, ANSONS law of contract, Oxford University Press, Oxford (2005)

KAPOOR, S.K, Contract with specific Relief Act, Central law Agency, Allahabad (2004)

MULLA, The Indian Contract Act, Lexis Nexis Butterworth Nagpur (2006)

SAHRAY.H.K, DUTT on Contract, Eastern law Publication, Delhi(2006)

SINGH, AVATAR, The Indian Contract Act Central law Agency, Allahabad (2008)

ACT
Indian Partnership Act, 1932

30