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The
Partnership Act, 19321
[Act 9 of 1932 as amended up to Act 34 of 2019] [Updated as on 30-10-
2022]
[8th April, 1932]
CONTENTS
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement
2. Definitions
3. Application of provisions of Act 9 of 1872
CHAPTER II
THE NATURE OF PARTNERSHIP
4. Definition of “partnership”, “partner”, “firm” and “firm name”
5. Partnership not created by status
6. Mode of determining existence of partnership
7. Partnership at will
8. Particular partnership
CHAPTER III
RELATION OF PARTNERS TO ONE ANOTHER
9. General duties of partners
10. Duty to indemnify for loss caused by fraud
11. Determination of rights and duties of partners by contract between

the partners
12. The conduct of the business
13. Mutual rights and liabilities

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14. The property of the firm
15. Application of the property of the firm
16. Personal profits earned by partners
17.
CHAPTER IV
RELATIONS OF PARTNERS TO THIRD PARTIES
18. Partner to be agent of the firm
19. Implied authority of the partner as agent of the firm
20. Extension and restriction of partner's implied authority
21. Partner's authority in an emergency
22. Mode of doing act to bind firm
23. Effect of admissions by a partner
24. Effect of notice to acting partner
25. Liability of a partner for acts of the firm
26. Liability of the firm for wrongful acts of a partner
27. Liability of firm for misapplication by partners
28. Holding out
29. Rights of transferee of a partner's interest
30. Minors admitted to the benefits of partnership
CHAPTER V
INCOMING AND OUTGOING PARTNERS
31. Introduction of a partner
32. Retirement of a partner
33. Expulsion of a partner
34. Insolvency of a partner
35. Liability of estate of deceased partner

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36. Rights of outgoing partner to carry on competing business
37. Right of outgoing partner in certain cases to share subsequent

profits
38. Revocation of continuing guarantee by change in firm
CHAPTER VI
DISSOLUTION OF A FIRM
39. Dissolution of a firm
40. Dissolution by agreement
41. Compulsory dissolution
42. Dissolution on the happening of certain contingencies
43. Dissolution by notice of partnership at will
44. Dissolution by the Court
45. Liability for acts of partner done after dissolution
46. Right of partners to have business wound up after dissolution
47. Continuing authority of partners for purposes of winding up
48. Mode of settlement of accounts between partners
49. Payment of firm debts and of separate debts
50. Personal profits earned after dissolution
51. Return of premium on premature dissolution
52. Rights where partnership contract is rescinded for fraud or

misrepresentation
53. Right to restrain from use of firm name or firm property
54. Agreements in restraint of trade
55. Sale of goodwill after dissolution
CHAPTER VII
REGISTRATION OF FIRMS
56. Power to exempt from application of the Chapter

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57. Appointment of Registrars
58. Application for registration
59. Registration
60. Recording of alterations in firm name and principal place of

business
61. Noting of closing and opening of branches
62. Noting of changes in names and addresses of partners
63. Recording of changes in and dissolution of a firm
64. Rectification of mistakes
65. Amendment of registrar by order of Court
66. Inspection of register and filed documents
67. Grant of copies
68. Rules of evidence
69. Effect of non-registration
70. Penalty for furnishing false particulars
71. Power to make rules
CHAPTER VIII
SUPPLEMENTAL
72. Mode of giving public notice
73. Repeals
74. Savings
SCHEDULE I
SCHEDULE II
———
Partnership Act, 1932

[Act 9 of 1932 as amended up to Act 34 of 2019] [8th April,
[Updated as on 1-10-2021] 1932]
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———
An Act to define and amend the law relating to partnership
Whereas it is expedient to define and amend the law relating to
partnership; it is hereby enacted as follows:
Statement of Objects and Reasons.—“The Bill is sufficiently
explained in the Report of the Special Committee printed below.”
REPORT OF THE SPECIAL COMMITTEE
“1. The constitution of the Committee was as follows:—
Chairman
The Honourable Sir Brojendra Lal Mitter, Kt. Bar-at-law, Law Member
of the Council of the Governor-General.
Members
(1) Sir Dinshah Fardunji Mulla, Kt. C.I.E., M.A. LL.B., Advocate,
Bombay.
(2) Mr. Alladi Krishnaswami Ayyar, Advocate-General, Madras.
(3) Mr. Arthur Eggar, M.A., Bar-at-law, Government Advocate,
Rangoon.
Mr. D.G. Mitchell, C.I.E., I.C.S., Officiating Secretary to the
Government of India, Legislative Department, attended the meetings of
the Committee, and Mr. A. De C. Williams, I.C.S., Deputy Secretary in
the same Department, acted as Secretary to the Committee.
2. The engagements of some of its members prevented the
Committee from meeting for some time, but it assembled at New Delhi
on the 3rd of November 1930, when its first meeting was held, and it
continued its deliberations daily until Monday, the 17th. A Bill to define
and amend the law relating to partnership, with notes setting forth the
reasons for its various provisions which had already been prepared in
the Legislative Department, was placed before us and formed the basis
of our discussions.
3. In paragraph 8 of the Report of the Special Committee on the Sale
of Goods Bill, which was adopted as the Statement of Objects and
Reasons to that Bill, it was said:—
“When Sir James Stephen moved the Indian Contract Bill, he
admitted that it was not and could not pretend to be, a complete
Code upon the branch of law to which it related. He, however,
expressed a hope that in later years it would be easy to enact
supplementary chapters relating to the several branches of the law
of contract which the Bill did not touch. This hope has never been
fulfilled. In later years it was found more convenient to have
separate enactments for the several branches of the law of contract,
e.g., the Transfer of Property Act, the Negotiable Instruments Act,
and the Merchant Shipping Act. In our opinion, in view of the
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complexity of modern conditions, the time has now come when this
process should be accelerated by embodying the different branches
of law relating to contract in separate self-contained enactments;
and we hope that the Bill which we attach to our Report may be
passed into law at an early date and may be but the first of the
series required to complete the task which we have outlined above.”
The present Bill is the second of the series foreshadowed by the
Special Committee, and like its predecessor it is based on the
corresponding English Act, in this case the Partnership Act, 1890, (53
and 54 Vict., c. 39). The law relating to partnership is at present
contained in Chapter XI of the Indian Contract Act, 1872, which was
based on the rules included in the Report of the Indian Law
Commission presided over by Lord Romilly, in 1866. These rules were
based on English precedents. The main object then in view was, in the
words of Sir James Stephen who piloted the Indian Contract Bill
through the Council, “that of providing a body of law to the Government
of the country so expressed that it might be readily understood both by
English and Indian Government servants without extrinsic help from
the English law libraries.” With that object in view the Select
Committee on the Indian Contract Bill, in its Report dated 22nd
February 1870, said that many important matters relating to
partnership were left unnoticed in Chapter XI. In addition to these
omissions the development of trade in India has shown further matters
on which legislation is now required. In the absence of clear and
definite rules on these points Indian Courts have held that Chapter XI
of the Indian Contract Act is not exhaustive and have relied on
analogies drawn from the English law. In regard to partnership the
position is much the same as that in regard to the sale of goods, and
the remarks of the Special Committee on the Sale of Goods Bill in
paragraph 6 of their Report may be repeated with cogency:
“Whatever merit the simple and elementary rules embodied in the
Indian Contract Act may have had, and however sufficient and
suitable they may have been for the needs which they were intended
to meet in 1872, the passage of time has revealed defects the
removal of which has become necessary in order to keep the law
abreast of the developments of modern business relations.”
4. The Special Committee showed that the English Sale of Goods Bill
was “a very successful and correct codification of this branch of the
mercantile law” and that it had been adopted in most of the British
possessions and many of the United States of America, with only such
small variations as were found necessary to adapt its provisions to local
circumstances. The Special Committee, therefore, adopted the Sale of
Goods Act, 1893, as the source of the Indian Sale of Goods Bill, and
modified it only to the small extent required to adapt it to Indian
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conditions. The Bill as drafted by them became the Indian Sale of

Goods Act, 1930 (Act 3 of 1930), with a few minor modifications.
5. The English Partnership Act, 1890, affords both a comparison with
and a contrast to the Sale of Goods Act, 1893. The law it contains has
been adopted in nearly all the British Dominions and Colonies and it
also forms the basis of a uniform Partnership Act which is in force in the
United States of America. Herein it affords a comparison with the Sale
of Goods Act and there can be no doubt that if its provisions are closely
followed in India, the commercial community will derive great
advantages. Sir Courtney Ilbert has remarked:
“Experience shows that whenever Parliament passes a good law
carefully framed like the Bill of Exchange Act or the Sale of Goods
Act, Legislatures in other parts of the British Dominions readily copy
it or adapt it. This would presumably be the best mode of obtaining
such kind and amount of uniformity in commercial legislation
throughout the Empire as is in existing circumstances feasible and
desirable.” [Vide the article on Unification of Commercial Law in Vol.
II of the Journal of Comparative Legislation.]
The Partnership Act, 1890, has received some approval from legal
commentators, and is generally recognised as a useful Code embodying
most of the law applicable to modern partnerships. In the Introduction
to the 9th Edition of Lindley on Partnership it is said that the Act “has
the merit of reducing a mass of law, previously undigested except by
private authors, into a series of propositions authoritatively expressed.”
6. The Partnership Act, 1890, however, has not been such a
successful piece of codification as the English Sale of Goods Act, 1893,
and herein lies the contrast. The full context of the quotation from
Lindley given above runs as follows:
“Opinions will naturally differ as to the utility of Statutes which
deal with important branches of law, but which do not profess to
deal with them exhaustively. No doubt an incomplete piece of work
is unsatisfactory; but it does not follow that such a work is not worth
executing; if it is well done as far as it goes, it may be a great boon;
and the Partnership Act, 1890, although imperfect, has the merit of
reducing a mass of law, previously undigested except by private
authors, into a series of propositions authoritatively expressed and
as carefully considered as any Act of Parliament is likely to be.”
The learned author of the treatise proceeds to discuss the difficulty
of passing a considered code of law on a technical subject through a
democratic Legislature like Parliament and he concludes: “Taken as a
whole the law of England, both civil and criminal, is well adapted to the
requirements of the English people; but it sadly wants methodising and
authoritative revision; and any such revision of any branch of it is a
distinct gain. From this point of view the Act in question (i.e., the
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Partnership Act, 1890) is decidedly useful, although it is by no means a

perfect measure, nor even as good as Parliament might have made it.”
These remarks have encouraged us to depart from the precedent of
the Sale of Goods Bill, where the English Act was modified in a few
particulars only, and to use the Partnership Act, 1890, with some
degree of freedom. Nevertheless, the Bill does not alter in any
substantial way the English law of Partnership or the Indian law of
Partnership, which is based thereon. The main principles are the same,
and likewise all important details. The deviations in principle it does
show are on minor points, and have been introduced in order to adapt
the law to Indian conditions or to supplement it in places where it is
incomplete, or are supported by the views of authoritative
commentators. Further, the wording of clearly defined principles in the
Partnership Act, 1890, has been freely adopted. Admittedly, any
change in the wording of the English Act may have the disadvantage of
making useful English decisions difficult to apply to Indian cases, but it
is anticipated that the practical identity in substance of the two Acts
and the similarity in wording of important provisions will avoid this
undesirable result and will attract to difficult cases in India the benefits
of English judicial experience.
7. The main source of the difference between the Bill and the
Partnership Act, 1890, lies in the greater emphasis given in the Bill to
the personality of a firm. On this subject Lindley remarks on p. 4:
“One feature peculiar to the English law of Partnership, and
distinguishing it from the laws of other European countries and of
Scotland, was the persistency with which the firm, as distinguished
from the partners composing it, was ignored both at law and in
equity. As no one can owe money to himself, it was held that no
debt could exist between any member of a firm and the firm itself;
and although Courts of Equity, in winding up the concerns of a firm,
treated the firm as the debtor or creditor of its members as the case
might be, yet this was only for purposes of book-keeping, and in
order to arrive at the net balance to be paid to or by each of the
partners on the ultimate settlement of their accounts. This non-
recognition of the firm was a defect in the law of partnership; and it
is to be regretted that the Partnership Act did not go further than it
did in the direction of assimilating the English law to the Scotch. Had
it done so, the difficulties of suing and being sued, and of dealing
with partners abroad, would have been greatly diminished.”
8. The Bill goes someway to meet Lindley's criticism but it adheres
strictly to the old established English and Indian view that a firm is not
a legal person. The emphasis above referred to arises from two causes,
the first of which is a mere matter of wording. The English Act defines
the word “partnership” as being “the relation which subsists between
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persons carrying on a business in common with a view to profit,” and,

as regards a “firm” it says that “persons who have entered into
partnership with one another are for the purposes of this Act called
collectively a firm.” It appears that the framers of the English Act
wished throughout to lay stress on the abstract relation of partnership
and to avoid giving colour to the view that the firm has any degree of
personality, for in the Act the term “partnership” is frequently used in
the sense of “firm”, and also as an adjective in the sense of “belonging
to a firm” or “relating to a firm”. The use of the defined word “firm”
seems almost to be avoided. The Bill confines the word “partnership” to
its legitimate defined meaning of the relation which exists between
partners, and wherever the partners themselves are referred to
collectively it uses the word “firm”. Hence the word “firm” occurs very
frequently in the Bill, whereas the word “partnership” occurs rarely, and
thereby the Bill, as compared with the English Act, emphasises the
concrete thing the firm, as against the abstract relation, the
partnership.
9. The second cause of the emphasis is very largely a matter of
arrangement. The strict view of the existing law, placing full stress
upon the abstract relation of partnership, is that “on any change
amongst the persons comprising a partnership there is in fact a new
partnership” (Lindley, p. 166). This, however, is not the practical or
commercial view of a firm, whereunder a firm has a sufficient degree of
personality and of continuity to justify such common places as
advertisements which claim that a firm has been established for over a
century. Even the English law as expressed in the Partnership Act,
1890, has been forced to depart from the strict legal view of the firm,
for it speaks of changes in a firm, or persons dealing with a firm after a
change in its constitution, of debts due from the firm to a partner, and
uses other phrases conceding some degree of personality to the firm,
and of continuity in its existence in spite of internal changes. The Bill
goes in this direction to the limits which are already implied in the
English Act and it collects together in a separate Chapter, entitled
“Incoming and outgoing partners” all provisions which directly bear
upon the introduction, retirement, expulsion, insolvency and death of
partners in those cases where the business of the firm is carried on
without a dissolution of partnership. The result is that, apart from the
preliminary Chapter and the Chapter on “The nature of partnership,”
the Bill has three Chapters which deal with the working firm, namely—
Chapter III—Relations of partners to one another.
Chapter IV—Relations of Partners to third parties.
Chapter V — Incoming and Outgoing Partners,
and one Chapter relating to the extinction of a firm, namely—
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Chapter VI—Dissolution of a firm.

10. We hope that this re-arrangement of the Partnership Act, 1890,
will be of practical convenience to lawyers and businessmen in that
very numerous class of cases where there is a change in the
constitution of a firm without a dissolution. The new Chapter V contains
a number of concise propositions, setting out the legal consequences
flowing from changes in the personnel of a firm when there is no
dissolution, which are embodied in various sections of the English Act
scattered throughout the all three of its parts. The re-arrangement has
also the advantage of confining Chapter VI strictly to provisions relating
to the dissolution of a firm and its legal consequences. But we must
emphasise again that in so re-arranging the English Act, we have not
departed from any of its outstanding conceptions or principles.
11. One of us would prefer to go much further and would propose
that, for the whole of Chapter II and sub-clauses (a) and (b) of Clause
2, the following should be substituted:—
“4. (1) A ‘firm’ is an association of persons who have joined
together for the purpose of conducting some kind of lawful trade,
profession, calling or enterprise, as a business venture, with the
object of obtaining profit by dealing with third parties, each of the
members of the association being in the position of a principal in all
such dealings.
(2) The members of a firm are called ‘partners’; their mutual
relationship is called ‘partnership’; the name under which the
business is carried on is called the ‘firm name’; and an ‘act of the
firm’ is an act or omission in which all the partners are deemed to
take part.
5. Every firm shall be deemed to be constituted by a contract
between the partners whereby they agree that their partnership shall
be governed by the Articles of Partnership stated in the schedule.
Provided that the partners may, at any time, expressly or impliedly,
agree to terms of partnership to the contrary of, or in addition to, such
Articles.”
According to this scheme, the Articles of Partnership in the Schedule
would include all provisions of the Bill which relate to such of the
mutual rights and duties of partners as are subject to contract between
the partners. This scheme would relegate practically the whole of
Chapter III and portions of Chapters IV, V and VI to the Schedule. The
rest of us, however, consider that this scheme would be too sweeping
an innovation, and we prefer to have the whole of the law set out and
logically arranged in the statute itself.
12. In addition to the pure law of partnership the Bill contains an
important new Chapter on the registration of firms—Chapter VII. The
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history of the proposals for some measure of this kind in India goes as
far back as 1867, when the Bombay Chamber of Commerce first made
the suggestion that legislation should be undertaken for the compulsory
registration of firms. The step was then deemed to be impracticable,
but ever since at frequent intervals various mercantile bodies,
sometime supported by Local Governments, have pressed for some
such legislation in the interests of the trading public. The movement
was strengthened by the passing of the Registration of Business Names
Act, 1916 (5 and 6 George V, c. 58), which furnished a useful
precedent. This Act inter aliamakes the registration of all firms
compulsory, attaches a penalty to failure to register, and renders
persons who are in default incapable of bringing a suit to enforce their
claims as partners, whether against their co-partners or against third
parties. In 1918 the Industrial Commission recommended a system of
compulsory registration, and in 1925 the Civil Justice Committee made
specific recommendations somewhat on the lines of the Registration of
Business Names Act, 1916, but excepting firms with a capital below Rs.
500. In 1920 the legislature of Burma passed the Burma Registration of
Business Names Act, 1920, which applied the principle of compulsory
registration to certain towns in Burma..
13. All the proposals made at various times were considered by the
Government of India, but, owing either to lack of unanimity among the
proposers or the difficulties-in the proposals themselves, no conclusions
were come to which could form the basis of a Bill which held any
promise to a successful passage through the Indian legislature. These
difficulties related to,
(1) Hindu undivided families,
(2) Short-lived partnerships, and
(3) firms in a small way of business, and a short discussion of these
will disclose the reasons why nothing so far has been done, and
will help to explain the present proposals.
14. A Hindu undivided family may carry on a family business
exclusively for its own benefit, or it may carry on a business with one or
more outsiders as partners with the family. To require that each
member of such a family should have his name registered in a register
of firms has all along been deemed to be an impracticable step. Every
male child born would have to be registered, and every death or
partition that occurred would involve changes in the register. It has
been recognised that such a proposal would be resented by the Hindu
community and probably would not be effective. However, this difficulty
may be avoided, as was pointed out by the present Law Member in his
evidence before the Industrial Commission in 1918. A Hindu undivided
family carrying on a family business may have many of the
characteristics of firm, but it is not a firm. Partnership arises only from
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contract and is not created by status or obtained by birth. The law of

