FEATURES OF INDIAN

PARTNERSHIP ACT
By:
Rudrakshi Razdan 2014D20
Pallavi Sethi 2014D13
Divesh Thakur 2014D51
Twinkle Singh 2014D33
THE INDIAN PARTNERSHIP ACT, 1932
The Indian Partnership Act, 1932 is an act enacted by the
Parliament of India to regulate partnership firms in India.

Before the enactment of this act, partnerships were governed by the
provisions of the Indian Contract Act.

The act is administered through the Ministry of Corporate Affairs.

The act is not applicable to Limited Liability Partnerships, since they
are governed by the Limited Liability Partnership Act, 2008. It received
the assent of the Governor-General on 8 April 1932 and came into
force on 1 October 1932.

It extends to the whole of India except the State of Jammu and
Kashmir.

DEFINITION OF "PARTNERSHIP", "PARTNER",
"FIRM" AND "FIRM-NAME"
As per Section 4:

"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.

The name under which their business is carried on is called the
"firm-name".
ESSENTIAL ELEMENTS OF PARTNERSHIP
Two or
more
Persons
Agreement
Sharing of
Profit
Business
Mutual
Agency
KINDS OF PARTNERSHIP
SECTION7 : PARTNERSHIP-AT-WILL
Where no provision is made by contract between the partners for the
duration of their partnership, or for the determination of their
partnership, the partnership is "partnership-at-will".
Such a partnership can be dissolved by any partner giving notice in
writing to all the other partners of his intention to dissolve the
partnership.


SECTION8 : PARTICULAR PARTNERSHIP
A person may become a partner with another person in particular
adventures or undertakings.
It will come to an end on completion of the task for which it was
made.
KINDS OF PARTNERS
REGISTRATION OF FIRMS
Under the partnership Act, it is not compulsory for every
partnership firm to get itself registered. But an unregistered
firm suffers from a number of disabilities.

An application in the prescribed format along with the
prescribed fees has to be submitted to the Registrar of firms of
the State in which the place of business of the firm is situated.
The application must be signed by all the partners and must
contain the following particulars:

The name of the firm.
The place of business of the firm.
The names of any other places where the business of the
firm is carried on.
The date when each partner joined the firm.
The names in full and permanent addresses of the partners.
EFFECTS OF NON-REGISTRATION
o No suit in civil court by a partner against the firm or
other partners.

o No suit in a civil court by a firm against the parties.

o The firm or its partners cannot make a claim of set-
off or other proceeding based upon a contract.
RIGHTS OF PARTNERS
1. Right to take part in the conduct of the business.
2. Right to be consulted.
3. Right to access the books.
4. Right to share the profits.
5. Right to interest on capital
6. Right to interest on advances.
7. Right to indemnity.
DUTIES OF PARTNERS

1. Absolute Duties

a) Duty to act in good faith in the conduct of partnership.
b) Duty to carry on business in true and commercial prudence for
the advantage of all the partners.
c) Duty to indemnify firm for any loss caused to the firm on account
of fraud done by a partner to any third party.
d) Duty to provide true and correct information with regard to
transactions of the firm to all the other partners of the firm.
f) Every partner of the firm is jointly and severally liable for all the
liabilities concerning the firm. A creditor of the firm can proceed
against the firm or any partner of the firm to enforce his right.
g) No partner can transfer his interest or assign his interest without
the permission of other partners of the firm.


2. QUALIFIED DUTIES

a) Duty to act diligently with care and prudent means in the
conduct of business.
b) Duty to share losses of the firm.
c) Duty to use firm's property exclusively for the best interest
of the firm's business.
d) Duty to indemnify to the firm any loss caused to the firm on
account of willful neglect on part of the partner.
e) Not to account for the secret profits at the expense of the
firm.
f) Not to start any business of competing nature.
.
INCOMING AND OUTGOING PARTNERS
. Introduction of a partner
Subject to contract between the partners and to the
provisions of Sec. 30 m no person shall be introduced as a
partner into a firm without the consent of all the existing
partners.

