Indian Partnership Act 1932

1. The Indian Partnership Act,
1932
Presented by:
Avinash
2022PBM5059

2. Introduction
• It extends to whole of India except the State of Jammu & Kashmir.
• It came into force on 1st day of October, 1932.
• According to Sec.4, "Partnership" is an association of
persons doing business.
• Partnership not created by status. (Hindu Undivided Family)
• This act aims to provide a legal framework for the formation, operation,
and dissolution, dispute of partnerships in India.

3. Elements of a Partnership
1. Contract for Partnership: A partnership results from a contract or
an agreement between two or more person.
2. Association of Two or More Persons: Partnership must include only
individuals not other firms. The law also prohibits minors from
being partners.
3. Carrying on of Business: There are two aspects of this element.
First firm must be carrying on some business and second the
business must be run on a profit motive.
4. Profit Sharing
5. Mutual Agency: This means that every partner is both a principle as
well as an agent for all the other partners of the firm.

4. Kinds Of Partnership
With regards to the duration of the partnership
1. Partnership at Will
2. Partnership for Fixed Duration
With regards to the extent of the business carried by the partnership
1. Particular Partnership
2. General Partnership

5. Types of Partners
1. Active Partner/ Managing Partner
2. Dormant/ Sleeping Partner
3. Nominal Partner
4. Partner by Estoppel
5. Partner in Profits Only
6. Minor Partner

6. Incoming & Outgoing Partners
• Under Sec. 30, no person shall be introduced as a partner into a firm
without the consent of all the existing partners.
• Under Sec. 30, a person who is introduced as a partner into a firm does
not there by become liable for any act of the firm done before he
became a partner.
• An outgoing partner is restricted from
1. Using the name of the partnership firm
2. Representing himself as a partner of the firm

7. True Test Of Partnership
1. Agreement: HUF does not fall under partnership. There should be
an agreement of partnership between two or more persons.
2. Profit Sharing: Profit sharing are contradictory to a partnership.
Some cases are share of profits given to an agent or servant does not
make him a partner, share of profit is given to a widow or child of a
deceased partner does not make them partners. Part of the profits
shared with the previous owner as a part of goodwill.
3. Mutual Agency: If a partner is both the principle as well as an agent
of the firm we can say that mutual agency exists. This means that
actions of any partner will bind all the other partners as well. This is
the truest test of a partnership.

8. Rights Of The Partners
1. Right to take part in the conduct of the firm's business
2. Right to express opinion
3. Right to have access to books of the firm
4. Right to profit
5. Right to interest on capital
6. Right to interest on advances made by partner
7. Right to dissolve the partnership
8. Right to indemnity

9. Dissolution Of a Firm
A firm can be dissolved either by voluntarily or by an order from the
court.
1. By Agreement (Section 40)
2. Compulsory Dissolution (Section 41)
3. On the happening of certain contingencies (Section 42): Death of a
partner, insolvent partner, are some contingencies.
4. By the notice of partnership at will (Section 43)