partnership has no application to these families, whose internal
relations and liabilities for the acts of members are governed entirely by
the Hindu law. Even in the case where a trading family enters into
partnership with outsiders no special provision for the registration of its
members is needed. As partnership arises only from contract, only that
member who makes the contract of partnership with outsiders can be
considered to be a partner. He may or he may not represent the whole
family, and only his interest or the whole joint family property may be
liable for the debts of the firm; but these are questions of fact mainly,
or, where there are mixed questions of fact and law, the law is not that
of partnership but is the Hindu law. If the partner member does
represent the family and if his share of the profits of the firm goes into
the family stock, then the whole of the joint family property will be
liable for the debts of the firm. But if the partner member is trading on
his own responsibility and keeps the profits to himself then the
creditors of the firm cannot realise their claims against the firm from
the joint family property, beyond the extent of the interest of the
partner member. It will be seen that the principles of law involved are
principles of the Hindu law, and that they are the same principles which
are applied to all dealings by the manager or representative of the joint
family.
15. No attempt to smooth the path of litigation against a Hindu
undivided family has been made, for example, in the recent Transfer of
Property (Amendment) Act, 1929, or Sale of Goods Act, 1930, though
the difficulties exist on a much greater scale in connection with
mortgages and sales by Hindu families generally than in connection
with the restricted class of the mercantile transactions of Hindu trading
families. It is submitted that the attempt need not be made now, for
the limited purpose of partnership, to the prejudice of the passing of an
otherwise useful measure.
16. The difficulties connected with shortlived partnerships and with
firms in a small way of business may be considered together. It has
been pointed out repeatedly with much force that to require small or
ephemeral joint ventures to be registered would produce little public
benefit and would act as clog on petty enterprise; and such ventures
are so numerous that any small benefit to be derived from registration
would be counter-balanced by the clerical labour involved. Hence, there
have been proposals, like that of the Civil Justice Committee, that firms
with less than certain capital should be exempt, or that the disability to
sue arising from non-registration should apply only to suits above a
certain value; but none of these proposals have survived examination.
The capital of a firm may be an elusive quantity and it is frequently a
fluctuating quantity; and to use the valuation of a suit in order to
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determine whether the suit lies or not is likely to lead to improper

devices and to perjury. The Bill seeks to overcome this class of difficulty
by making registration optional, and by creating inducements to
register which will only bear upon firms in a substantial and fairly
permanent way of business.
17. The outlines of the scheme are briefly as follows. The English
precedent in so far as it makes registration compulsory and imposes a
penalty for non-registration has not been followed, as it is considered
that this step would be too drastic for a beginning in India, and would
introduce all the difficulties connected with small and ephemeral
undertakings. Instead, it is proposed that registration should lie
entirely within the discretion of the firm or partner concerned; but,
following the English precedent, any firm which is not registered will be
unable to enforce its claims against third parties in the civil Courts; and
any partner who is not registered will be unable to enforce his claims
either against third parties or against his fellow partners. One exception
to this disability is made—Any unregistered partner in any firm,
registered or unregistered, may sue for dissolution of the firm. This
exception is made on the principle that registration is designed
primarily to protect third parties, ‘and the absence of registration need
not prevent the disappearance of an unregistered or imperfectly
registered firm. Under this scheme a small firm, or a firm created for a
single venture, not meeting with difficulty in getting payment, need
never register; and even a firm with a large business need not register
until it is faced with litigation. Registration may then be effected at any
time before the suit is instituted. The rights of third parties to sue the
firm or any partner are left intact.
18. Once registration has been effected the statements recorded in
the register regarding the constitution of the firm will be conclusive
proof of the facts therein contained against the partners making them,
and no partner whose name is on the register will be permitted to deny
that he is a partner, with certain natural and proper exceptions which
will be indicated later. This should afford a strong protection to persons
dealing with firms against false denials of partnership and the evasion
of liability by the substantial members of a firm.
19. The framing of inducements to register changes in a firm has
been difficult, but the devices proposed in the Bill are put forward as
being as strong as may be created, in the absence of penal sanction
and without altering any of the established principles of partnership
law. As regards a partner newly introduced into the firm, if he fails to
register he will incur a grave risk of being unable to claim his dues from
his partners, and will have to rely solely on their good faith or sue for
dissolution. On the other hand, the third party who deals with a firm
and knows that a new partner has been introduced can either make
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registration of the new partner a condition for further dealings, or

content himself with the certain security of the other partners and the
chance of proving by other evidence the partnership of the new but
unregistered partner. A third party who deals with a firm without
knowing of the addition of a new partner counts on the credit of the old
partners only, and will not be prejudiced by the failure of the new
partner to register.
20. As regards outgoing partners the Bill provides that the estate of
a deceased partner or of an insolvent partner is in no case liable for the
acts of the firm after his death or insolvency. This rule is well
established and is hard and fast. Nothing in the way of registration of
the death or insolvency of a partner, therefore, can improve the position
of third parties, and no inducement need be offered, beyond the desire
which will actuate most firms to keep their entry in the register up to
date, for the information and benefit of intending customers. These are
the exceptions mentioned above, where the existence of a name on the
register may not establish the partnership of the person named.
21. As regards retired or expelled partners, who are legally on the
same footing, there will be strong inducement to have the changes
noted in the register. The law provides that a retired or an expelled
partner continues to be liable for the acts of the firm, and the firm
continues to be liable for any act of theirs purporting to be done on
behalf of the firm, until public notice is given of the retirement or
expulsion. Clause 71 (now Section 72) of the Bill provides that this
public notice can be given as regards retirement and expulsion only by
notice to the Registrar, which will be recorded in the register. Hence,
when a partner retires or is expelled, it will be in his own interest and
also in the interest of the remaining partners to give immediate notice
of the change to the Registrar.
22. Similar considerations apply when a firm is dissolved. All the
partners will still be liable for the acts of any of them which would have
bound the firm if done before its dissolution until public notice is given.
Here again, it will be in the interest of all the partners that early notice
should be given, and this can only be done by notice to the Registrar.
23. To sum up, it is anticipated that once a firm has been registered
the register of firms will continue to contain a complete and up to date
list of all partners who will be liable for the debts of the firm to persons
who propose to deal with the firm.
24. One more point regarding the registration of firms calls for
mention. It is proposed that the chapter, in so far as it provides
machinery for registration, amendment of the register, grant of copies
and so forth, should come into force along with the rest of the Bill, so
that firms may apply for registration at once. The clause regarding the
conclusive nature of the statements recorded in the register will come
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into force at the same time. However, it would obviously be unjust to

make all unregistered firms and partners incapable of suing until they
have had a reasonable opportunity to register; and it is proposed that
they should be allowed one year, by enacting that the clause rendering
them incapable of suing shall not come into force until one year after
the commencement of the rest of the Act [see Sub-Section (3) of
Section 11].
25. It has already been indicated that the Bill contains other
provisions which are not contained in the Partnership Act, 1890. These
are considered in detail in the Notes on Clauses, but one set of
provisions is important enough to justify its mention in this Report. In
the Introduction to Lindley page 8 it is said, under the marginal head
“Goodwill”; “One matter of great practical importance and of some
difficulty is unfortunately not dealt with, i.e., the goodwill of dissolved
firm and the extent to which, and the persons by whom, the use of its
name may be continued. Sir Frederick Pollock's Bill dealt with these
points; as did also the Bill which passed the House of Commons in
1889, and the Bill which was brought into the House of Lords in 1890.
But owing, it is believed, to differences of opinion, and to the difficulty
of arriving at a conclusion which would be acceptable to both Houses of
Parliament, the clauses relating to these subjects were struck out. The
law upon them must therefore be extracted from judicial decisions and
the doubts and difficulties which beset questions arising on these
subjects must remain for future judicial or legislative solution.”
Perhaps a reason for the differences of opinion on the clauses
relating to goodwill was that they were framed generally, and not with
application to the goodwill of firms only. Sir Frederick Pollock himself
says in his Digest of the Law of Partnership (12th Edn. pages 121-22):
“The act does not make any express provision for disposing of the
goodwill on the dissolution of a firm. Probably this is due to the
consideration that the rules of law relating to goodwill are not confined
to cases where a business has been carried on in partnership, and
therefore do not belong to the law of partnership in any exact sense.
Nevertheless the rules have been settled chiefly by decisions in
partnership cases, and the question of goodwill is one of those which
ought always to be considered and provided for in the formation of a
partnership, and constantly has to be considered on its dissolution,
whether provided for or not.”
It is considered that the views of these two eminent writers should
be followed, and accordingly provision is made in the Bill for the
disposal of the goodwill of a firm. [See Section 55]. Provisions
governing the sale of goodwill generally would be out of place, but they
are of sufficient importance in their bearing on firms, to justify their
inclusion in a restricted form. There is perhaps no statute on the Indian
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Statute Book where general provisions could find a logical place, but it
is hoped that the provisions now proposed for the goodwill of firms will
be found to contain principles which may be used as a general guide.”
Chapter I
PRELIMINARY
1. Short title, extent and commencement.—(1) This Act may be
called the Indian Partnership Act, 1932.
2
[(2) It extends to the whole of India 3 [* * *].]
(3) It shall come into force on the 1st day of October, 1932, except
Section 69, which shall come into force on the 1st day of October,
1933.
STATE AMENDMENTS
DADRA AND NAGAR HAVELI.—In its application to the State of Dadra
and Nagar Haveli, for sub-section (3), substitute the following:
“(3) It shall come into force at once except Section 69 which shall
come into force on the 1st day of July, 1966.”—Regn. VI of 1963 as
amended by Regn. II of 1965.
GOA, DAMAN AND DIU.—Same as in Dadra and Nagar Haveli except for
the date of enforcement of Section 69 which is January 1, 1965—Regn.
XI of 1963.
LACCADIVE, MINICOY AND AMINDIVI I SLANDS.—In its application to the
State of Laccadive, Minicoy and Amindivi Islands, for sub-section (3),
substitute the following:
“(3) It shall come into force at once except Section 69, which
shall come into force on the expiry of a period of one year from the
date of commencement of the rest of this Act.”—Regn. VIII of 1965,
Section 3 and Schedule I.
PONDICHERRY.—Same as in Dadra and Nagar Haveli, except for the
date of enforcement of Section 69 which is July 1, 1964—Regn. VII of
1963, Section 3 and Schedule I.
2. Definitions.—In this Act, unless there is anything repugnant in the
subject or context,—
(a) an “act of a firm” means any act or omission by all the
partners or by any partner or agent of the firm which gives rise
to a right enforceable by or against the firm;
(b) “business” includes every trade, occupation and profession;
(c) “prescribed” means prescribed by rules made under this Act;
(d) “third party” used in relation to a firm or to a partner therein
means any person who is not a partner in the firm; and
(e) expressions used but not defined in this Act and defined in the
Indian Contract Act, 1872 (9 of 1872), shall have the meanings
assigned to them in that Act.
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STATE AMENDMENTS
MAHARASHTRA.—In Section 2 of the Indian Partnership Act, 1932, in
its application to the State of Maharashtra after clause (c), the following
clause shall be inserted, namely:—
“(C-1) ‘Registrar’ means the Registrar of Firms appointed under
sub-section (1) of Section 57 and includes the Deputy Registrar of
Firms and Assistant Registrar of Firms appointed under sub-section
(2) of that section;”—Mah. Act 29 of 1984, Section 2 (w.e.f. 1-1-
1985).
3. Application of provisions of Act 9 of 1872.—The unrepealed
provisions of the Indian Contract Act, 1872, save insofar as they are
inconsistent with the express provisions of this Act, shall continue to
apply to firms.
NOTES ► Though the Indian Partnership Act is now an independent
Act 9 of 1932 but previous to this date, the Law of Partnership was a
part (Ch. XI) of the Indian Contract Act of 1872. This present section
expressly recognises that the Law of Partnership is still a branch of the
law of contract and provides that the general provisions of the Indian
Contract Act shall continue to govern the partnership transactions
insofar as they are not inconsistent with the provisions of this Act.
Chapter II
THE NATURE OF PARTNERSHIP
4. Definition of “partnership”, “partner”, “firm” and “firm name”.—
“Partnership” is the relation between persons who have agreed to share
the profit 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” and the name
under which their business is carried on is called the “firm name”.
► Nature and Scope.—Entrustment of stridhan property to husband does not
amount to partnership. Pratibha Rani v. Suraj Kumar, (1985) 2 SCC 370 : 1985
SCC (Cri) 180.
A firm is conglomeration of its partners. It is not a juristic person. Under the
Partnership Act, a partner represents a firm and he has an implied authority in
terms of Section 19. Thus, any action taken by a partner of a firm vis-à-vis the
firm, unless otherwise specified, binds the firm itself, Tanna & Modi v. CIT, (2007)
7 SCC 434.
Partnership firm is not an independent legal entity. Firm name is only a
compendious name given to the partnership and the partners are the real owners
of its assets. Allotment of assets to individual partners on dissolution of the
partnership, does not constitute transfer of any assets of the firm. Hence, an
award recording such settlement, held, does not require registration under Section
17(1), Registration Act, 1908, N. Khadervali Saheb v. N. Gudu Sahib, (2003) 3
SCC 229.
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Partnership concern is not a legal entity like a company; it is a group of