Subject to the provisions of Sec. 30, a person who is
Introduced as a partner into a firm does not there by
become liable for any act of the firm done before he became
a partner

RETIREMENT OF A PARTNER
1) A partner may retire -
(a) with the consent of all the other partners,
(b) in accordance with an express agreement by
the partners, or
(c) where the partnership is at will, by giving notice
in writing to all the other partners of his intention to
retire

EXPULSION OF A PARTNER

A partner may be expelled from a firm by majority of the
partners only if:

a.) the power to expel has been conferred by contract
between the partners.
b.) such a power has been exercised in good faith for the
benefit of the firm.

The partner who has been expelled must be given
reasonable opportunity to explain his position and to
remove the cause of his expulsion.
INSOLVENCY OF A PARTNER
When a partner in the firm is declared as insolvent, he
ceases to be a partner on the date on which the order of
adjudication is made, whether or not the firm is thereby
dissolved will depend upon the agreement of
partnership between the partners.

The insolvent partners share in the firms assets will be
used for firms debts first and whatever remains will be
utilized for the insolvent partners personal debts
DEATH OF A PARTNER
Although on the death of a partner, the firm is
dissolved, but if the other partners so agree the firm
may not be dissolved. When a firm is not dissolved,
the estate of the deceased partner is not liable for any
acts of the firm done after his death. No public notice
of death is required to relieve the deceased partners
estate from future obligations.
DISSOLUTION OF FIRMS
The dissolution of the partnership between all the partners of a firm is
called the dissolution of a firm.

Implies complete breakdown of partnership between all partners of the
firm
Dissolution of partnership different from dissolution of firms
DISSOLUTION OF PARTNERSHIP
Dissolution of partnership changes the mutual
relations of the partners.
If a partner dies, retires or becomes insolvent, but
remaining partners still agree to continue the
business, only partnership is dissolved, not firm

DISSOLUTION OF FIRM
Dissolution of firm means complete closure of
business
All the relations and the business of the firm come
to an end when firm is dissolved
The business of the firm ceases to exist, all affairs
wound up by selling assets, paying up the liabilities
and discharging claims of partners
Ways of dissolution of partnership:
Dissolution without the intervention of court
Dissolution by court
DISSOLUTION WITHOUT INTERVENTION OF
COURT
By agreement:
Partnership can be dissolved anytime with the consent of all the partners
Partnership can be dissolved in accordance with the terms in the
Partnership Deed
Compulsory Dissolution- It becomes compulsory for firms to
dissolute when:
Insolvency of Partners : Incase all the partners or all the partners except
one become insolvent
Unlawful Business : In case the firms business becomes unlawful
By Notice : For partnerships at will, one partner can send a written notice to
the other partners, duly signed by him
DISSOLUTION WITHOUT INTERVENTION OF
COURT
Dissolution on the happening of a contingent event:
Expiry of Fixed Period: If firm constituted for fixed period, it dissolves
automatically
On achievement of Specific Task : If firm is constituted for a specific task,
it is bound to get dissolved, unless stated in an agreement
Death of Partner : Death of any of the partner dissolves the partnership
Insolvency of Partner : In absence of any Contract, the insolvency of any
partner results in the dissolution of firm
Resignation of Partner : Resignation by any partner dissolves partnership

DISSOLUTION BY COURT
Dissolution by Court may be ordered in the following cases
Insanity of Partner : If one of the partners is of unsound mind
Incapacity of Partner : If one partner becomes completely incapable of completing
his duties and obligations
Constant breach of Agreement : The court may order for the dissolution of the firm
if the partner other than the suing partner is found guilty for constant breach of
agreement regarding the conduct of business
Transfer of Interest : If any partner transfers whole of its shares to a third party
permanently
Continuous Losses : If firm is suffering continuous losses and there is no capital for
future growth
Just and Equitable : The court may order for dissolution on any other ground which
court think is just, fair and equitable
CASE
AIREY vs. BARBAM(1861,29, BEAV, 620)

In this case A and B entered into a partnership for 5 years. A paid the
premium to B. The partnership was dissolved within 2 years into the
partnership as a result of mutual disagreement due to As failure to
devote time to the business as agreed. It was agreed that no part of
the premium was payable because the dissolution has been caused
by the misconduct on the part of A.

THANK YOU!