INDIAN PARTNERSHIP ACT, 1932

1) SHORT TITLE, EXTENT AND COMMENCEMENT

1.1 The Indian Partnership Act, 1932 (hereinafter referred to as the Act.) applies to the
whole of India except the state of Jammu & Kashmir. The Act has come into force w.e.f. 1st
day of October, 1932 with the assent of the Governor General of India on 8th April, 1932.

1.2 The total Act has been divided into Eight Chapters out of which there is only one
Chapter; i.e,. Chapter VII comprising of sections ranging from 56 to 71 the application of
which has been made optional to all the implementing States.

2) WHAT IS PARTNERSHIP

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

2.2 Persons who have entered into partnership with one another are called
individually "partner" and collectively "a firm".

2.3 When duration of partnership is not defined, the partnership is "partnership at

will". When persons become partner for a particular venture or for a specified time, it
is called a "particular partnership".

3) RELATIONSHIP BETWEEN THE PARTNERS

3.1 Relationship between the partners is defined through the partnership deed.

3.2 Partnership Deed is necessary under section 58(1) at the time of registration of
any firm. Though, there is no requirement of having any instrument in writing at the
time of admission and / or retirement or dissolution of firm, under Rule 16 of Indian
Partnership Rules, 1989, the Registrar of Firms (who is a registering authority to
register the firm) is empowered to take on record the evidence in support of
registering any partnership. Therefore, the Deed is necessary to be executed to place
on record the relationship of partners at the time of registration and at subsequent
changes to register such changes.

3.3 Various forms as are required to be filled up and filed with the Registrar need
certain information. Therefore, it is necessary to have that information incorporated
in the deed which Registrar can verify while scrutinizing the forms and ultimately
register the firm. Names and Addresses of Partners are to be mentioned in the
beginning paras. Partnership Deed should, therefore, contain following clauses.

(i) Name of the firm

(ii) Date of commencement of Business of the firm

(iii) Address including address of the additional place/s of Business of the firm

(iv) Nature of Business

 (v) Duration

(vi) Sharing of Profit & Loss between Partners

(vii) Capital of the firm

The above clauses are necessary in all deeds, since the entry on record which is
furnished by the Registrar to the Firm gives the above information as recorded in the
Register. If for any reason, any of the above clauses are missing from the deed, the
registration procedure cannot be completed. As regards Point No. (vii) above, it
should be noted that to be a valid document, partnership deed should necessarily be
on a stamp paper of requisite value and this value is determined by the amount of
capital.

3.4 Any additional clauses can be incorporated by the partners as required by them.

3.5 Hence, relationship between partners right from formation to dissolution is

mentioned in the Deed of Partnership.

4) RELATIONS OF PARTNERS TO THIRD PARTIES

4.1 A partner is the agent of the firm for the purposes of the business of the firm.

4.2 The authority of a partner to bind the firm in ordinary course of business,
conferred by section 19 is called "implied authority" of a partner.

4.3 The partners in a firm may, by contract between the partners, extend or restrict
the implied authority of any partner. Every partner is liable jointly with other
partners and also severally for all acts of the firm done while he is a partner.

5) REGISTRATION OF FIRMS

The provisions of Chapter VII have been given in a tabular manner separately as
these deals with the practical aspects.

SUMMARY OF COMPLIANCE PROVISIONS UNDER THE INDIAN PARTNERSHIP

ACT, 1932

(Applicable to the State of Maharashtra)

Sr.No Subject Form No./ Tim Sectio Fees +* Remarks PENALTY

. Applicatio e n Copying
Sectio Amount
n limit Chgs
n
(Rs.)
1 Registration A 1 58(1) 300 + 20 Application 59A-1 Rs.100
of firm year to be per year
signed by or part
all thereof
partners.
2 Appeal Plain Paper 30 58(4) 150 Refusal on — —
against days grounds of
refusal by the similarity of
Registrar to firm name
register the etc.
Firm to Dy.
Law
Secretary
Govt. of
Maharashtra
3 Change in B 90 60(1) 100 + 30 Application 69A Not
Firm Name days to be more
or signed by than
Principal all Rs.10/-
Place or partners. per day
Nature of
Business
4 Closing and C 90 61 100 + 30 Application 69A Not
Opening of days to be more
Branches signed by than Rs.
any 10/-
partner. per day
5 Change in D 90 62 100 + 30 Application 69A Not
Name/Addres days to be more
s of Partner signed by than
the partner Rs.10/-
concerned. per day
6 Change in E 90 63(1) 100 + 30 All parties 69A Not
Constitution days to the deed more
or Dissolution shall sign than
Form E. Rs.10/-
per day
7 When a minor F 90 63(2) 100 + 30 Intimation 69A Not
becomes days by the more
major and Minor. than
elects to Rs.10/-
become or per day
not to
become a
partner
8 Rectification Plain Paper - 64(2) 100 + 30 Application - -
of Mistake to be made
by all the
partners
along with
valid proof
to support
the
application
 for
rectification
.
9 Inspection of Plain Paper - 66(1) 20 By any N.A. N.A.
Register person.
10 Inspection of Plain Paper - 66(2) 20 By any N.A. N.A.
Documents person.
11 Certified Copy Plain Paper - 67 Rs. 5 By any N.A. N.A.
Court Fee person.
Stamp+Rs.1
0
per 100
words
12 Intentional - - - - - 70 Fine
furnishing of /Impri
false or sonment
inaccurate
particulars up to I
year or
both
13 Letter of Plain Paper - - Rs.5 - - -
Authority Court Fee
Stamp

• For true extract of the recording of registration or the change in constitution, a

stamp paper of Rs. 10 shall be enclosed with the respective application and same
shall be purchased in the name of firm or partner.