individual partners. There is no justification for assuming that partnership firms are
more efficient in carrying out audit work than individual Chartered Accountants
who have formed sole proprietorship firms, Comptroller & Auditor-General v.
Kamlesh Vadilal Mehta, (2003) 2 SCC 349.
A juristic person can be a company within the meaning of the provisions of the
Companies Act, 1956 or a partnership within the meaning of the provisions of the
Partnership Act, 1932 or an association of persons which ordinarily would mean a
body of persons which is not incorporated under any statute. A proprietary
concern, however, stands absolutely on a difference footing. A person may carry
on business in the name of a business concern, but he being proprietor thereof,
would be solely responsible for conduct of its affairs. A proprietary concern is not
a company. A proprietary concern would not answer the description of either a
company incorporated under the Companies Act or a firm within the meaning of
the provisions of Section 4 of the Partnership Act, Raghu Lakshminarayanan v.
Fine Tubes, (2007) 5 SCC 103 : (2007) 2 SCC (Cri) 455.
A partnership firm, unlike a company registered under the Companies Act, is
not a distinct legal entity and is only a compendium of its partners. Even
registration of a firm does not convert it into a distinct legal entity like a company.
Partners of a firm are co-owners of the property of the firm, unlike shareholders in
a company who are not co-owners of the property of the company, V.
Subramaniam v. Rajesh Raghuvandra Rao, (2009) 5 SCC 608.
► Ingredients of partnership.—The components of the definition of
partnership, and therefore of a “firm” consist of (a) persons, (b) a business
carried on by all of them or any of them acting for all and (c) an agreement
between those persons to carry on such business and to share its profits. It is the
relationship between those persons which constitutes the partnership. Dy. C.S.T.
v. K. Kelukutty, (1985) 4 SCC 35, 41 : 1985 SCC (Tax) 507.
Whether there was a partnership or not may in certain cases be a mixed
question of law and fact, in the sense that whether the ingredients of partnership
as embodied in the law of partnership were there or not in a particular case must
be judged in the light of the principles applicable to partnership. The following
important elements must be there in order to establish partnership: (1) there must
be an agreement entered into by all parties concerned; (2) the agreement must be
to share profits of business; and (3) the business must be carried on by all or any
of the persons concerned acting for all. Sharing of profits and contributing to
losses were not the only elements in a partnership, existence of agency was
essential. Helper Girdharbhai v. Saiyed Mohd. Mirasaheb Kadri, (1987) 3 SCC
538.
► Juristic status.—A firm is not a legal person even though it has some
attributes of personality. Partnership is a certain relation between persons, with
the product of agreement being, to share the profits of a business. ‘Firm’ is a
collective noun, a compendious expression to designate an entity, not a person.
C.I.T. v. R.M. Chidambaram Pillai, (1977) 1 SCC 431, 433 : 1977 SCC (Tax)
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188.
Firm or partnership is not a legal entity separate and distinct from partners and
is only compendious description of individuals who compose the firm. Munshi
Ram v. Municipal Committee, (1979) 3 SCC 83 : 1979 SCC (Tax) 205.
A partnership firm is identifiable from the partnership agreement. Same
partners may constitute more than one distinct and separate firm but firms have
no juristic personality. Dy. C.S.T. v. K. Kelukutty, (1985) 4 SCC 35, 41, 42 : 1985
SCC (Tax) 507.
5. Partnership not created by status.—The relation of partnership
arises from contract and not from status;
and, in particular, the members of a Hindu undivided family carrying on
a family business as such, or Burmese Buddhist husband and wife
carrying on business as such, are not partners in such business.
STATE AMENDMENTS
GOA, DAMAN AND DIU.—In its application to the State of Goa, Daman
and Diu, for the words ‘Burmese Buddhist husband and wife carrying on
business as such’, substitute the words ‘a husband and wife under the
regime of communion of property carrying on business as such.—Goa,
Daman and Diu Act 6 of 1966, Section 2 (22-8-1966).
► Inference of Partnership firm.—For inference as to the existence of a
Partnership firm, there should be an agreement and same should be to share
profits of a business between persons and an element of agency is also required
in order to constitute partnership, Indian Oil Corporation Ltd. v. Shriji Enterprises
Erandol, 2014 SCC OnLine Bom 175 : (2014) 3 Mah LJ 465.
6. Mode of determining existence of partnership.—In determining
whether a group of persons is or is not a firm, or whether a person is or
is not a partner in a firm, regard shall be had to the real relation
between the parties, as shown by all relevant facts taken together.
Explanation 1.—The sharing of profits or of gross returns arising from
property by persons holding a joint or common interest in that property
does not of itself make such persons partners.
Explanation 2.—The receipt by a person of a share of the profits of a
business, or of a payment contingent upon the earning of profits or
varying with the profits earned by a business, does not of itself make
him a partner with the persons carrying on the business;
and, in particular, the receipt of such share or payment—
(a) by a lender of money to persons engaged or about to engage
in any business,
(b) by a servant or agent as remuneration,
(c) by the widow or child of a deceased partner as annuity, or
(d) by a previous owner or part owner of the business, as
consideration for the sale of the goodwill or share thereof,
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does not itself make the receiver a partner with the persons carrying on
the business.
7. 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”.
► Contract of service.—In Income Tax law a firm is a unit of assessment, by
special provisions, but is not a full person; which leads to the next step that since a
contract of employment requires two distinct persons viz. the employer and the
employee, there cannot be a contract of service, in strict law, between a firm and
one of its partners. CIT v. R.M. Chidambaram Pillai, (1977) 1 SCC 431, 433 :
1977 SCC (Tax) 188.
8. Particular partnership.—A person may become a partner with
another person in particular adventures or undertakings.
NOTES ► Particular Partnership.—Such partnership is limited to a
particular transaction or adventure or undertaking. In partnership of
this kind the partners incur no responsibility beyond the limits of the
particular adventure or undertaking, but the three elements of
partnership, namely, agreement, business and mutual agency must
exist in this kind of partnership also. For illustration, two solicitors may
be partners insofar as a particular case is concerned when they agree to
share the profits accuring therefrom, but no further. So also a partner
may be limited to the purchase and sale of particular jewels.
Chapter III
RELATION OF PARTNERS TO ONE ANOTHER
9. General duties of partners.—Partners are bound to carry on the
business of the firm to the greatest common advantage, to be just and
faithful to each other, and to render true accounts and full information
of all things affecting the firm to any partner or his legal representative.
STATE AMENDMENTS
MAHARASHTRA.—In its application to the State of Maharashtra, in
Section 9 of the principal Act, for the words “or his legal representative”
the words “, his heir or legal representative” shall be substituted.—Mah.
Act 29 of 1984, S. 3 (w.e.f. 1-1-1985).
10. Duty to indemnify for loss caused by fraud.—Every partner shall
indemnify the firm for any loss caused to it by his fraud in the conduct
of the business of the firm.
11. Determination of rights and duties of partners by contract
between the partners.—(1) Subject to the provisions of this Act, the
mutual rights and duties of the partners of a firm may be determined
by contract between the partners, and such contract may be expressed
or may be implied by a course of dealing.
Such contract may be varied by consent of all the partners, and such
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consent may be expressed or may be implied by a course of dealing.

Agreements in restraint of trade.—(2) Notwithstanding anything
contained in Section 27 of the Indian Contract Act, 1872 (9 of 1872),
such contracts may provide that a partner shall not carry on any
business other than that of the firm while he is a partner.
12. The conduct of the business.—Subject to contract between the
partners—
(a) every partner has a right to take part in the conduct of the
business;
(b) every partner is bound to attend diligently to his duties in the
conduct of the business;
(c) any difference arising as to ordinary matters connected with
the business may be decided by a majority of the partners, and
every partner shall have the right to express his opinion before
the matter is decided, but no change may be made in the
nature of the business without the consent of all the partners;
and
(d) every partner has a right to have access to and to inspect and
copy any of the books of the firm.
STATE AMENDMENTS
Section 12 of the principal Act,—
(a) in clause (c), the word “and” appearing at the end shall be
deleted;
(b) in clause (d), for the words “books of the firm”, the words “books
of the firm; and” shall be substituted;
(c) after clause (d), the following clause shall be added, namely:—
“(e) in the event of the death of a partner, his heirs or legal
representatives or their duly authorised agents shall have a right of
access to and to inspect and copy any of the books of the firm.”—Mah.
Act 29 of 1984, S. 4 (w.e.f. 1-1-1985).
NOTES ► This section deals with the rules determining mutual
relations of partners. All these rules are, however, subject to contract
between the partners that is, the rules will govern so far as they are not
excluded or varied by agreement between the parties which may be
proved by an express declaration to that effect or may be determined
from the conduct of the parties.
► Change in business of Firm.—In a Partnership Firm doing mining
business, change of contractors by majority of partners would not amount to
change in business of Firm. Nature of business would change if any activity other
than mining was to be undertaken, Kunda Madhukar Shetye v. Shaila Subrao
Shetye, 2015 SCC OnLine Bom 828 : (2015) 6 Mah LJ 843 : (2016) 1 AIR Bom R
295.
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► Power of attorney.—A partner cannot execute such power of attorney in

favour of third party, when other partners had not retired and were available and
without their consent, Horace Kevin Gonsalves v. Prabha Ganpat Borkar, 2015
SCC OnLine Bom 262 : (2015) 6 Mah LJ 208 : (2015) 2 AIR Bom R 250.
13. Mutual rights and liabilities.—Subject to contract between the
partners—
(a) a partner is not entitled to receive remuneration for taking
part in the conduct of the business;
(b) the partners are entitled to share equally in the profits earned,
and shall contribute equally to the losses sustained by the
firm;
(c) where a partner is entitled to interest on the capital
subscribed by him, such interest shall be payable only out of
profits;
(d) a partner making, for the purposes of the business, any
payment or advance beyond the amount of capital he has
agreed to subscribe, is entitled to interest thereon at the rate
of six per cent per annum;
(e) the firm shall indemnify a partner in respect of payments
made and liabilities incurred by him—
(i) in the ordinary and proper conduct of the business, and
(ii) in doing such act, in an emergency, for the purpose of
protecting the firm from loss, as would be done by a person
of ordinary prudence, in his own case, under similar
circumstances, and
(f) 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.
NOTES ► Scope.—This section is one of the most important sections
of this Act, which provides important rules relating to the mutual
rights, duties and obligations of partners inter se in the absence of a
contract to the contrary.
14. The property of the firm.—Subject to contract between the
partners, the property of the firm includes all property and rights and
interests in property originally brought into the stock of the firm, or
acquired, by purchase or otherwise, by or for the firm, or for the
purposes and in the course of the business of the firm, and includes
also the goodwill of the business.
Unless the contrary intention appears, property and rights and
interest in property acquired with money belonging to the firm are
deemed to have been acquired for the firm.
► Determination of assets of partnership.—Determination of assets of
partnership firm in absence of original deed of partnership before court, though
extract from certificate of registration brought on record, had to be gathered from
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the admission of the parties and other materials available on record, Shreedhar
Govind Kamerkar v. Yesahwant Govind Kamerkar, (2006) 13 SCC 481.
Under Section 14 of the Partnership Act, 1932, in the absence of an
agreement to the contrary, property exclusively belonging to a person, on his
entering into partnership with others, does not become a property of the
partnership merely because it is used for the business of the partnership. Such
property will become property of the partnership only if there is an agreement
express or implied that the property was, under the agreement of the partnership,
to be treated as the property of the partnership, Arm Group Enterprises Ltd. v.
Waldorf Restaurant, (2003) 6 SCC 423.
Partner in a partnership firm, also has an existence separate from that of the
firm and therefore retains his rights over his personal property, which cannot
automatically be taken to be incorporated into the assets of the partnership,
Shashi Kapila v. R.P. Ashwin, (2002) 1 SCC 583.
Mere use of property of Partner for Firm would not make property of Partner
as property of Firm. Implied or express consent of Partner required for treating
property as Partnership property. Specific intention of Partner to treat his
property as that of Firm is required. Property ought to be thrown in Partnership
stock and in absence of any transfer of interest, property of Partner cannot be
presumed to be sold to Partnership Firm, Khaja Mohideen v. M. Mohammed
Saliha, (2013) 3 MWN (Civil) 410 (Mad).
► Goodwill, nature of.—Goodwill is intangible in nature, insubstantial in form
and nebulous in character and denotes benefit arising from connection and
reputation. It is an asset of the business. CIT v. B.C. Srinivasa Setty, (1981) 2
SCC 460 : 1981 SCC (Tax) 119.
► Interest in the firm's ‘assets’.—A partner has interest in each and every
asset of the firm, including goodwill even during subsistence of the firm, though
during subsistence he cannot claim specific share in any particular asset.
Partner's interest in the firm's assets is ‘property’ under Section 2(15) of Estate
Duty Act, 1953. On death of a partner, interest in the assets passes to surviving
partners, if in terms of partnership deed heir of the deceased partner is not to get
any share therein. Collector of Estate Duty v. Mrudula Nareshchandra, 1986
Supp SCC 357, 365, 366 : 1986 SCC (Tax) 793.
► Right as proprietor.—An erstwhile proprietor can neither file a suit nor
claim any relief in the suit filed by the partnership asserting his right as the
erstwhile proprietor, Purushottam v. Shivraj Fine Arts Litho Works, (2007) 15
SCC 58.
► Property of Firm.—When there is a document showing separate property
of a partner was thrown into the common stock of partnership firm, there cannot
be any doubt such property became the property of the partnership firm, N.
Marappan v. V.S.T. Sengottaian, 2016 SCC OnLine Mad 6967 : (2016) 3 LW
248.
15. Application of the property of the firm.—Subject to contract
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between the partners, the property of the firm shall be held and used
by the partners exclusively for the purposes of the business.
16. Personal profits earned by partners.—Subject to contract
between the partners,—
(a) if a partner derives any profit for himself from any transaction
of the firm, or from the use of the property or business
connection of the firm or the firm-name, he shall account for
the profit and pay it to the firm;
(b) 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.
17. Subject to contract between the partners:
(a) Rights and duties of partners after a change in the firm.
—Where a change occurs in the constitution of a firm, the
mutual rights and duties of the partners in the reconstituted
firm remain the same as they were immediately before the
change, as far as may be;
(b) After the expiry of the term of the firm.—Where a firm
constituted for a fixed term continues to carry on business after
the expiry of that term, the mutual rights and duties of the
partners remain the same as they were before the expiry, so far
as they may be consistent with the incidents of partnership at
will; and
(c) And where additional undertakings are carried out.—
Where a firm constituted to carry out one or more adventures
or undertakings carries out other adventures or undertakings,
the mutual rights and duties of the partners in respect of the
other adventures or undertakings are the same as those in
respect of the original adventures or undertakings.
Chapter IV
RELATIONS OF PARTNERS TO THIRD PARTIES
18. Partner to be agent of the firm.—Subject to the provisions of this
Act, a partner is the agent of the firm for the purposes of the business
of the firm.
► Status of partner.—In common parlance the status of a partner qua the
firm is different from employees working under the firm, it may be that a partner is
being paid some remuneration for any special attention which he devotes but that
would not involve any change of status and bring him within the definition of
employee. Regl. Director, E.S.I.C. v. Ramanuja Match Industries, (1985) 1 SCC
218, 221 : 1985 SCC (L&S) 213.
► Insurance.—A conspectus of Sections 18, 12 and 26 of the Partnership
Act, shall show where the vehicle belonging to the firm is being driven by a
partner, it can be said that it is done with the permission of the owner, namely, the
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firm or with its authority. Narchinva V. Kamat v. Alfredo Antonio Doe Martins,
(1985) 2 SCC 574, 577, 578.
19. Implied authority of the partner as agent of the firm.—(1)
Subject to the provisions of Section 22, the act of a partner which is
done to carry on, in the usual way, business of the kind carried on by
the firm, binds the firm.
The authority of a partner to bind the firm conferred by this section
is called his “implied authority”.
(2) In the absence of any usage or custom of trade to the contrary,
the implied authority of a partner does not empower him to—
(a) submit a dispute relating to the business of the firm to
arbitration,
(b) open a banking account on behalf of the firm in his own name,
(c) compromise or relinquish any claim or portion of a claim by
the firm,
(d) withdraw a suit or proceeding filed on behalf of the firm,
(e) admit any liability in a suit or proceeding against the firm,
(f) acquire immovable property on behalf of the firm,
(g) transfer immovable property belonging to the firm, or
(h) enter into partnership on behalf of the firm.
► Alienation of property by partner.—When Partner gave undertaking to
allow land owned by him for raising cinema hall by the firm for the firm's business
with the restriction against alienation of the land during subsistence of the firm and
Partnership was initially created for a fixed term made at will by a fresh deed then
land sold by such partner notwithstanding the restriction not binding on the other
partners. Devi Prasad Rai v. Kanhaiyalal Mukharya, (1986) 4 SCC 5.
20. Extension and restriction of partner's implied authority.—The
partners in a firm may, by contract between the partners, extend or
restrict the implied authority of any partner.
Notwithstanding any such restriction, any act done by a partner on
behalf of the firm which falls within his implied authority binds the firm,
unless the person with whom he is dealing knows of the restriction or
does not know or believe that partner to be a partner.
21. Partner's authority in an emergency.—A partner has authority, in
an emergency, to do all such acts for the purpose of protecting the firm
from loss as would be done by a person of ordinary prudence, in his
own case, acting under similar circumstances, and such acts bind the
firm.
22. Mode of doing act to bind firm.—In order to bind a firm, an act or
instrument done or executed by a partner or other person on behalf of
the firm shall be done or executed in the firm name, or in any other
manner expressing or implying an intention to bind the firm.
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23. Effect of admissions by a partner.—An admission or

representation made by a partner concerning the affairs of the firm is
evidence against the firm, if it made in the ordinary course of business.
24. Effect of notice to acting partner.—Notice to a partner who
habitually acts in the business of the firm of any matter relating to the
affairs of the firm operates as notice to the firm, except in the case of a
fraud on the firm committed by or with the consent of the partner.
NOTES ► Notice to a partner.—The general rule is that a notice to
a principal is notice to all his agents; and notice to an agent of matters
connected with his agency is notice to the principal. The words, ‘notice
to one partner is notice to all’, mean that a firm cannot, in its character
of principal, set up the ignorance of some of its members against the
knowledge of others of whose acts it claims the benefit or by whose
acts it is bound. It also means that when it is necessary to prove that a
firm had notice, all that need be done is to show that notice was given
to one of its members who habitually acts in the partnership. The
conditions necessary for the application of this section are as follows:
(i) That the partner is one who habitually acts in the business of
the firm.
(ii) That the notice to him relates to the affairs of the firm.
(iii) That no fraud is committed by or with the consent of that
partner.
► Binding effect of notice to partner.—Section 24 deals with the effect of
notice to a partner. Such notice may be binding if the following conditions are
satisfied:
(a) the notice must be given to a partner;
(b) the notice must be a notice of any matter relating to the affairs of the
firm;
(c) fraud should not have been committed with the consent of such partner
on the firm.
Section 24 is based on the principle that as a partner stands as an agent in
relation to the firm, a notice to the agent tantamounts to notice to the principal and
vice versa. As a general rule, notice to a principal is notice to all his agents; and
notice to an agent of matters connected with his agency is notice to his principal,
Ashutosh v. State of Rajasthan, (2005) 7 SCC 308.
► Liability of partner.—A partner is always liable for partnership debt unless
there is implied or express restriction. Creditor is at liberty to recover the debt
from any one or more of the partners, Ashutosh v. State of Rajasthan, (2005) 7
SCC 308.
25. Liability of a partner for acts of the firm.—Every partner is liable,
jointly with all the other partners and also severally, for all acts of the
firm done while he is a partner.
► Joint and several liability.—Each partner is personally liable for debt of
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the partnership firm, Ashutosh v. State of Rajasthan, (2005) 7 SCC 308.

