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The Indian Partnership Act 1932
The Indian Partnership Act 1932
The Indian Partnership Act 1932
Business Legislation
RTMNU MBA Semester - I
Dr. Ambedkar Institute of Management Studies & Research,
Deeksha Bhoomi, Nagpur
Dr. M. J. Siddiqui
INTRODUCTION
In India it is governed by the Indian
Partnership Act, 1932, which extends
to the whole of India except the State
of Jammu and Kashmir. It came into
force on 1st October 1932.
A partnership is the relationship
between persons who have agreed to
share the profits of a business carried
on by all or any of them acting or all.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ELIGIBILITY
A partnership agreement can be
entered into between persons who
are competent to contract. Every
person who is of the age of majority
according to the law to which he is
subject and who is of sound mind
and is not disqualified from
contracting by any law to which he is
subject can enter into a partnership.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ELIGIBILITY
The following can enter into a
partnership
INDIVIDUAL
PARTNERS OF A FIRM
HINDU UNDIVIDED FAMILY
COMPANY
TRUSTEES
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ELIGIBILITY
1. INDIVIDUAL: An individual, who
is competent to contract, can
become a partner in the
partnership firm. If there are more
than two partners in a firm, an
individual can be a partner in his
individual capacity as well as in a
representative capacity as Karta
of the Hindu undivided family.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ELIGIBILITY
2. FIRM: A partnership firm is not a
person and therefore a firm can not
enter into partnership with any firm
or individual. But a partner of the
partnership firm can enter into
partnership with other persons and
he can share the profits of the said
firm with his other co-partners of
the parent firm.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ELIGIBILITY
3. HINDU UNDIVIDED FAMILY: A Karta
of the Hindu undivided family can
become a partner in a partnership in
his individual capacity, provided the
member has contributed his self
acquired or personal skill and labour
4. COMPANY: A company is a juristic
person and therefore can become a
partner in a partnership firm, if it is
authorized to do so by its objects.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ELIGIBILITY
5. TRUSTEES: Trustees of private
religious trust, family trust and
trustees of Hindu mutts or other
religious endowments are juristic
persons and can therefore enter into
partnership, unless their constitution
or objects forbid
NUMBER OF PARTNERS
The number of partners in a firm
shall not exceed 20 and a partnership
having more than 20 persons is
illegal.
If the partnership is between the
karta or member of Hindu undivided
family the other members of the joint
Hindu family will not be taken into
account.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ESSENTIALS OF A PARTNERSHIP
1. AGREEMENT - The relationship between
partners arises from contract and not status. If
after the death of sole proprietor of a firm, his
heirs inherit firm they do not become partners,
as there is no agreement between them.
2. SHARING OF PROFITS The partners may
agree to share profits out of partnership
business, but not share the losses. Sharing of
losses is not necessary to constitute the
partnership. The partners may agree to share
the profits of the business in any way they like.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
ESSENTIALS OF A PARTNERSHIP
3. BUSINESS Business includes every trade,
RESTRICTIONS ON AUTHORITY
OF A PARTNER
The Following Restrictions are governed by
Contract Act and Partnership Act.
1. The partners may by contract, extend or
restrict the implied authority of any
partner.
RESTRICTIONS ON AUTHORITY
OF A PARTNER
2. Under the Partnership Act in the absence of any
usage of trade to the contrary, the implied
authority of a partner does not empower him to
do the following acts:
A. Submit a dispute relating to the business of a firm to
arbitration.
B. Open a bank account in his own name
C. Compromise or relinquish any claim of the firm
D. Admit liability in a suit or proceeding against the firm
E. Withdraw a suit or proceeding on behalf of the firm.
F. Acquire immovable property on behalf of the firm
G. Transfer immovable property belonging to the firm.
H. Enter into partnership on behalf of the firm.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
DISSOLUTION OF FIRM
Dissolution of firm:
It involves closing down of the business as
the partnership between all the partners
comes to an end.
Dissolution of Partnership:
It involves a change in the relationship
amongst the partners due retirement,
expulsion etc., and the business of the
firm does not necessary come to an end.
It leads to reconstitution of firm
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
DISSOLUTION OF FIRM
A firm may be dissolved in the following
manner
1. By agreement (sec.40)
2. By Compulsory Dissolution (Sec.41)
3.
Dissolution on the happening of
Certain Contingencies (Sec.42)
4. Dissolution by notice (Sec.43
5. Dissolution by the Court: (Sec.44).
B. PERMANENT INCAPACITY OF A
PARTNER: that a partner has become
permanently incapable of performing
his duties as partner.
C. GUILTY CONDUCT AFFECTING
BUSINESS : That a partner is guilty of
conduct, which is likely to affect
prejudicially the carrying on the
business of the firm.
DAIMSR /Business Legislation /MBA Semester I / Dr. M. J. Siddiqui
CONSEQUENCES OF DISSOLUTION
Rights & liabilities of partners on dissolution (Sec.45
to 55 ).
CONSEQUENCES OF DISSOLUTION
Liabilities of partners on dissolution :
1. Continuing liability until public notice
(Sec.45)
2. Liability for continuing authority of
Partners for purpose of winding up
(Sec.47)
PARTNERSHIP
COMPANY
Legal Status :
No existence
A separate legal entity
Mutual Agency:
Every partners is an agent
A member of the
Of the other partners
Company is not an
Agent
of other members
Liability of Members:
Liability of Partner is unlimited Limited to unpaid
share.
Transfer of Interest