6) RELEVANT PROVISIONS OF THE BOMBAY STAMP ACT

Partnership For a capital contribution of Rs. 50,000/- or Rs. 500/-

Deed less

For every additional capital of Rs. 50,000/- or Rs. 500/-

part thereof

Maximum stamp duty for any amount of Rs. 5,000/-

capital

For capital contributed in form of property Same duty as on conveyance

on market value of property

Dissolution Where property is transferred to a partner Same duty as on conveyance

Deed other than the one who brought it in. on market value of property

In any other case Rs. 200/-

7) CHECKLIST OF DOCUMENTS TO BE SUBMITTED FOR

Sr. Registration of a firm Admission and / or Retirement of a Partner and
No. Dissolution of a Firm
1. Application with Court Fee Stamp of Rs. 5 Application on Court Fee Stamp of Rs. 5
2. Certified True Copy of Partnership Deed Certified True Copy of the Deed
3. Form A duly notarized Form E duly notarized
4. Certified True Copy of Marathi Translation N. A.
5. Stamp Paper of Rs. 10. Stamp Paper of Rs. 10.
6. Self Addressed Postage Paid Envelope Self Addressed Postage Paid Envelope (Not
(Not Compulsory) Compulsory)
7. Filing Fees Rs. 2200 Filing Fees Rs. 1200

• Supplementary Deed is prepared where there is change in address of a firm or a

change in share of profits among the partners, or change in remuneration to
partners, interest on capital or opening and closing of branches etc. Supplementary
Deeds are to be executed on a stamp paper of Rs. 200/-.
• There is no need to submit the Deed of Partnership, if executed only for the purpose
of change in Profit Sharing Ratio or Remuneration or Interest payable to partners,
since these are not recorded by Registrar of Firms in the Entry on Record.
• Any Supplementary Deed executed at the time of formation of partnership forms
part of original deed and requires Marathi Translation as required in the case of main
deed of partnership.
• Marathi Translation of the partnership is required only at the time of registration.

TIPS FOR EFFICIENT REGISTERING OF DOCUMENTS

• If one partner retires and a new partner is admitted on the same day, retirement
cum admission deed can be prepared and registered with the Registrar of Firms with
one & single ‘E’ form.
• Partners’ signatures must be on solemn affirmation before a Magistrate or such other
Officer empowered to administer oaths. Ensure that the name & address stamp of
such authorised officer is affixed. In case of notarized forms, notary if appointed by
the Government of Maharashtra, should use the red ink to stamp the document,
while if appointed by the Government of India, can use the blue ink.
• The documents shall be submitted within one month from the date of
Notarization/Attestation.
• The Bombay Stamp Act uses the word "share of contribution" instead of Capital of a
Firm. It appears that additional stamp duty is payable on every increase in capital as
long as it does not exceed Rs. 5 Lacs as per Article 47 of the said Act.
• Even if there is a change in name due to marriage, Form ‘D’ along with the copy of
Marriage Certificate has to be submitted.
• In case of simultaneous changes in Principal Place of Business along with Change in
Constitution and / or Change in Name of Partner and / or change in Address of
 Partner, then separate Forms B / E / D are required to be submitted as the case may
be to intimate each such change.
• Any changes that occur within a span of 90 days can be intimated together to the
Registrar of Firms.
• Common Form E can be used in case of Admission cum Retirement within 90 days.
• Always write full particulars without using any short forms or abbreviations.
• In case of Retirement cum Admission, if intimated, using the same Form E, always
obtain signatures of all partners including Retiring, Continuing and Incoming on Form
E.
• There is no power of condonation of penalty or appeal to any higher authority other
than as envisaged u/s. 58(4).
• While drafting any partnership deed subsequent to the registration, at the time of
any changes etc. always ensure that Name, Address and Object clause as well as
spellings of Names of the Partners are identical as compared to the earlier
submissions and as per Entry on record.
• If for any reason you need registration of papers submitted by you urgently or early
hearing in case of delay in submissions, then an Affidavit on a stamp paper of Rs.
200/- signed by all partners duly notarized, stating the reason for urgency be
submitted to the Registrar. After accepting Affidavit, papers are processed with
priority.

Registrar of Firms Address: New Adm. Bldg, 6th Floor, Near Chetana College, Bandra (E),
Mumbai - 400 051. Tel: 2655 1944, 2655 1149. Cash Counter Timings: 10.30 A.M. to 3.30
P.M.