Where a firm is deemed to be a person and thus a legal entity for a particular
purpose, [such as assessment of tax liability under Section 5(1) r/w Section 2(1)
(k) of the Karnataka Sales Tax Act] the principle enunciated in Section 25 of the
Partnership Act, regarding personal liability of partners for acts of the firm, would
not be applicable unless there is a statutory provision which specifies that partners
would be personally liable for lapses of the firm, Dena Bank v. Bhikhabhai
Prabhudas Parekh & Co., (2000) 5 SCC 694.
26. Liability of the firm for wrongful acts of a partner.—Where, by the
wrongful act or omission of a partner acting in the ordinary course of
the business of a firm, or with the authority of his partners, loss or
injury is caused to any third party, or any penalty is incurred, the firm
is liable therefor to the same extent as the partner.
27. Liability of firm for misapplication by partners.—Where—
(a) a partner acting within his apparent authority receives money
or property from third party and misapplies it, or
(b) a firm in the course of its business receives money or property
from a third party, and the money or property is misapplied by
any of the partners while it is in the custody of the firm,
the firm is liable to make good the loss.
28. Holding out.—(1) Any one who by words spoken or written or by
conduct represents himself, or knowingly permits himself to be
represented, to be a partner in a firm, is liable as a partner in that firm
to any one who has on the faith of any such representation given credit
to the firm, whether the person representing himself or represented to
be a partner does or does not know that the representation has reached
the person so giving credit.
(2) Where after a partner's death the business is continued in the
old firm name, the continued use of that name or of the deceased
partner's name as a part thereof shall not of itself make his legal
representative or his estate liable for any act of the firm done after his
death.
29. Rights of transferee of a partner's interest.—(1) A transfer by a
partner of his interest in the firm, either absolute or by mortgage, or by
the creation by him of a charge on such interest, does not entitle the
transferee, during the continuance of the firm, to interfere in the
conduct of the business, or to require accounts, or to inspect the books
of the firm, but entitles the transferee only to receive the share of
profits of the transferring partner, and the transferee shall accept the
account of profits agreed to by the partners.
(2) If the firm is dissolved or if the transferring partner ceases to be
a partner, the transferee is entitled against the remaining partners to
receive the share of the assets of the firm to which the transferring
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partner is entitled, and, for the purpose of ascertaining that share, to

an account as from the date of the dissolution.
► Transfer of property after dissolution.—Heirs and legal representatives
of deceased partner can transfer property to extent of their own share after
dissolution. Distinction exists between right of a partner to sell property during
subsistence of partnership and right of an erstwhile partner to sell property after
dissolution, M.V. Karunakaran v. Krishan, (2009) 17 SCC 334 : (2011) 2 SCC
(Civ) 397.
30. Minors admitted to the benefits of partnership.—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.
(2) 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 copy any of the accounts of the firm.
(3) Such minor's share is liable for the acts of the firm, but the
minor is not personally liable for any such act.
(4) Such minor may not sue the partners for an account or payment
of his share of the property or profits of the firm, save when severing
his connection with the firm, and in such case the amount of his share
shall be determined by a valuation made as far as possible in
accordance with the rules contained in Section 48:
Provided that all the partners acting together or any partner entitled
to dissolve the firm upon notice to other partners may elect in such suit
to dissolve the firm, and thereupon the Court shall proceed with the
suit as one for dissolution and for settling accounts between the
partners, and the amount of the share of the minor shall be determined
along with the shares of the partners.
(5) 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.
(6) 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 persons
asserting that fact.
(7) When such person becomes a partner,—
(a) his rights and liabilities as a minor continue up to the date on
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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 partnership, and
(b) his share in the property and profits of the firm shall be the
share to which he was entitled as a minor.
(8) Where such person elects not to become a partner,—
(a) his rights and liabilities shall continue to be those of a minor
under this section up to the date on which he gives public
notice,
(b) his share shall not be liable for any acts of the firm done after
the date of the notice, and
(c) he shall be entitled to sue the partners for his share of the
property and profits in accordance with sub-section (4).
(9) Nothing in sub-sections (7) and (8) shall affect the provisions of
Section 28.
Chapter V
INCOMING AND OUTGOING PARTNERS
31. Introduction of a partner.—(1) Subject to contract between the
partners and to the provisions of Section 30, no person shall be
introduced as partner into a firm without the consent of all the existing
partners.
(2) Subject to the provisions of Section 30, a person who is
introduced as a partner into a firm does not thereby become liable for
any act of the firm done before he became a partner.
32. Retirement of a partner.—(1) A partner may retire—
(a) with a 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.
(2) A retiring partner may be discharged from any liability to any
third party for acts of the firm done before his agreement by an
agreement made by him with such third party and the partners of the
reconstituted firm, and such agreement may be implied by a course of
dealing between such third party and the reconstituted firm after he
had knowledge of the retirement.
(3) Notwithstanding the retirement of a partner from a firm, he and
the partners continue to be liable as partners to third parties for any act
done by any of them which would have been an act of the firm if done
before the retirement, until public notice is given of the retirement:
Provided that a retired partner is not liable to any third party who
deals with firm without knowing that he was a partner.
(4) Notices under sub-section (3) may be given by the retired
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partner or by any partner of the reconstituted firm.

► Interpretation/Construction.—Use of the word “retire” in Section 32 of
the Act is confined to cases where a partner withdraws from a firm and the
remaining partners continue to carry on the business of the firm without
dissolution of partnership as between them. Where a partner withdraws from a
firm by dissolving it, it shall be dissolution and not retirement. Retirement of a
partner from a firm does not dissolve it, in other words, it does not determine
partnership inter se between all the partners. It only severs the partnership
between the retiring partner and continuing partners, leaving the partnership
amongst the latter unaffected and the firm continues with the changed constitution
comprising of the continuing partners. Section 32 provides for retirement of a
partner but there is no express provision in the Act for the separation of his share
and the intention appears to be that it would be determined by agreement between
the parties, Pamuru Vishnu Vinodh Reddy v. Chillakuru Chandrasekhara Reddy,
(2003) 3 SCC 445.
► Retirement of partners.—Partner can retire from ongoing partnership
without effecting dissolution of the firm, if the partnership agreement provides
therefor. Partner's right to retire, therefore, has to be ascertained from the terms
of the agreement. Whether the partnership was one at will and whether dissolution
was sought under Section 44, not relevant in this context. Vishnu Chandra v.
Chandrika Prasad Agarwal, (1983) 1 SCC 22, 25.
Retirement of a partner does not comprehend dissolution, Pamuru Vishnu
Vinodh Reddy v. Chillakuru Chandrasekhara Reddy, (2003) 3 SCC 445.
► Liability.—In the absence of agreement discharging the retiring partners,
they would remain liable towards their pre-retirement liability, Syndicate Bank v.
R.S.R. Engg. Works, (2003) 6 SCC 265.
► Discharge.—Retiring partner can be discharged by an agreement between
the retiring partner, third party and partners of reconstituted firm. Such an
agreement can also be implied from the course of dealing between the third party
and the reconstituted firm after retirement of a partner. So if a creditor takes a
new security for the debt from the continuing firm then it shows his intention to
deal with the continuing partner for debts owed by the firm. In the absence of
such agreement, express or implied, held, public notice is necessary, Syndicate
Bank v. R.S.R. Engg. Works, (2003) 6 SCC 265.
33. Expulsion of a partner.—(1) A partner may not be expelled from
a firm by any majority of the partners, save in the exercise in good faith
of powers conferred by contract between the partners.
(2) The provisions of sub-sections (2), (3) and (4) of Section 32
shall apply to an expelled partner as if he were a retired partner.
34. Insolvency of a partner.—(1) Where a partner in a firm is
adjudicated an 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.
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(2) Where under a contract between the partners the firm is not
dissolved by the adjudication of a partner as an insolvent, the estate of
a partner so adjudicated is not liable for any act of the firm and the firm
is not liable for any act of the insolvent, done after the date on which
the order of adjudication is made.
35. Liability of estate of deceased partner.—Where under a contract
between the partners the firm is not dissolved by the death of a
partner, the estate of a deceased partner is not liable for any act of the
firm done after his death.
36. Rights of outgoing partner to carry on competing business.—(1)
An outgoing partner may carry on a business competing with that of
the firm and he may advertise such business, but, subject to contract
to the contrary, he may not—
(a) use the firm name,
(b) represent himself as carrying on the business of the firm, or
(c) solicit the custom of persons who were dealing with the firm
before he ceased to be a partner.
Agreements in restraint of trade.—(2) A partner may make an
agreement with his partners that on ceasing to be a partner he will not
carry on a business similar to that of the firm within a specified period
or within specified local limits; and notwithstanding anything contained
in Section 27 of the Indian Contract Act, 1872 (9 of 1872), such
agreement shall be valid if the restrictions imposed are reasonable.
37. Right of outgoing partner in certain cases to share subsequent
profits.—Where any member of a firm has died or otherwise ceased to
be a partner, and the surviving or continuing partners carry on the
business of the firm with the property of the firm without any final
settlement of accounts as between them and the outgoing partner or
his estate, then, in the absence of a contract to the contrary, the
outgoing partner or his estate is entitled at the option of himself or his
representatives to such share of the profits made since he ceased to be
a partner as may be attributable to the use of his share of the property
of the firm or to interest at the rate of six per cent per annum on the
amount of his share in the property of the firm:
Provided that where by contract between the partners an option is
given to surviving or continuing partners to purchase the interest of a
deceased or outgoing partner, and that option is duly exercised, the
estate of the deceased partner, or the outgoing partner or his estate, as
the case may be, is not entitled to any further or other share of profits;
but if any partner assuming to act in exercise of the option does not in
all material respects comply with the terms thereof, he is liable to
account under the foregoing provisions of this section.
38. Revocation of continuing guarantee by change in firm.—A
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continuing guarantee given to a firm, or to a third party in respect of

the transactions of the firm, is, in the absence of agreement to the
contrary, revoked as to future transactions from the date of any change
in the constitution of the firm.
Chapter VI
DISSOLUTION OF A FIRM
39. Dissolution of a firm.—The dissolution of partnership between all
the partners of a firm is called the “dissolution of the firm”.
► Applicability.—Suit for dissolution of partnership consisting of eight
members is maintainable under Partnership Act and Companies Act is not
applicable, Vasantrao v. Shyamrao, (1977) 4 SCC 9.
► Grounds for dissolution.—Breach of agreement and conduct destructive
of mutual confidence, gives rise to a ground for dissolution of a partnership, V.H.
Patel & Co. v. Hirubhai Himabhai Patel, (2000) 4 SCC 368.
► Discharge of liabilities.—Mere execution of said deed did not discharge
the parties thereto from their rights and liabilities. The rights and liabilities of the
partners in respect of the partnership property would be discharged only when the
firm is finally wound up and the properties of the firm are distributed, Shreedhar
Govind Kamerkar v. Yesahwant Govind Kamerkar, (2006) 13 SCC 481.
40. Dissolution by agreement.—A firm may be dissolved with the
consent of all the partners or in accordance with a contract between the
partners.
► Presumption of dissolution.—Fact that one of the partners retired from
partnership with the consent of other partners, sufficient to lead to the conclusion
that the firm was dissolved. Mir Abdul Khaliq v. Abdul Gaffar Sheriff, (1985) 2
SCC 14.
► Dissolution and reconstitution, difference.—‘Dissolution’ and
‘reconstitution’ are two distinct legal concepts, for, a dissolution brings the
partnership to an end while a reconstitution means the continuation of the
partnership under altered circumstances but in law there would be no difficulty in
a dissolution of a firm being followed by the constitution of a new firm by some of
the erstwhile partners who may take over the assets and liabilities of the dissolved
firm. C.I.T. v. Pigot Champan & Co., (1982) 2 SCC 330 : 1982 SCC (Tax) 97.
41. Compulsory dissolution.—A firm is dissolved—
(a) 4 [* * *]
(b) by the happening of any event which makes it unlawful for the
business of the firm to be carried on or for the partners to carry
it on in partnership:
Provided that, where more than one separate adventure or
undertaking is carried on by the firm, the illegality of one or more shall
not of itself cause the dissolution of the firm in respect of its lawful
adventures and undertakings.
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NOTES ► Compulsory dissolution by insolvency of partners.—

This section enumerates the events the occurrence of which
compulsorily dissolved when all its partners (or all its partners but one)
are adjudicated as insolvents even if there be a contract to contrary. A
firm is also dissolved on the adjudication of even one of its members as
insolvent unless there is a contract to the contrary.
42. Dissolution on the happening of certain contingencies.—Subject
to contract between the partners a firm is dissolved—
(a) if constituted for a fixed term, by the expiry of the term;
(b) if constituted to carry out one or more adventures or
undertakings, by the completion thereof;
(c) by the death of a partner; and
(d) by the adjudication of a partner as an insolvent.
► Applicability.—Clause 14 in partnership deed specifically providing for: (i)
continuance of partnership on death of a partner, and (ii) manner of calculating
dues to be paid to legal heirs of deceased partner on exercise of option by
remaining partners to purchase share of deceased partner by giving notice with
respect to it within 3 months of death of partner to his legal heirs. Having regard to
such clause in partnership deed, held, Section 42(c) and provisions under former
part of Section 37 (i.e. other than the proviso to Section 37) of Partnership Act,
1932 had no application in case of Death of one of the four partners of firm
concerned, Kodendera K. Uthaiah v. P.M. Medappa, (2017) 16 SCC 331.
► Death of partners, effect.—Dissolution of partnership firm on account of
death of one of the partners is subject to contract entered into by parties
concerned. However, where there are only two partners constituting partnership
firm, on death of one of them, the firm is deemed to be dissolved despite existence
of a clause which says otherwise, Mohd. Laiquiddin v. Kamala Devi Misra, (2010)
2 SCC 407 : (2010) 1 SCC (Civ) 430.
► Arbitration clause.—The arbitration clause continues to survive even after
dissolution of firm on the death of a partner, Ravi Prakash Goel v. Chandra
Prakash Goel, (2008) 13 SCC 667.
43. Dissolution by notice of partnership at will.—Where the
partnership is at will, the firm may be dissolved by any partner giving
notice in writing to all the other partners of his intention to dissolve the
firm.
(2) The firm is dissolved as from the date mentioned in the notice as
the date of dissolution or, if no date is so mentioned, as from the date
of the communication of the notice.
44. Dissolution by the Court.—At the suit of a partner, the Court may
dissolve a firm on any of following grounds, namely:—
(a) that a partner has become of unsound mind, in which case the
suit may be brought as well by the next friend of the partner
who has become of unsound mind as by any other partner;
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(b) that a partner, other than the partner suing, has become in
any way permanently incapable of performing his duties as
partner;
(c) that a partner, other than the partner suing, is guilty of
conduct which is likely to affect prejudicially the carrying on of
the business, regard being had to the nature of the business;
(d) that a partner, other than the partner suing, wilfully or
persistently commits breach of agreements relating to the
management of the affairs of the firm or the conduct of its
business, or otherwise so conducts himself in matters relating
to the business that it is not reasonably practicable for the
other partners to carry on the business in partnership with
him;
(e) that a partner, other than the partner, suing, has in any way
transferred the whole of his interest in the firm to a third party,
or has allowed his share to be charged under the provisions of
Rule 49 of Order XXI of the First Schedule to the Code of Civil
Procedure, 1908 (5 of 1908), or has allowed it to be sold in the
recovery of arrears of land revenue or of any dues recoverable
as arrears of land revenue due by the partner;
(f) that the business of the firm cannot be carried on save at a
loss; or
(g) on any other ground which renders it just and equitable that
the firm should be dissolved.
45. Liability for acts of partner done after dissolution.—(1)
Notwithstanding the dissolution of a firm, the partners continue to be
liable as such to third parties for any act done by any of them which
would have been an act of the firm if done before the dissolution, until
public notice is given of the dissolution:
Provided that the estate of a partner who dies, or who is adjudicated
an insolvent, or of a partner who not having been known to the person
dealing with the firm to be a partner, retires from the firm, is not liable
under this section for acts done after the date on which he ceases to be
a partner.
(2) Notices under sub-section (1) may be given by any partner.
46. Right of partners to have business wound up after dissolution.—
On the dissolution of a firm every partner or his representative is
entitled, as against all the other partners or their representatives, to
have the property of the firm applied in payment of the debts and
liabilities of the firm, and to have the surplus distributed among the
partners or their representatives according to their rights.
► Sections 46 and 48, interpretation.—The provisions of Section 48 are the
culmination of the provisions of Section 46. Therefore, both the sections have to
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be harmoniously read together, Ravi Prakash Goel v. Chandra Prakash Goel,

