INDIAN PARTNERSHIP ACT 1932

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  • 1. Indian partnership act 1932 • Introduction • This act was earlier covered indian-contract act 1872. • This act, extends all over india excepts jammu & kashmir. • This act was became effective 1 october, 1932
  • 2. Partnership According to section 4 of the Partnership Act of 1932, which applies in both India and Pakistan, "Partnership is defined as the relation between two or more persons who have agreed to share the profits and losses according to their ratio of business run by all or any one of them acting for all". This definition superseded the previous definition given in section 239 of Indian Contract Act 1872 as – “Partnership is the relation which subsists between persons who have agreed to combine their property, labour, skill in some business, and to share the profits thereof between them”. The 1932 definition added the concept of mutual agency. A partnership firm is not a legal entity apart from the partners constituting it. It has limited identity for the purpose of tax law as per section 4 of the Partnership Act of 1932
  • 3. Essential elements of partneship 1.Agreeement –an agreement from which relationship of partnership arises may be express,oral or in writing. 2.Sharing profit of business – generally sharing of profit in equal ratio. 3.Business carried on by all or any of them acting for all.
  • 4. Features of partnership • Two or more persons • Minimum - 2 • Maximum In banking business partnership - 10 In other partnership - 20
  • 5. •Partner – Member of firm , individually called partner •Firm - Members of firm i.e. partners are collectively called firm.
  • 6. On the basis of duration • Particular partnership – in this duration is fixed and no.of activities are fixed • Partnership at will – in this neither duration is fixed nor activities are fixed.
  • 7. Types of partner • • • • • • Active partner Sleeping partner Holding out partner Partner by estoppel Sub-partner Nominal partner
  • 8. Duties of partner • • • • Duty to indemnify the firm. Duty not to claim remuneration. Duty to share loss. Duty to partner not to earn / make secret profit. • Duty not to carry on similar business. • Duty to carry business of firm diligently.
  • 9. Rights of partners • Right to take part in conduct of business. • Access to books of firm. • Right to share profit. • Interest on capital. • Interest on advance given by partners
  • 10. • Right to retired. • Right not to be expelled. • Right to stop admission o new partner. • Right to be indemnified. • Right to dissolve the firm.