(2008) 13 SCC 667.
47. Continuing authority of partners for purposes of winding up.—
After the dissolution of a firm the authority of each partner to bind the
firm, and the other mutual rights and obligations of the partners,
continue notwithstanding the dissolution, so far as may be necessary to
wind up the affairs of the firm and to complete transactions begun but
unfinished at the time of the dissolution, but not otherwise:
Provided that the firm is in no case bound by the acts of a partner
who has been adjudicated insolvent; but this proviso does not affect
the liability of any person who has after the adjudication represented
himself or knowingly permitted himself to be represented as a partner
of the insolvent.
48. Mode of settlement of accounts between partners.—In settling
the accounts of a firm after dissolution, the following rules shall,
subject to agreement by the partners, be observed:
(a) Losses, including deficiencies of capital, shall be paid first out
of profits, next out of capital, and, lastly, if necessary, by the
partners individually in the proportions in which they were
entitled to share profits.
(b) The assets of the firm, including any sums contributed by the
partners to make up deficiencies of capital, shall be applied in
the following manner and order—
(i) in paying the debts of the firm to third parties;
(ii) in paying to each partner rateably what is due to him from
the firm for advances as distinguished from capital;
(iii) in paying to each partner rateably what is due to him on
account of capital; and
(iv) the residue, if any, shall be divided among the partners in
the proportions in which they were entitled to share profits.
49. Payment of firm debts and of separate debts.—Where there are
joint debts due from the firm, and also separate debts due from any
partner, the property of the firm shall be applied in the first instance in
payment of the debts of the firm, and, if there is any surplus, then the
share of each partner shall be applied in payment of his separate debts
or paid to him. The separate property of any partner shall be applied
first in the payment of his separate debts, and the surplus (if any) in
the payment of the debts of the firm.
50. Personal profits earned after dissolution.—Subject to contract
between the partners, the provisions of clause (a) of Section 16 shall
apply to transactions by any surviving partner or by the representatives
of a deceased partner, undertaken after the firm is dissolved on account
of the death of a partner and before its affairs have been completely
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wound up:
Provided that where any partner or his representative has bought the
goodwill of the firm, nothing in this section shall affect his right to use
the firm name.
NOTES ► Section 16 of this Act provides that every partner must, as
an agent of the firm, account to the firm for every benefit derived by
him from any transaction concerning the partnership or from any use
by him of property of the firm name or business connection. This
section (i.e. Section 50) merely extends the applications of this rule to
the affairs of the partnership even after the dissolution of the firm till
they have been finally wound up. In Clements v. Hall, where private
profits were earned from a renewal of the lease by the surviving
partner, it was held that the representatives of the deceased partner
were entitled to share such profits. Where a partner retains assets of
the firm for his own benefit after dissolution he is liable not only to
account for the same but also to pay interest.
51. Return of premium on premature dissolution.—Where a partner
has paid a premium on entering into partnership for a fixed term and
the firm is dissolved before the expiration of that term otherwise than
by the death of a partner, he shall be entitled to repayment of the
premium or of such part thereof as may be reasonable, regard being
had to the terms upon which he became a partner and to the length of
time during which he was a partner, unless—
(a) the dissolution is mainly due to his own misconduct, or
(b) the dissolution is in pursuance of an agreement containing no
provision for the return of the premium or any part of it.
52. Rights where partnership contract is rescinded for fraud or
misrepresentation.—Where a contract creating partnership is rescinded
on the ground of the fraud or misrepresentation of any of the parties
thereto, the party entitled to rescind is, without prejudice to any other
right, entitled—
(a) to a lien on, or a right of retention of, the surplus or the assets
of the firm remaining after the debts of the firm have been
paid, for any sum paid by him for the purchase of a share in
the firm and for any capital contributed by him;
(b) to rank as a creditor of the firm in respect of any payment
made by him towards the debt of the firm; and
(c) to be indemnified by the partner or partners guilty of the fraud
or misrepresentation against all the debts of the firm.
53. Right to restrain from use of firm name or firm property.—After a
firm is dissolved, every partner or his representative may in the
absence of a contract between the partners to the contrary, restrain any
other partner or his representative from carrying on a similar business
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in the firm name or from using any of the property of the firm for his
own benefit, until the affairs of the firm have been completely wound
up:
Provided that where any partner or his representative has bought the
goodwill of the firm, nothing in this section shall affect his right to use
the firm name.
54. Agreements in restraint of trade.—Partners may, upon or in
anticipation of the dissolution of the firm, make an agreement that
some or all of them will not carry on a business similar to that of the
firm within a specified period or within specified local limits; and
notwithstanding anything contained in Section 27 of the Indian
Contract Act, 1872 (9 of 1872), such agreement shall be valid if the
restrictions imposed are reasonable.
► Negative, restrictive covenant.—Negative covenants in agreement cannot
be read in conjunction with provisions of the 1932 Act, FI Smidth (P) Ltd. v.
Secan Invescast (India) Pvt. Ltd., (2013) 1 CTC 886 (Mad).
55. Sale of goodwill after dissolution.—(1) In settling the accounts of
a firm after dissolution, the goodwill shall, subject to contract between
the partners, be included in the assets, and it may be sold either
separately or along with other property of the firm.
Rights of buyer and seller of goodwill.—(2) Where the goodwill
of a firm is sold after dissolution, a partner may carry on a business
competing with that of the buyer and he may advertise such business,
but, subject to agreement between him and the buyer, he may not—
(a) use the firm name,
(b) represent himself as carrying on the business of the firm, or
(c) solicit the custom of persons who were dealing with the firm
before its dissolution.
Agreement in restraint of trade.—(3) Any partner may, upon the
sale of the goodwill of a firm, make an agreement with the buyer that
such partner will not carry on any business similar to that of the firm
within a specified period or within specified local limits, and,
notwithstanding anything contained in Section 27 of the Indian
Contract Act, 1872 (9 of 1872), such agreement shall be valid if the
restrictions imposed are reasonable.
► Goodwill, nature and scope.—“Goodwill” may be the whole advantage
belonging to the firm, its reputation as also connection thereof. It, thus, means that
every affirmative advantage as contrasted with negative advantage that has been
acquired in carrying on the business whether connected with the premises of
business or its name or style, everything connected with or carrying the benefit of
the business. The goodwill is generally considered to be an asset of the
partnership, Ramnik Vallabhdas Madhvani v. Taraben Pravinlal Madhvani, (2004)
1 SCC 497.
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► Goodwill, meaning.—The term “goodwill” signifies the value of the

business in the hands of a successor, so far as increased by the continuity of the
undertaking being preserved in the shape of the right to use the old name and
otherwise. It is something more than a mere chance or probability of old
customers maintaining their connection, though this is a material part of the
practical fruits.
Chapter VII
REGISTRATION OF FIRMS
56. Power to exempt from application of the Chapter.—The 5 [State
Government] of any 6 [State] may, by notification in the Official Gazette,
direct that the provisions of this Chapter shall not apply to 7 [the State]
or to any part thereof specified in the notification.
57. Appointment of Registrars.—(1) The 8 [State Government] may
appoint Registrar of Firms for the purposes of this Act, and may define
the areas within which they shall exercise their powers and perform
their duties.
(2) Every Registrar shall be deemed to be a public servant within the
meaning of Section 21 of the Indian Penal Code (45 of 1860).
STATE AMENDMENTS
MAHARASHTRA.—In its application to the State of Maharashtra, for
Section 57 of the principal Act, the following section shall be
substituted, namely:—
“57. Appointment of Registrar of Firms and Deputy and Assistant
Registrars of Firms.—(1) The State Government may, by notification
in the Official Gazette, appoint a Registrar of Firms who shall
exercise, perform and discharge the powers, functions and duties of
the Registrar under this Act throughout the State of Maharashtra.
(2) The State Government may likewise appoint one or more
Deputy Registrars of Firms and Assistant Registrars of Firms who
shall exercise, perform and discharge all or such of the powers,
functions and duties of the Registrar and in such areas as the State
Government may, by notification in the Official Gazette, specify.
(3) The officers appointed under sub-section (1) and sub-section
(2) shall be deemed to be public servants within the meaning of
Section 21 of the Indian Penal Code.”.—Mah. Act 29 of 1984, S. 5
(w.e.f. 1-1-1985).
UTTAR PRADESH.—In its application to the State of Uttar Pradesh, for
Section 57 the following section shall be substituted, namely:—
“57. Appointment of Registrar, Deputy Registrars and Assistant
Registrars.—(1) The State Government may, by notification, appoint
a Registrar of Firms who shall exercise, perform and discharge the
powers, functions and duties of the Registrar under this Act
throughout Uttar Pradesh.
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(2) The State Government may likewise appoint one or more

Deputy Registrars of Firms and Assistant Registrars of Firms who
exercise, perform and discharge all or such of the powers, functions
and duties of the Registrar and in such areas as are notified in the
notification.
(3) The officers appointed under sub-section (1) or sub-section
(2) shall be deemed to be public servants within the meaning of
Section 21 of the Indian Penal Code.” [Vide U.P. Act 34 of 1979, S.
2, w.e.f. 22-10-1979].
58. Application for registration.—(1) The registration of a firm may
be effected at any time by sending by post or delivering to the
Registrar 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—
(a) the firm name,
(b) the place or principal place of business of the firm,
(c) the names of any other places where the firm carries on
business,
(d) the date when each partner joined the firm,
(e) the names in full and permanent addresses of the partners,
and
(f) the duration of the firm.
The statement shall be signed by all the partners, or by their agents
specially authorised in this behalf.
(2) Each person signing the statement shall also verify it in the
manner prescribed.
(3) A firm name shall not contain any of the following words,
namely:—
“Crown”, “Emperor”, “Empress”, “Empire”, “Imperial”, “King”,
“Queen”, “Royal”, or words expressing or implying the sanction,
approval or patronage of 9 [Government], except 10 [when the State
Government] signifies 11 [its] consent to the use of such words as part
of the firm name by order in writing 12 [* * *].
STATE AMENDMENTS
and Diu, in Section 58,—
(i) for sub-section (3), the following shall be substituted, namely:—
“(3) No firm shall be registered by a name which in the opinion of the
Registrar is undesirable.”;
(ii) after sub-section (3), insert the following:—
“(4) Any person aggrieved by an order of the Registrar under sub-
section (3) may, within 30 days from the date of communication of
-----------------------------------------------------------------------------------------------------------------------------------------------------------
such order, appeal to the State Government whose decision shall be

final.
(5) A firm's name shall not contain any of the following words, namely,
‘Union, State, President, Republic, Governor’, or words expressing or
implying sanction, approval or patronage of Government unless the
Government of Goa, Daman and Diu signifies, by order in writing, its
consent to the use of such words as part of the firm's name:
Provided that nothing in this sub-section shall apply to any firm
carrying on business under any such name, before the date of the
commencement of the Indian Partnership (Goa, Daman and Diu
Amendment) Act, 1966.
(6) Any person who contravenes the provisions of sub-section (5) shall
be punishable with a fine which may extend to five hundred rupees.”—
Goa, Daman and Diu Act 6 of 1966, Section 3 (22-8-1966).
(a) in sub-section (1),—
(i) for the words “The registration of a firm” the words, brackets,
figure and letter “Subject to the provisions of sub-section (1-
A), the registration of a firm” shall be substituted;
(ii) the words “at any time” shall be deleted;
(iii) after the words “prescribed fee” the words “and a true copy of
the deed of partnership” shall be inserted;
(iv) after clause (a), the following clause shall be inserted,
namely:—
(aa) the nature of business of the firm;”;
(b) after sub-section (1), the following sub-section shall be inserted,
namely:—
“(1-A) The statement under sub-section shall be sent or delivered to
the Registrar within a period of one year from the date of constitution of
the firm:
Provided that in the case of any firm carrying on business on or before
the date of commencement†13 of the Indian Partnership (Maharashtra
Amendment) Act, 1984 (Mah. 29 of 1984), such statement shall be
sent or delivered to the Registrar within a period of one year from such
date.”;
(c) for sub-section (3), the following sub-sections shall be
“(3) A firm shall not have any of the names of emblems specified in the
Schedule to the Emblems and Names (Prevention of Improper Use) Act,
1950 (12 of 1950), or any colourable limitation thereof, unless
permitted so to do under that Act, or any name which is likely to be
associated by the public with the name of any other firm on account of
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similarity, or any name which, in the opinion of the Registrar, for

reasons to be recorded in writing, is undesirable:
registered under any such name before the date of the
commencement† of the Indian Partnership (Maharashtra Amendment)
Act, 1984 (Mah. 29 of 1984).
(4)Any person aggrieved by an order of the Registrar under sub-section
(3) may, within 30 days from the date of communication of such order,
appeal to the officer not below the rank of Deputy Secretary to
Government authorised by the State Government in this behalf, in such
manner, and on payment of such fee, as may be prescribed. On receipt
of any such appeal, the authorised officer shall, after giving an
opportunity of being heard to the appellant, decide the appeal, and his
decision shall be final.”—Mah. Act 29 of 1984, S. 6 (w.e.f. 1-1-1985).
PONDICHERRY.—In its application to the State of Pondicherry, for sub-
section (3), substitute the following sub-sections:—
“(3) The Registrar shall refuse to register—
(a) a firm under sub-section (1), or
(b) an alteration of the firm name,
if the proposed name or alteration of the firm name is identical
with the name by which any other existing firm has been registered
or in the opinion of the Registrar so nearly resembles such other
name as to be likely to deceive or mislead the public or the members
of either firm.
(4) Any person who is aggrieved by an order of Registrar under
sub-section (3) may file an appeal before such person or authority,
in such manner, within such time and on payment of such fees as
may be prescribed. The appeal shall be heard and decided in such
manner as may be prescribed.”—Pondi. Act 8 of 1969, Section 2 (1-1
-1970).
RAJASTHAN.—In its application to the State of Rajasthan, for sub-
section (3) of Section 58 substitute the following sub-sections:—
“(3) No firm shall be registered by a name which, in the opinion of
the State Government, is undesirable.
(4) Except with the previous sanction, in writing, of the State
Government, no firm shall be registered by a name which contains
any of the following words, namely:—
(a) ‘Union’, ‘State’, ‘President’, ‘Republic’ or any word expressing or
implying the sanction, approval or patronage of the Central or any
State Government; and
(b) ‘Municipal’, ‘Chartered’ or any word which suggests or is
calculated to suggest connection with any municipality or local
authority:
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registered before the date of commencement of the Indian
Partnership (Rajasthan Amendment) Act, 1971.”—Raj. Act 10 of
1971, Section 2 (15-9-1971).
TAMIL NADU.—In its application to the State of Tamil Nadu, for sub-
section (3) of Section 58 of the Indian Partnership Act, 1932 (Central
Act 9 of 1932) (hereinafter referred to as the Principal Act), the
following sub-sections shall be substituted, namely:—
“(3) No firm shall be registered by a name which, in the opinion of
the State Government is undesirable.
(4) Except with the previous sanction in writing of the State
Government, no firm shall be registered by a name which contains
any of the following words, namely:—
(a) ‘Union’, ‘State’, ‘President’, ‘Republic’ or any word expressing or
implying the sanction, approval or patronage of the Central or any
State Government; and
(b) ‘Municipal’, ‘Chartered’, or any word which suggests or is
calculated to suggest connection with any municipality or other
local authority:
registered before the date of commencement of the Indian
Partnership (Madras Amendment) Act, 1965”.—[Vide Madras Act 35
of 1965, S. 2, w.e.f. April 1, 1966].
UTTARAKHAND.—In its application to the State of Uttarakhand, Section
58 shall be substituted as follows, namely—
“58. Application for registration.—(1) The registration of a firm
may be effected at any time by uploading on the website following
statement in the prescribed online form and accompanied with
prescribed fees to the Registrar of the area in which any place of
business of the firm is situated or proposed to be situated, stating—
(a) the firm name,
(b) the place or principal place of business of the firm,
(c) the names of any other places where the firm carries on
business,
(d) the date when each partner joined the firm,
(e) the names in full and permanent addresses of the partners, and
(f) the duration of the firm.
The statement shall be digitally signed by all the partners or by
their agents specially authorised in this behalf.
(2) The applicant, signing the statement shall also upload to the
website, verifying the statement recorded in the online format
mentioned in sub-section (1), verifying it in the affidavit certified by
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the Notary on the non-judicial stamp paper of Rs 10.

(3) The desired enclosure shall also be uploaded on website, by
the applicant.
(4) A firm name shall not contain the word Union, State, Land
Mortgage, Land development, Cooperative, Gandhi, Reserve Bank or
any of the 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.
(5) The prescribed fee of registration shall be submitted online
after the online approval given by the Registrar.
(6) After submitting the prescribed registration fee the digitally
signed registration certificate may be downloaded from the website
by the applicant.” [Vide Uttarakhand Act No. 5 of 2019, S. 2, dated 5
-3-2019.]
NOTES ► Mode in which registration may be effected.—Under
this section registration may be effected only of a firm which is in
existence. The registration of a firm which has been dissolved is not
contemplated by this Act. For registration of a firm together with the
prescribed fee a statement on prescribed form should be submitted.
The statement should deal with the firm name, the place or principal
place of business of the firm, the names of any other place 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. Such statement should be signed by all the
partners or by their authorised agents. Substantial compliance with the
provisions of the Act would be enough.14
59. Registration.—When the Registrar is satisfied that the provisions
of Section 58 have been duly complied with, he shall record an entry of
the statement in a register called the Register of Firms, and shall file
the statement.
STATE AMENDMENTS
MAHARASHTRA.—In its application to the State of Maharashtra, Section
59 of the principal Act shall be renumbered as sub-section (1) of that
section, and,—
(a) in sub-section (1) as so renumbered, after the words “file the
statement.”, the words “On the date such entry is recorded and
such statement is filed, the firm shall be deemed to be
registered,” shall be added;
(b) after sub-section (1) as so renumbered, the following sub-
section shall be added, namely:—
“(2) The firm, which is registered, shall use the brackets and word
“(Registered)” immediately after its name”.—Mah. Act 29 of 1984, S. 7
-----------------------------------------------------------------------------------------------------------------------------------------------------------
(w.e.f. 1-1-1985).
Sections 59-A, 59A-1 and 59-B
ANDHRA PRADESH.—In its application to the State of Andhra Pradesh,
after Section 59 of the Indian Partnership Act, 1932 the following
section shall be inserted, namely:—
“59-A. (1) Notwithstanding anything in the Chapter, the Registrar
of Firms, Andhra Pradesh, may, by order in writing, amend the
register by deleting therefrom the entries relating, to any firm,
whose place of business has, by virtue of the provisions contained in
the State Reorganisation Act, 1956 and the Andhra Pradesh, and
Madras (Alteration of Boundaries) Act, 1959, ceased to be in the
State of Andhra Pradesh, the Registrar may likewise amend the
register by adding thereto the entries relating to any firm included in
the register of another State but, whose place of business has, by
reason of the said provisions, become included in the State of
Andhra Pradesh:
Provided that the Registrar shall, before passing an order under
this sub-section, give to the firm concerned an opportunity of
making its representation, if any.
(2) The Registrar shall cease to perform the functions of a
Registrar under the Act in respect of any firm the entries relating to
which are deleted as aforesaid and shall perform the functions of a
Registrar under the Act in respect of any firm the entries relating to
which are added as aforesaid.
(3) Any person aggrieved by an order under sub-section (1) may
appeal to such authority and within such time as may be specified in
this behalf by an order made by the Government of Andhra Pradesh
and the authority shall pass such order on the appeal as it thinks fit.
(4) An order of the Registrar under sub-section (1) or where an
appeal has been preferred against it under sub-section (3) the order
of the appellate authority, shall be final.”—(A.P. Act 7 of 1965, S. 2,
w.e.f. March 10, 1965).
KERALA.—In its application to the State of Kerala, after Section 59,
insert—
“59-A. Amendment of register.—(1) Notwithstanding anything
contained in this Chapter, the Registrar of Firms appointed by the
State of Kerala may, by order in writing, amend the register by
deleting therefrom the entries relating to any firm whose place of
business has, by reason of the reorganisation of States ceased to be
situated in the State of Kerala.
The Registrar may likewise amend the register by adding thereto
the entries relating to any firm included in the register of the State
of Madras but whose place of business has, by reason of the said
-----------------------------------------------------------------------------------------------------------------------------------------------------------
reorganisation of States, become part of the State of Kerala:

Provided that the Registrar shall, before passing an order, make
such inquiry as he deems necessary.
(2) After such amendment the Registrar shall cease to perform
the functions of a Registrar in respect of any firm the entries relating
to which have been deleted as aforesaid and shall perform all the
functions of a Registrar in respect of all firms the entries relating to
this behalf by the State Government of Kerala and such authority
shall pass such order on the appeal as it thinks fit.
(4) An order of the Registrar under sub-section (1), or where an
appeal has been preferred against it under sub-section (3), the order
of the appellate authority, shall be final.
(5) The provisions of this section shall cease to be in force from
such date as the State Government of Kerala may, by notification in
the Gazette, appoint.”—Kerala A.L.O., 1957 (30-10-1957).
MADHYA PRADESH.—In its application to the State of Madhya Pradesh,
after Section 59, insert—
“59-A. (1) Notwithstanding anything contained in the Chapter,
the Registrar of Firms appointed by the State of Madhya Pradesh
may, by order in writing, amend the register by deleting therefrom
the entries relating to any firm, whose place of business has, by
reason of the reorganisation of States, ceased to be situated in the
State of Madhya Pradesh.
the entries relating to any firm included in the register of another
State but whose place of business has, by reason of the said
reorganisation of States, become part of the State of Madhya
Pradesh:
Provided that the Registrar shall, before passing an order, make
this behalf by the State Government of Madhya Pradesh, and such
authority shall pass such order on the appeal as it thinks fit.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
of the appellate authority shall be final.
such date as the State Government of Madhya Pradesh may, by
notification in the State Gazette, appoint.”—M.P., Adaptation of Laws
(State and Concurrent Subjects) (Third Amendment) Order, 1957
(with retrospective effect from 1-11-1956).
MAHARASHTRA.—In its application to the State of Maharashtra—
(1) After Section 59, insert—
“59-A. Deletion and addition of entries relating to certain firms, by
reason of re-organisation of States.—(1) Notwithstanding anything
contained in this Chapter, a Registrar of Firms appointed for any area
by the Government of Bombay may, by order in writing, amend the
Register of Firms maintained by him deleting therefrom the entries
relating to any firm, whose place of business has, by reason of the
reorganisation of States under the States Reorganisation Act, 1956,
ceased to be situated in the State of Bombay. The Registrar may
likewise and without any charge or fee therefor amend the register
by adding thereto the entries relating to any firm included in the
register of another State but whose place of business has, by reason
of such reorganisation, become part of the area within his
jurisdiction in the State of Bombay:
Provided that the Registrar shall, before passing any order under
this sub-section, make such inquiry as he deems necessary and give
notice to the firm and the Registrar of the State concerned.
(2) After such amendment, the Registrar shall cease to perform
functions of a Registrar in respect of any firm the entries relating to
appeal to such authority, and within such time, as may be specified
in this behalf by Government of Bombay by notification in the Official
Gazette; and such authority shall pass such order on the appeal as it
thinks fit.
(4) An order of a Registrar under sub-section (1), or when an
of the appellate authority shall be final.
such date as the Government of Bombay may, by notification in the
Official Gazette, appoint.”—Central Acts on State and Concurrent
Subjects (Bombay Adaptation) (Amendment) Order, 1957 (17-10-
1957).
-----------------------------------------------------------------------------------------------------------------------------------------------------------
(2) After Section 59 of the Principal Act, the following section shall
be inserted, namely:—
“59A-1. Late Registration on payment of penalty.—If the
statement in respect of any firm is not sent or delivered to the
Registrar within the time specified in sub-section (1-A) of Section
58, then the firm may be registered on payment, to the Registrar, of
a penalty of 15 [one thousand rupees] per year of delay or a part
thereof.”—Mah. Act 29 of 1984, S. 8 (w.e.f. 1-1-1985).
(See Section 59-B below)
MYSORE.—In Section 59-A as introduced by Madras Adaptation of
Laws (Central Acts) Order, 1957, in sub-section (1), for the words ‘by
reason of the reorganisation of State’, the words, brackets etc., ‘by
reason of the addition of the Bellary district to the State of Mysore
under the Andhra State Act, 1953 (Central Act 30 of 1953), or of the
reorganisation of States under the States Reorganisation Act, 1956
(Central Act 37 of 1956)’ shall be substituted.—Mys. Act 19 of 1961,
Section 2 (14-9-1916).
TAMIL NADU.—In its application to the State of Tamil Nadu, after
Section 59, insert—
“59-A. Special provision for amending the register.—(1)
Notwithstanding anything contained in this Chapter, the Registrar of
Firms appointed by the State Government of Madras may, by order
in writing, amend the register by deleting therefrom the entries
relating to any firm, the place of business of which has, [by reason of
the formation of the State of Andhra or of the addition of the Bellary
district to the State of Mysore under the Andhra State Act, 1953 or
the reorganisation of States under the States Reorganisation Act,
1956,] or of the alteration of boundaries under the Andhra Pradesh
and Madras (Alteration of Boundaries) Act, 1959, ceased to be
located in the State of Madras.
the entries relating to any firm included in the register of another
State but the place of business of which has, by reason of the said re
-organization of States or of the said alteration of boundaries,
become part of the State of Madras:
Provided that the Registrar, [may,] before passing an order, make
-----------------------------------------------------------------------------------------------------------------------------------------------------------

this behalf by the State Government of Madras; and such authority
shall pass such order on the appeal as it thinks fit.
appellate appeal has been preferred against it under sub-section (3),
the order of the authority shall be final.
(5) The provisions of the section shall cease to be in force from
such date as the State Government of Madras, by notification in the
Official Gazette, appoint.” Madras Act 21 of 1959 and Madras
Additional Territories A.L.O., 1961 (w.e.f. 1-4-1960).
Section 59-B
GUJARAT.—In its application to the State of Gujarat, after Section 59-
A, insert the following:—
“59-B. Deletion of entries relating to certain firms by reason of
reorganisation of Bombay State.—(1) Notwithstanding anything
contained in the Chapter, a Registrar of Firms appointed for any area
by the Government of Gujarat may, by order in writing, amend the
Register of Firms maintained by him by deleting therefrom the
entries relating to any firm whose place of business has, by reason of
the reorganisation of the State of Bombay, by the Bombay
Reorganisation Act, 1960, ceased to be situated in the State of
Gujarat:
Provided that the Registrar shall, before passing any order under
this sub-section, make such inquiry as he deems necessary and give
notice to the firm and the Registrar of the State of Maharashtra.
to which have been deleted as aforesaid.
this behalf by the Government of Gujarat, by notification in the
Official Gazette; and such authority shall pass such order on the
appeal as it thinks fit.
(4) An order of a Registrar under sub-section (1), or where an
of the appellate authority shall be final.”—Gujarat Adaptation of Laws
(State and Concurrent Subjects) (Eighth Amendment) Order, 1961
w.e.f. 1-5-1960).”
MAHARASHTRA.—In its application to the State of Maharashtra, after
Section 59-A, insert the following:—
59-B. Same as in Gujarat, except for the corresponding references
to Maharashtra—Central Acts on State and Concurrent Subjects
(Maharashtra Adaptation) (Amendment) Order, 1961 w.e.f. 1-5-
-----------------------------------------------------------------------------------------------------------------------------------------------------------
1960.
60. Recording of alterations in firm name and principal place of
business.—(1) When an alteration is made in the firm name or in the
location of the principal place of business of a registered firm, a
statement may be sent to the Registrar accompanied by the prescribed
fee, specifying the alteration and signed and verified in the manner
required under Section 58.
(2) When the Registrar is satisfied that the provisions of sub-section
(1) have been duly complied with, he shall amend the entry relating to
the firm in the Register of Firms in accordance with the statement, and
shall file it along with the statement relating to the firm filed under
Section 59.
STATE AMENDMENTS
Section 60 of the principal Act—
(a) for sub-section (1), the following sub-section shall be
“(1) When an alteration is made in the firm name or in the nature of
business of a firm or in the location of the principal place of business of
a registered firm, a statement shall be sent to the Registrar, within a
period of 90 days from the date of making such alteration, accompanied
by the prescribed fee, specifying the alteration and signed and verified
in the manner required under Section 58.”;
(b) in the marginal note, for the words “firm name and” the words
“firm name, nature of business and” shall be substituted.—Mah.
Act 29 of 1984, S. 9 (w.e.f. 1-1-1985).
61. Noting of closing and opening of branches.—When a registered
firm discontinues business at any place or begins to carry on business
at any place, such place not being its principal place of business, any
partner or agent of the firm may send intimation thereof to the
Registrar, who shall make a note of such intimation in the entry relating
to the firm in the Register of Firms, and shall file the intimation along
with the statement relating to the firm filed under Section 59.
STATE AMENDMENTS
MAHARASHTRA.—In Section 61 of the Principal Act, for the words “may
send intimation thereof the Registrar, who shall” the following shall be
“shall send intimation thereof to the Registrar, within a period of
90 days from the date of such discontinuance or, as the case may
be, from the date on which the firm begins to carry on business at
such place. The Registrar shall then”.—Mah. Act 29 of 1984, S. 10
(w.e.f. 1-1-1985).
62. Noting of changes in names and addresses of partners.—When
-----------------------------------------------------------------------------------------------------------------------------------------------------------
any partner in a registered firm alters his name or permanent address,

an intimation of the alteration may be sent by any partner or agent of
the firm to the Registrar, who shall deal with it in the manner provided
in Section 61.
STATE AMENDMENTS
Section 62 of the Principal Act, for the words “may be sent” the words
“shall be sent, within a period of 90 days from the date of making such
alteration,” shall be substituted.—Mah. Act 29 of 1984, S. 11 (w.e.f. 1-
1-1985).
63. Recording of changes in and dissolution of a firm.—(1) When a
change occurs in the constitution of a registered firm any incoming,
continuing or outgoing partner, and when a registered firm is dissolved
any person who was a partner immediately before the dissolution, or
the agent of any such partner or person specially authorised in this
behalf, may give notice to the Registrar of such change or dissolution,
specifying the date thereof, and the Registrar shall make a record of the
notice in the entry relating to the firm in the Register of Firms, and
shall file the notice along with the statement relating to the firm filed
under Section 59.
Recording of withdrawal of a minor.—(2) When a minor who has
been admitted to the benefits of partnership in a firm attains majority
and elects to become or not to become a partner, and the firm is then a
registered firm, he, or his agent specially authorised in this behalf, may
give notice to the Registrar that he has or has not become a partner,
and the Registrar shall deal with the notice in the manner provided in
sub-section (1).
STATE AMENDMENTS
(a) in sub-section (1),—
(i) for the word “any”, wherever it occurs, the word “every” shall
be substituted;
(ii) for the words “may give notice to the Registrar of such change
or dissolution, specifying the date thereof;” the following shall
be substituted, namely:—
“shall, within a period of 90 days from the date of such change or
dissolution, give notice to the Registrar of such change or dissolution,
specifying the date thereof;”;
(b) after sub-section (1), the following sub-section shall be added,
namely:—
“(1-A) Where a change occurs in the constitution of a registered firm,
all persons, who after such change are partners of the firm, shall jointly
-----------------------------------------------------------------------------------------------------------------------------------------------------------
send an intimation of such change duly signed by them, to the

Registrar, within a period of 90 days from the date of occurrence of
such change and the Registrar shall deal with it in the manner provided
by Section 61.”;
(c) in sub-section (2), for the words “may give notice to the
Registrar” the words “shall, within a period of 90 days from the
date of his election, give notice to the Registrar” shall be
substituted.—Mah. Act 29 of 1984, S. 12 (w.e.f. 1-1-1985).
64. Rectification of mistakes.—(1) The Registrar shall have power at
all times to rectify any mistake in order to bring the entry in the
Register of Firms relating to any firm into conformity with the
documents relating to that firm filed under this Chapter.
(2) On application made by all the parties who have signed any
document relating to a firm filed under this Chapter, the Registrar may
rectify any mistake in such document or in the record or note thereof
made in the Register of Firms.
NOTES ► This section authorises the Registrar to correct clerical
errors whether made by the persons sending statement or notices to
the Registrar. It also relates to any mistakes in such statements or
notice whether, clerical or otherwise, these can be rectified on an
application made by all the parties who have signed the document in
question.
65. Amendment of registrar by order of Court.—A Court deciding any
matter relating to a registered firm may direct that the Registrar shall
make any amendment in the entry in the Register of Firms relating to
such firm which is consequential upon its decision; and the Registrar
shall amend the entry accordingly.
66. Inspection of register and filed documents.—(1) The Register of
Firms shall be open to inspection by any person on payment of such fee
as may be prescribed.
(2) All statements, notices and intimations filed under this Chapter
shall be open to inspection, subject to such conditions and on payment
of such fee as may be prescribed.
67. Grant of copies.—The Registrar shall on application furnish to any
person, on payment of such fee as may be prescribed, a copy, certified
under his hand, of any entry or portion thereof in the Register of Firms.
STATE AMENDMENTS
UTTARAKHAND.—In its application to the State of Uttarakhand, Section
67 shall be substituted as follows, namely—
“67. Grant of copies—The Registrar shall on online application
furnish to any person, on payment of such fee as may be prescribed,
a copy digitally certified under his hand of any entry or portion
thereof in the register of firms.” [Vide Uttarakhand Act No. 5 of
-----------------------------------------------------------------------------------------------------------------------------------------------------------
2019, S. 3, dated 5-3-2019.]

68. Rules of evidence.—(1) Any statement, intimation or notice
recorded or noted in the Register of Firms shall, as against any person
by whom or on whose behalf such statement, intimation or notice was
signed, be conclusive proof of any fact therein stated.
(2) A certified copy of any entry relating to a firm in the Register of
Firms may be produced in proof of the fact of the registration of such
firm, and of the contents of any statement, intimation or notice
recorded or noted therein.
STATE AMENDMENTS
UTTARAKHAND.—In its application to the State of Uttarakhand, sub-
section (1) of Section 68 shall be substituted as follows, namely—
“68. Rules of Evidence.—(1) Any statement, intimation or notice
recorded or noted in the register of Firms shall, as against any
person by whom or on whose behalf such statement, intimation or
notice was digitally signed, be conclusive proof of any fact therein
stated.” [Vide Uttarakhand Act No. 5 of 2019, S. 4, dated 5-3-2019.]
69. Effect of non-registration.—(1) No suit to enforce a right arising
from a contract or conferred by this Act shall be instituted in any Court
by or on behalf of 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
in the Register of Firms as a partner in the firm.
(2) No suits to enforce a right arising from a contract shall be
instituted in any Court by or on behalf of a firm against any third party
unless the firm is registered and the persons suing are or have been
shown in the Register of Firms as partners in the firm.
(3) The provisions of sub-sections (1) and (2) shall apply also to a
claim of set-off or other proceeding to enforce a right arising from a
contract, but shall not affect—
(a) the enforcement of any right to sue for the dissolution of a
firm or for accounts of a dissolved firm, or any right or power to
realise the property of a dissolved firm; or
(b) the powers of an official assignee, receiver or Court under the
Presidency-towns Insolvency Act, 1909 (3 of 1909), or the
Provincial Insolvency Act, 1920 (5 of 1920), to realise the
property of an insolvent partner.
(4) This section shall not apply—
(a) to firms or to partners in firms which have no place of
business in 16 [the territories to which this Act extends], or
whose places of business in 17 [the said territories] are situated
in areas to which, by notification under 18 [Section 56], the
Chapter does not apply, or
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(b) to any suit or claim or set-off not exceeding one hundred

rupees in value which, in the Presidency-towns, is not of a kind
specified in Section 19 of the Presidency Small Cause Courts
Act, 1882 (15 of 1882), to outside the Presidency-towns, is not
of a kind specified in the Second Schedule to the Provincial
Small Cause Courts Act, 1887 (9 of 1887), or to any
proceeding in execution or other proceeding incidental to or
arising from any such suit or claim.
STATE AMENDMENTS
(a) to sub-section (1), the following proviso shall be added, namely:
—
“Provided that the requirement of registration of firm under this sub-
section shall not apply to the suits or proceedings instituted by the
heirs or legal representatives of the deceased partner of a firm for
accounts of the firm or to realise the property of the firm.”;
(b) after sub-section (2), the following sub-section shall be inserted,
namely:—
“(2-A) No suit to enforce any right for the dissolution of a firm or for
accounts of a dissolved firm or any right or power to realise the
property of a dissolved firm shall be instituted in any Court by or on
behalf of 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 in the
Register of Firms as a partner in the firm:
Provided that the requirement of registration of firm under this sub-
section shall not apply to the suits or proceedings instituted by the
heirs or legal representatives of the deceased partner of a firm for
accounts of a dissolved firm or to realise the property of a dissolved
firm.”;
(c) in sub-section (3),—
(i) for the words, brackets and figures “sub-sections (1) and (2)”
the words, brackets, figures and letter “sub-sections (1), (2)
and (2-A)” shall be substituted;
(ii) for clause (a), the following clause shall be substituted,
namely:—
“(a) the firms constituted for a duration up to six months or with a
capital up to two thousand rupees; or”.—Mah. Act 29 of 1984, S. 13
(w.e.f. 1-1-1985).
Sub-section (2-A) of Section 69 declared unconstitutional in V.
Subramaniam v. Rajesh Raghuvandra, (2009) 5 SCC 608.
Section 69-A
-----------------------------------------------------------------------------------------------------------------------------------------------------------

Section 69 of the Principal Act, the following section shall be inserted,
namely:—
[69-A. Charges for delay in compliance of Sections 60, 61, 62 or
19
63.—If any statement, intimation or notice under Sections 60, 61,

62 or as the case may be, 63, in respect of any registered firm is not
sent or given to the Registrar, within the period specified in that
section, the Registrar may, make suitable amendments in the
records relating to the firm, upon payment of charges for delay in
sending or giving the same, at the rate of rupees two thousand per
year or part thereof in respect of the period between the date of
expiry of the period specified in that section and the date of making
the payment.]
► Nature and scope.—Section 69 is mandatory in character and its effect is
to render a suit by a plaintiff in respect of a right vested on him or acquired by
him under a contract which he entered into as a partner of an unregistered firm,
whether existing or dissolved, void. In other words, a partner of an erstwhile
unregistered partnership firm cannot bring a suit to enforce a right arising out of a
contract falling within the ambit of Section 69 of the Partnership Act. Seth
Loonkaran Sethia v. Ivan E. John, (1977) 1 SCC 379, 393.
Section 69 is confined only to enforcement of a right arising from a contract
by an unregistered firm by instituting a suit or other proceedings in court.
Arbitration proceedings cannot be treated as suit or other proceedings to enforce
any rights arising under a contract. Section 69 does not prohibit an unregistered
firm, from defending an arbitration proceeding initiated by the opposite party, itself
by seeking to appoint the arbitrator in terms of the arbitration clause contained in
the contract between the parties and to make reference of dispute between them
to the arbitrator, Kamal Pushp Enterprises v. D.R. Construction Co., (2000) 6
SCC 659.
► Constitutional validity of amendment.—Maharashtra Amendment Act 29
of 1984 inserting Section 69(2-A) and substituting Section 69(3)(a) violates
Articles 14, 19(1)(g) and 300-A of the Constitution of India. Maharashtra
Amendment Act 29 of 1984 introducing Section 69(2-A) by which a partner of an
unregistered firm is prohibited to file suit for dissolution or for accounts of a
dissolved firm or to realize its properties, virtually deprives a partner of an
unregistered firm from recovery of his share in the firm without any compensation
or from seeking dissolution of the firm. Hence, held, restrictions placed by the
amendment are arbitrary and excessive, beyond public interest and not
reasonable. Thus, the amendment is ultra vires and is declared unconstitutional, V.
Subramaniam v. Rajesh Raghuvandra Rao, (2009) 5 SCC 608 : (2009) 2 SCC
(Civ) 599.
► Applicability.—Arbitral proceedings do not come under the expression
“other proceedings” in Section 69(3) of Partnership Act. Hence, ban imposed
-----------------------------------------------------------------------------------------------------------------------------------------------------------
under the said Section 69 can have no application to arbitral proceedings as well
as the arbitration award, Umesh Goel v. H.P. Coop. Group Housing Society Ltd.,
(2016) 11 SCC 313 : (2016) 3 SCC (Civ) 795.
When documents produced are not sufficient to label Enterprise in question as
partnership firm, Section 69 would not apply, Indian Oil Corporation Ltd. v. Shriji
Enterprises Erandol, 2014 SCC OnLine Bom 175 : (2014) 3 Mah LJ 465.
► Interpretation/Construction.—Expression “arising from a contract” refers
to a contract entered into by the unregistered firm with the third-party defendant in
the course of mutual business dealings. It does not refer to a contract referred to
in the plaint as a historical fact, Haldiram Bhujiawala v. Anand Kumar Deepak
Kumar, (2000) 3 SCC 250.
► Scope of bar under this section.—A prayer for declaration of existence
of the partnership and the shares between the parties cannot be said to be made
by a person suing as a partner. Rather, such a prayer is to be a partner, and is
therefore not barred by Section 69(1). Furthermore, what was in fact being
prayed for was a declaration of the existence of a contract (the partnership
contract) between the parties, hence that could not be said to be a suit to enforce
a right arising from a contract, so as to come within the mischief of Section 69(1),
Mukund Balkrishna Kulkarni v. Kulkarni Powder Metallurgical Industries, (2004)
13 SCC 750.
► Bar against suing, applicability.—The contract by the unregistered firm
referred to in Section 69(2) of the Partnership Act, 1932 must not only be one
entered into by the firm with a third-party defendant but must also be one entered
into by the plaintiff firm in the course of the business dealings of the plaintiff firm.
If the right sought to be enforced does not arise from a contract to which the
unregistered firm is a party, or is not entered into in connection with the business
of the unregistered firm with a third party, the bar of Section 69(2) will not apply,
Purushottam v. Shivraj Fine Arts Litho Works, (2007) 15 SCC 58.
Arbitral proceedings at the instance of an unregistered firm are not
maintainable. This initial defect cannot be cured by subsequent registration of the
firm, U.P. State Sugar Corpn. Ltd. v. Jain Construction Co., (2004) 7 SCC 332.
► Amendment of pleadings.—In a suit by partner for money if the fact that
partnership was dissolved was not mentioned in original plaint, amendment of
plaint to supply omission, permissible. Ganesh Trading Co. v. Moji Ram, (1978) 2
SCC 91.
► Maintainability of suits.—Suit claiming a decree for accounting of the
plaintiff's profits and for dissolution of the unregistered firm, is maintainable,
Bhartesh Chandra Jain v. Shoiab Ullah, (2004) 13 SCC 358.
► Optional nature of registration.—While Partnership Act was enacted in
India, the English law to the extent of compulsory registration of a firm was not
followed as it was considered to be too drastic and would create several
difficulties. Registration was made optional at the discretion of the partners.
However, partners of an unregistered firm or the firm are disabled from enforcing
-----------------------------------------------------------------------------------------------------------------------------------------------------------
certain claims against the firm or third parties in a civil court. On the other hand,
registration of a firm provides protection to third parties against false denials or
partnership and evasion of liability. Once a firm is registered under the Act,
statements recorded in the register regarding the constitution of the firm are
conclusive proof of fact as against the partner, V. Subramaniam v. Rajesh
Raghuvandra Rao, (2009) 5 SCC 608 : (2009) 2 SCC (Civ) 599.
► Enforcement of right under other enactments.—Partners enforcing their
right as co-owners of the suit property conferred under the Transfer of Property
Act, 1882 and the Partnership Act, 1932 does not bar the partners of an
unregistered Firm from enforcing their right conferred under the Transfer of
Property Act. What is prohibited under Section 69 of the Act is enforcement of
contract of partnership, provisions of the Partnership Act, 1932 and enforcement
of right arising from a contract (between the firm and third party) and not the
rights conferred under the other enactments, Sandhya Anthraper v. Manju
Kathuria, (2014) 1 ICC 1028 (Kant) (DB).
► “Other proceedings”, Scope of.—Condition precedent for the operation
of ban under Section 69(3) is that the launching of a suit in a court of law should
be present and it should be by an unregistered firm or by a person claiming to be
partner of an unregistered firm either to a claim for set-off in the said suit or any
other proceedings intrinsically connected with the said suit. In the event of the
above ingredients set out under Sections 69(1), (2) and (3) being fulfilled then and
then alone the ban prescribed against an unregistered firm under Sections 69(1),
(2) and (3) would operate and not otherwise, Umesh Goel v. H.P. Coop. Group
Housing Society Ltd., (2016) 11 SCC 313 : (2016) 3 SCC (Civ) 795.
► Reference to arbitration.—As long as partnership deed contains clause
providing for reference of disputes arising between the parties to arbitration, in
absence of any statutory prohibition, non-registration of the firm is not ground to
reject reference to arbitration, Ananthesh Bhakta v. Nayana S. Bhakta, (2017) 5
SCC 185.
► Right arising out of unregistered partnership.—Clause 25(a) of
partnership deed specifically states that no partner shall without consent in writing
of other partners be entitled to transfer immovable property of firm. Plaint
mentioned that suit property was purchased out of funds of firm. It was also
pleaded that respondent-plaintiff never consented to for transfer of suit property.
Therefore, reading of Section 69(2) of the Act and Clause 25(a) of the partnership
deed, it is clear that suit was not maintainable, Farooq v. Sandhya Anthraper
Kurishingal, (2018) 12 SCC 580.
70. Penalty for furnishing false particulars.—Any person who signs
any statement, amending statement, notice or intimation under this
Chapter containing any particulars which he knows to be false or does
not believe to be true, or containing particulars which he knows to be
incomplete or does not believe to be complete, shall be punishable with
imprisonment which may extend to three months, or with fine or with
both.
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STATE AMENDMENTS
Section 70 of the principal Act, for the words “shall be punishable with
imprisonment which may extend to three months, or with fine, or with
both,” the following shall be substituted, namely:—
“shall, on conviction, be punished with imprisonment for a term
which may extend to one year, or with fine, or with both:
Provided that in the absence of special and adequate reasons to
the contrary to be mentioned in the judgment of the Court, the fine
shall not be less than one thousand rupees.”.—Mah. Act 29 of 1984,
S. 15 (w.e.f. 1-1-1985).
Section 70-A
Section 70 of the Principal Act, the following section shall be inserted,
namely:—
“70-A. Maximum fees and power to amend Schedule I.—(1) The
fees payable under this Act and the rules made thereunder shall not
exceed the maximum fees as specified in Schedule I.
(2) Subject to the provisions of this section, the State
Government may, having regard to the expenditure incurred or to be
incurred for carrying out the purposes of this Act, from time to time,
by notification in the Official Gazette, vary any of the amounts of
maximum fees and other particulars specified in Schedule I, and,
thereupon, the said Schedule shall be deemed to be amended
accordingly.
(3) Every notification issued under sub-section (2) shall take
effect from the date of its publication in the Official Gazette, unless
some other date is specified therein for this purpose.
(4) Every notification issued by the State Government under sub-
section (2) shall be laid, as soon as may be after it is issued, before
each House of the State Legislature, while it is in session, for a total
period of thirty days, which may be comprised in one session or in
two successive sessions, and if, before the expiry of the session in
which it is so laid or the session immediately following, both Houses
agree in making any modification in the notification or both Houses
agree that the notification should not be issued, and notify such
decision in the Official Gazette, the notification shall, from the date
of publication of such decision, have effect only in such modified
form or be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to the
validity of anything previously done or omitted to be done in
pursuance of that notification.”—Mah. Act 29 of 1984, S. 16 (w.e.f. 1
-1-1985).
-----------------------------------------------------------------------------------------------------------------------------------------------------------
71. Power to make rules.—(1) The 20 [State Government] 21 [may by

notification in the Official Gazette, make rules] prescribing the fees
which shall accompany documents sent to the Registrar of Firms, or
which shall be payable for the inspection of documents in the custody
of the Registrar of Firms, or for copies from the Register of Firms:
Provided that such fees shall not exceed the maximum fee specified
in Schedule I.
(2) The State Government may 22
[also] make rules—
(a) prescribing the form of statement submitted under Section
58, and of the verification thereof;
(b) requiring statements, intimations and notices under Sections
60, 61, 62 and 63 to be in prescribed form, and prescribing the
form thereof;
(c) prescribing the form of the Register of Firms, and the mode in
which entries relating to firms are to be made therein, and the
mode in which such entries are to be amended or notes made
therein;
(d) regulating the procedure of the Registrar when disputes arise;
(e) regulating the filing of documents received by the Registrar;
(f) prescribing conditions for the inspection of original documents;
(g) regulating the grant of copies;
(h) regulating the elimination of registers and documents;
(i) providing for the maintenance and form of an index to the
Register of Firms; and
(j) generally, to carry out the purposes of this Chapter.
(3) All rules made under this section shall be subject to the
condition of previous publication.
[(4) Every rule made by the State Government under this section
23
shall be laid, as soon as it is made, before the State Legislature.]

STATE AMENDMENTS
ANDHRA PRADESH.—In the Indian Partnership Act, 1932 as in force in
the State of Andhra Pradesh in Section 71, in sub-section (1), after the
proviso, the following proviso shall be added, namely:—
“Provided further that the fees payable under this Act, shall be
collected in the form of court-fee stamps which shall be affixed to
the documents sent to the Registrar of Firms.”. (A.P. Act 27 of 1994,
S. 2, w.e.f. 1-4-1995.)
Section 71 of the Principal Act,—
(a) for sub-section (1), the following sub-section shall be
“(1) Subject to the provisions of Section 70-A, the State Government
-----------------------------------------------------------------------------------------------------------------------------------------------------------
may, by notification in the Official Gazette, make rules prescribing the

fees which shall accompany documents sent to the Registrar or which
shall be paid in respect of any intimation, notice or application given to
the Registrar or which shall be payable for the inspection of documents
in the custody of the Registrar or for copies from the Register of Firms
or which shall be paid for supply of any prescribed forms.”;
(b) in sub-section (2),—
(i) in clause (a), for the words and figures “under Section 58” the
words, brackets and figures “under sub-section (1) of Section
58” shall be substituted;
(ii) after clause (a), the following clause shall be inserted,
namely:—
“(aa) prescribing the manner of filing an appeal under sub-section (4)
of Section 58;”;
(c) for sub-section (4), the following sub-section shall be
“(4) Every rule made under this section shall be laid, as soon as may be
after it is made, before each House of the State Legislature, while it is
in session, for a total period of thirty days, which may be comprised in
one session or in two successive sessions, and if, before the expiry of
the session in which it is so laid or the session immediately following,
both Houses agree in making any modification in the rule or both
Houses agree that the rule should not be made, and notify such
decision in the Official Gazette, the rule shall, from the date of
publication of such decision, have effect only in such modified form or
be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of
anything previously done or omitted to be done in pursuance of that
rule.”.—Mah. Act 29 of 1984, S. 17 (w.e.f. 1-1-1985).
Chapter VIII
SUPPLEMENTAL
72. Mode of giving public notice.—A public notice under this Act is
given—
(a) where it relates to the retirement or expulsion of a partner
from a registered firm, or to the dissolution of a registered firm,
or to the election to become or not to become a partner in a
registered firm by a person attaining majority who was
admitted as a minor to the benefits of partnership, by notice to
the Registrar of Firms under Section 63, and by publication in
the Official Gazette and in at least one vernacular newspaper
circulating in the district where the firm to which it relates has
its place or principal place of business, and
(b) in any other case, by publication in the Official Gazette, and in
-----------------------------------------------------------------------------------------------------------------------------------------------------------
at least one vernacular newspaper circulating in the district

where the firm to which it relates has its place or principal
place of business.
NOTES ► Mode of giving public notice.—This section lays down
the manner in which the public notice of certain matters relating to
partnership firms, may be given. It provides that in all cases, where a
public notice is required under this Act, it must be effected by
publication in the Official Gazette, as well as in at least one vernacular
newspaper having circulation in the district in which the firm in
question has its place, or principal place of business.
Public notices relating to registered firm must also be communicated
to the Registrar of Firms. Such copy of a public notice should be sent to
the Registrar of the Firms under Section 63 where the matter relates
to—
(i) the retirement or expulsion of partner, or
(ii) the dissolution of the firm, or
(iii) the election on attaining majority, to become or not to
become a partner by a person who as a minor was admitted to
the benefits of partnership.
This section may be read with Sections 30, 32, 33, 45, 63 and 69.
73. Repeals.—24 [Repealed]
74. Savings.—Nothing in this Act or any repeal effected thereby shall
affect or be deemed to affect—
(a) any right, title, interest, obligation or liability already
acquired, accrued or incurred before the commencement of this
Act, or
(b) any legal proceeding or remedy in respect of such right, title,
interest, obligation or liability,
(c) anything done or suffered before the commencement of this
Act, or
(d) any enactment relating to partnership not expressly repealed
by this Act, or
(e) any rule of insolvency relating to partnership, or
(f) any rule of law not inconsistent with this Act.
STATE AMENDMENTS
and Diu, Section 74 shall be renumbered as sub-section (1) thereof and
after it insert the following:—
“(2) Notwithstanding anything contained in sub-section (1) and
other law in force in the Union Territory of Goa, Daman and Diu, the
provisions of sub-sections (1) and (2) of Section 69 shall apply to all
suits instituted in the Union territory of Goa, Daman and Diu after
-----------------------------------------------------------------------------------------------------------------------------------------------------------
the 1st January, 1965, even if the cause of action with respect to the
said suits had arisen before that date.”—Goa, Daman and Diu Act 6
of 1966, Section 4 (22-8-1966).
SCHEDULE I
Maximum Fees
[See sub-section (1) of Section 71]
Document or act in respect of which Maximum fee
the fee is payable
Statement under Section 58 Three rupees
Statement under Section 60 One rupee
Intimation under Section 61 One rupee
Intimation under Section 62 One rupee
Notice under Section 63 One rupee
Application under Section 64 One rupee
Inspection of the Register of Firms Eight annas for inspecting one
under sub-section (1) of Section 66. volume of the Register.
Inspection of documents relating to a Eight annas for the inspection
firm under sub-section (2) of Section of all documents relating to
66. one firm.
Copies from the Register of Firms Four annas for each hundred
words or part thereof.
STATE AMENDMENTS
Andhra Pradesh.—In its application to the State of Andhra Pradesh,
for Schedule I to the Indian Partnership Act, 1932, the following new
Schedule shall be substituted, namely:—
“SCHEDULE I
Maximum Fees
Sl. Document or act in respect of Maximum
No. which the fee is payable fee
(1) (2) (3)
1. Statement under Section 58 For each partner Rs 100
2. Statement under Section 60 Rs 100
3. Intimation under Section 61 Rs 100
4. Intimation under Section 62 Rs 100
5. Notice under Section 63 Rs 100
6. Application under Section 64 Rs 100
7. Inspection of the Register of For inspecting Rs 20
Firms under sub-section (1) of the entry of each
Section 66. firm in the
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Register.
8. Inspection of documents relating For each Rs 20
to a firm under sub-section (2) of inspection of all
Section 66. documents
relating to one
single firm
9. Copies from the Register of Firms. For each hundred Rs 4.”.
words or part
thereof.
[Vide A.P. Act 27 of 1994, S. 3, w.e.f. 1-4-1995.]
Daman And Diu.—In its application to the State of Daman And Diu,
in Sch. I, (a) for the words ‘eight annas’, at both the places where they
occur, substitute the words, ‘fifty paise’; and (b) in entries relating to
copies from the Register of Firms, for the words ‘four annas’, substitute
the words ‘fifty paise’—Goa, Daman and Diu Act 6 of 1966, S. 5 (22-8-
1966).
Goa.—Amendment of Schedule I.—In the Indian Partnership Act,
1932 (Central Act 9 of 1932), as in force in the State of Goa, for
Schedule I, the following shall be substituted, namely:—
“SCHEDULE I
Maximum Fees
Sl. Document or act in respect of which the fee is Maximum fee
No. payable
1 2 3
(1) For statement under Section 58 Rupees
seventy
(2) Statement under Sections 60, 61 and 62 Rupees
twenty
(3) Notice under Section 63 Rupees
twenty-five
(4) Application under Section 64 Rupees thirty
-five
(5) Inspection of volume under Section 66(1) for Rupees
inspecting one volume of register fifteen
(6) For inspection of all documents relating to one Rupees thirty
firm
(7) Copies from the Register of Firms, other than by Rupees
Xerox twenty”
[Vide Goa Act 12 of 2002, S. 2].
Gujarat.—Substitution of Schedules 1 to 9 of 1923.—In the Indian
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Partnership Act, 1932 (9 of 1932), in its application to the State of

Gujarat, for Schedule I, the following Schedule shall be substituted,
namely:—
“SCHEDULE I
Maximum Fees
the fee is payable
1 2
Statement under Section 58 Fifty rupees
Statement under Section 60 Twenty-five rupees
Intimation under Section 61 Twenty-five rupees
Intimation under Section 62 Twenty-five rupees
Notice under Section 63 Twenty-five rupees
Application under Section 64 Twenty-five rupees
Inspection of the Register of Firms Ten rupees for inspecting one
under sub-section (1) of Section 66. volume of the Register.
Inspection of documents relating to a Ten rupees for the inspection
firm under sub-section (2) of Section of all documents relating to
66. one firm.
Copies from the Register of Firms. Five rupees for each hundred
words or part thereof”.
[Vide Gujarat Act 13 of 1991, S. 2 (published in Guj. Gaz. Extra., Part
IV, dt. 16-4-1991)].
Kerala.—Substitution of new Schedule for Schedule I.—In its
application to the State of Kerala, for Schedule I to the Indian
Partnership Act, 1932 (Central Act 9 of 1932), the following Schedule
shall be substituted, namely:—
“SCHEDULE I
Maximum Fees
Document or act in respect of Maximum Fee
which the fee is payable
(1) (2)
Statement under Section 58 Five hundred rupees
Statement under Section 60 Two hundred rupees
Intimation under Section 61 Two hundred rupees
Intimation under Section 62 Two hundred rupees
Notice under Section 63 Two hundred rupees
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Application under Section 64 Two hundred rupees

Inspection of the Register of Fifty rupees for inspecting one
Firms under sub-section (1) of Volume of the Register
Section 66
Inspection of documents relating One hundred rupees for the
to a firm under sub-section (2) of inspection of all documents
Section 66 relating to one firm
Copies from the Register of Firms One hundred rupees for each
hundred words or a part thereof”.
[Vide Kerala Act 32 of 2013, S. 2]
Madhya Pradesh.—Substitution of Schedule I.—In its application to
the State of Madhya Pradesh, for Schedule I of the Indian Partnership
Act, 1932 (9 of 1932), the following Schedule shall be substituted,
namely:—
“SCHEDULE I
Maximum Fees
the fee is payable
(1) (2)
Statement under Section 58 Five hundred rupees
Statement under Section 60 One hundred rupees
Intimation under Section 61 One hundred rupees
Intimation under Section 62 Fifty rupees
Notice under Section 63 One hundred rupees
Application under Section 64 Fifty rupees
Inspection of the Register of Firms Twenty-five rupees
under sub-section (1) of Section 66.
Inspection of documents relating to a Twenty-five rupees
firm under sub-section (2) of Section
66.
Copies from the Register of firms under Ten rupees (For each
Section 67. hundred words or part
thereof):
Provided that the State Government may increase the rate subject to
a maximum of five percentage of the above rate in every two years.
NOTE.—In case where the applicant requires copies, from the register
of firms under Section 67, early i.e. within five working days, he shall
file separate application along with double amount of fee and the
competent authority shall grant copies within five working days”. [Vide
-----------------------------------------------------------------------------------------------------------------------------------------------------------
M.P. Act 34 of 1998, S. 3)].

Maharashtra.—In its application to the State of Maharashtra, for
Schedule I appended to the principal Act, the following Schedule shall
be substituted, namely:—
“SCHEDULE I
Maximum Fees
[See Sections 70-A and 71]
Document or act in respect of which the fee is payable Maximum
fee
(1) (2)
(1) Statement under Section 58(1) Fifty rupees
(2) Memorandum of appeal under Section 58(4) Twenty-five
rupees
(3) Statement under Section 60 Fifteen
rupees
(4) Intimation under Section 61 Fifteen
rupees
(5) Intimation under Section 62 Fifteen
rupees
(6) Notice under Section 63(1) Fifteen
rupees
(7) Intimation under Section 63(1-A) Fifteen
rupees
(8) Notice under Section 63(2) Fifteen
rupees
(9) Application under Section 64 Fifteen
rupees
(10) Inspection of the Register of Firms under sub- Seven
section (1) of Section 66, for inspection of one rupees and
volume of the Register of Firms. fifty paise
(11) Inspection of documents relating to a firm under Seven
sub-section (2) of Section 66, for the inspection rupees and
of all documents relating to one firm. fifty paise
(12) Copies from the Register of Firms under Section Two rupees
67, for each hundred words or part thereof.
(13) Price of Forms prescribed under the rules. One rupee
per Form.”.
[Vide Mah. Act 29 of 1984, S. 18 (w.e.f. 1-1-1985)].
Pondicherry.—In its application to the State of Pondicherry, Column
(1) same as the principal Act: for Column (2) substitute as follows,
-----------------------------------------------------------------------------------------------------------------------------------------------------------
serially,—
Rs 10.00; Rs 3.00; Rs 3.00; Rs 3.00; Rs 3.00; Rs 3.00; Re 1.00;
Re 1.00; Re 0.40;
Rajasthan.—Substitution of new Schedule for Schedule I to Central
Act 9 of 1932.—In its application to the State of Rajasthan, for
Schedule I to the Principal Act, the following Schedule shall be
“SCHEDULE I
Maximum Fees
Sl. Document or act in respect of Maximum fee
No. which the fee is payable
1 2 3
1. Statement under Section 58 Three hundred rupees
2. Statement under Section 60 One hundred rupees
3. Intimation under Section 61 One hundred rupees
4. Intimation under Section 62 One hundred rupees
5. Notice under Section 63 One hundred rupees
6. Application under Section 64 One hundred rupees
7. Inspection of the Register of Firms One hundred rupees for
under sub-section (1) of Section inspection of one volume of
66. Register.
8. Inspection of documents relating One hundred rupees for
to a firm under sub-section (2) of inspection of all documents
Section 66. relating to one firm.
9. Copies from the Register of Firms. Fifteen rupees for each
hundred words or part
thereof.”.
[Vide Rajasthan Act 7 of 2007, S. 2, w.e.f. the date to be notified]
Tamil Nadu.—Substitution of new Schedule for Schedule I to
Central Act 9 of 1932.—In its application to the State of Tamil Nadu, for
Schedule I to the principal Act, the following Schedule shall be
“SCHEDULE I
Maximum Fees
Document or act in respect of which the Maximum fee
fee is payable
1 2
Rs. P.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
1. Statement under Section 58 Two hundred rupees

2. Statement under Section 60 Fifty rupees
3. Intimation under Section 61 Fifty rupees
4. Intimation under Section 62 Fifty rupees
5. Notice under Section 63 Fifty rupees
6. Application under Section 64 Fifty rupees
7. Inspection of the Register of Firms Twenty-five rupeesfor
under sub-section (1) of Section 66 inspection of the entry of
each firm in the Register.
8. Inspection of documents relating to Fifty rupees for each
a firm under sub-section (2) of inspection of all
Section 66 documents relating to one
firm.
9. Copies from the Register of Firms Ten rupees for each
hundred words or part
thereof.”
[Vide T.N. Act 17 of 2013, S. 2]
Uttar Pradesh.—In its application to the State of Uttar Pradesh, for
Schedule I, the following Schedule shall be substituted, namely—
“SCHEDULE I
Maximum Fees
Document or Act in respect of which the fee is Maximum Fee
payable
1. Statement under Section 58 Five thousand
rupees
2. Statement under Section 60 Five hundred
rupees
3. Intimation under Section 61 Five hundred
rupees
4. Intimation under Section 62 Five hundred
rupees
5. Notice under Section 63 Five hundred
rupees
6. Application under Section 64 Five hundred
rupees
7. Inspection of the Register of Firms under sub- One hundred
section (1) of Section 66 rupees
8. Inspection of documents relating to Firm One hundred
under sub-section (2) of Section 66 rupees
-----------------------------------------------------------------------------------------------------------------------------------------------------------
9. Copies from the Register of Firms Fifty rupees for

each hundred
words or part
thereof”
[Vide U.P. Act No. 2 of 2013, S. 2]
SCHEDULE II
[Enactments Repealed]
25
[* * *]
———
1. For Statement of Objects and Reasons and for Report of Special Committee, see Gazette of
India, 1931, Pt. V, p. 31; for report of Select Committee, see ibid., 1932, Pt. V, p. 1.
The Act has been applied to Berar by the Berar Laws Act, 1941 (4 of 1941).
The Act has been extended to Dadra and Nagar Haveli by Regn. 6 of 1963, S. 2 and
Schs. 1 and 2 of 1965, to Pondicherry by Regn. 11 of 1963, S. 3 and Sch., and to
Laccadive, Minicoy and Amindivi Islands by Regn. 8 of 1965, S. 3 and Sch.
The Act does not apply to partnership of cooperative societies in Maharashtra, vide
Mah. Act 24 of 1961, S. 20(2).
The Act has been amended in its application to Madras by Madras Adaptation of Laws
(Central Acts) Order, 1950 and by Madras Act 21 of 1959.
2. Subs. by A.O. 1950 (w.e.f. 26-1-1950).
3.
The words “except the State of Jammu and Kashmir” omitted by Act 34 of 2019, Ss. 95, 96
& Sch. V (w.e.f. 31-10-2019).
4. Omitted by Act 31 of 2016, S. 245 and Sch. I (w.e.f. the date to be notified). Prior to
omission it read as:
“(a) by the adjudication of all the partners or of all the partners but one as insolvent,
or”
5. Subs. for the words “Provincial Government” and “Province” respectively by A.L.O. 1950
(w.e.f. 26-1-1950).
6. Subs. for the words “Provincial Government” and “Province” respectively by A.L.O. 1950
(w.e.f. 26-1-1950).
7. Subs. for “any Province” by A.O. 1937 (w.e.f. 1-4-1937) and A.L.O. 1950 (w.e.f. 26-1-
1950).
8. Subs. for “Provincial Government” by A.L.O. 1950 (w.e.f. 26-1-1950).
9. The words “the Crown or the Government of India or a Local Government” have been
successively adapted by the A.O. 1948 and the A.O. 1950 to read as above.
10. Subs. for “when the C.G. in C.” by the A.O. 1937 (w.e.f. 1-4-1937).
11. Subs. for “his” by the A.O. 1937 (w.e.f. 1-4-1937).
12. The words “under the head of one of the Secretaries of the Government of India” omitted
-----------------------------------------------------------------------------------------------------------------------------------------------------------
by the A.O. 1937 (w.e.f. 1-4-1937).
13. January 1, 1985
14. In its application to the State of Madras, Section 59-A has been inserted by the Madras
(Added Territories) Adaptation of Laws Order, 1961.
15. Subs. for “one hundred rupees” by Mah. Act 16 of 2018, S. 2 (w.e.f. the date to be
notified).
16.
Subs. for “Part A States and Part C States” by Act 3 of 1951, S. 3 and Sch. (w.e.f. 1-4-
1951).
17. Subs. for “such States” by Act 3 of 1951, S. 3 and Sch. (w.e.f. 1-4-1951).
18. Subs. for “Section 55” by Act 24 of 1934, S. 2 and Sch. I.
19. Subs. by Mah. Act 16 of 2018, S. 3 (w.e.f. the date to be notified). Prior to substitution it
read as:
“69-A. Penalty for contravention of Sections 60, 61, 62 or 63.—If any statement,
intimation or notice under Sections 60, 61, 62 or 63 in respect of any registered firm is
not sent or given to the Registrar, within the period specified in that section, the
Registrar may, after giving notice to the partners of the firm and after giving them a
reasonable opportunity of being heard, refuse to make the suitable amendments in the
records relating to the firm, until the partners of the firm pay such penalty, not exceeding
ten rupees per day, as the Registrar may determine in respect of the period between the
date of expiry of the period specified in Sections 60, 61, 62, or as the case may be, 63
and the date of making the amendments in the entries relating to the firm. —Mah. Act 29
of 1984, S. 14 (w.e.f. 1-1-1985).”
20. Subs. for “Provincial Government” by the A.L.O. 1950 (w.e.f. 26-1-1950).
21. Subs. by Act 20 of 1983, S. 2 and Sch. (w.e.f. 15-3-1984).
22.
Ins. by the A.O. 1937 (w.e.f. 1-4-1937).
23. Ins. by Act 20 of 1983, S. 2 and Sch. (w.e.f. 15-3-1984).
24. Repealed by the Repealing Act, 1938 (1 of 1938), S. 2 and Sch. (w.e.f. 26-2-1938). Prior
to repeal it read as:
“73. Repeals.—The enactments mentioned in Schedule II are hereby repealed to the
extent specified in the fourth column thereof.”
25. Repealed by the Repealing Act, 1938 (1 of 1938) Section 2 and Schedule. Prior to repeal it
read as:
“SCHEDULE II
Enactments Repealed
Year No. Short title Extent of repeal

-----------------------------------------------------------------------------------------------------------------------------------------------------------
1 2 3 4
1872 IX The Indian Contract Act, Exception 2 and 3 to Section

1872 27
The whole of Chapter XI
1920 Burma Act VIII The Burma Registration of The whole”

Business Names Act, 1920
Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/
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disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The authenticity of
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Page 1 Monday, May 01, 2023

1. Short title, extent and commencement

3. Application of provisions of Act 9 of 1872

THE NATURE OF PARTNERSHIP

4. Definition of “partnership”, “partner”, “firm” and “firm name”

5. Partnership not created by status

6. Mode of determining existence of partnership

RELATION OF PARTNERS TO ONE ANOTHER

9. General duties of partners

10. Duty to indemnify for loss caused by fraud

11. Determination of rights and duties of partners by contract between

12. The conduct of the business

13. Mutual rights and liabilities

14. The property of the firm

15. Application of the property of the firm

16. Personal profits earned by partners

RELATIONS OF PARTNERS TO THIRD PARTIES

18. Partner to be agent of the firm

19. Implied authority of the partner as agent of the firm

20. Extension and restriction of partner's implied authority

21. Partner's authority in an emergency

22. Mode of doing act to bind firm

23. Effect of admissions by a partner

24. Effect of notice to acting partner

25. Liability of a partner for acts of the firm

26. Liability of the firm for wrongful acts of a partner

27. Liability of firm for misapplication by partners

28. Holding out

29. Rights of transferee of a partner's interest

30. Minors admitted to the benefits of partnership

INCOMING AND OUTGOING PARTNERS

31. Introduction of a partner

32. Retirement of a partner

33. Expulsion of a partner

34. Insolvency of a partner

35. Liability of estate of deceased partner

36. Rights of outgoing partner to carry on competing business

37. Right of outgoing partner in certain cases to share subsequent

38. Revocation of continuing guarantee by change in firm

39. Dissolution of a firm

40. Dissolution by agreement

41. Compulsory dissolution

42. Dissolution on the happening of certain contingencies

43. Dissolution by notice of partnership at will

44. Dissolution by the Court

45. Liability for acts of partner done after dissolution

46. Right of partners to have business wound up after dissolution

47. Continuing authority of partners for purposes of winding up

48. Mode of settlement of accounts between partners

49. Payment of firm debts and of separate debts

50. Personal profits earned after dissolution

51. Return of premium on premature dissolution

52. Rights where partnership contract is rescinded for fraud or

53. Right to restrain from use of firm name or firm property

54. Agreements in restraint of trade

55. Sale of goodwill after dissolution

56. Power to exempt from application of the Chapter

57. Appointment of Registrars

58. Application for registration

60. Recording of alterations in firm name and principal place of

61. Noting of closing and opening of branches

62. Noting of changes in names and addresses of partners