Partnership in India is governed by The Partnership Act, 1932 which had come into force on Oct 1,1932.

1. INDIAN PARTNERSHIP ACT,
1934
BYAman Singh (IMBA/25016/11)
Srishti Raj Karnot (IMBA/25031/11)
Bhavin Tanwar (IMBA/25022/11)
Aastha Rastogi (IMBA/25010/11)

2. “Partnership in India is governed
by The Partnership Act, 1932
which had come into force on
Oct 1,1932.”

3. REGISTRATION OF FIRMS:
 Registration of a firm requires the following
formalities to be fulfilled:
The name and the address of the firm,
2. The principle place of business of the firm,
3. Name of the other places (if any) where the firm
carries the business.
1.

4. cont…..,
4. The date on which each partner joined the firm.
5. The name and the address of each partner.
6. The duration of the firm.

5. EFFECT OF NON-REGISTRATION:
 Non-registration of firm has the following effects.
1. A partner cannot bring a suit to enforce any right.
2. An unregistered firm cannot file a suit.
3. An unregistered firm is not an illegal association.

6. DEFINITION OF PARTNERSHIP:
 Sec.4 of the Partnership Act 1932 defines partnership
as, “The relation b/w persons who have agreed to
share the profits of a business carried on by all or
any of them acting for all.”

7. NATURE OF PARTNERSHIP:
 Following are some good deals about partnership:
 An association of two or more persons.
 An agreement or a contract.
 It leads to business.
 It can be carried on by all or any one of them.
 It is formed for sharing profits.

8. POSITION & RIGHTS OF A MINOR
(SEC.13)
 A minor cannot become a partner in the firm.
 A minor can be admitted to the benefits of the firm.
 A minor can inspect the books of accounts.
 A minor is entitled to his agreed share of profit.

9. Cont….,
 He will not be personally liable to the debts of the
firm.
 After attaining majority, he may become a full-fledged
partner of the firm.
 A minor who, thus becomes a partner will become
personally liable for all the debts & obligations of the
firm.

10. ESSENTIALS OF PARTNERSHIP:
 Any business is considered as partnership only if the
following three essentials are present:
 Agreement b/w two or more persons,
 Agreement to share profit as well as loss.
 Carried on by al or any one acting of them acting for
all.

11. TEST OF PARTNERSHIP:
 Creditor OR Partner
Just by lending monies to the firm a person cannot
become the partner of the firm because he is only
liable for the interest not for the profit earned by the
firm.
……

12. …….
 Partner OR Servant
By earning remuneration, a person cannot become a
partner in the firm.
 Share of Goodwill
If a person has helped in selling the goodwill of the firm
and receiving incentive for the same, cannot be called a
partner in the firm.

13. DUTIES OF PARTNERS:
 Following are some fundamental duties of all the
partners:
 To work for the greatest common advantage.
 To be just and faithful.
 To render true accounts.
 To give full information.
 To indemnify for fraud (sec.10).
…….

14. ……..
 To indemnify for fraud (sec.10).
 To indemnify for willful neglect (sec.23f).
 To share losses (sec.13b).
 To diligently attend the business (sec.12b & 13a)
 To account for private profits (sec.16 & 60)
 To act within authority.
 To not to assign share (sec. 29(1&2)).4
 To account for the property of firms (sec.15).

15. DIFFERENCE B/W COMPANY &
PARTNERSHIP:
PARTNERSHIP
COMPANY
 It is governed by the
 A company is governed by the
partnership act 1932.
 The rights & liabilities of
partners are unlimited.
companies act 1956.
 The rights & liabilities of
shareholders restricts to the
proportion of their share.
 By registration, company
becomes a separate legal
entity.
 The firm has no legal or
separate entity or rights.

16. PARTNERSHIP
 The firm cannot sue any
other firm.
 In case of partnership, there
are rights & obligation as
against individual person.
COMPANY
 A company can sue the other
company like any natural
person.
 In case of company, the rights
& obligation are as against the
factious, whole, the company
not the members composing
it.

17. DISSOLUTION (SEC.39)
DISSOLUTION OF PARTNERSHIP:
DISSOLUTION OF PARTNERSHIP MAY TAKE
PLACE:
 By the expiry of the term (sec.42a)
 By the end of the adventure (sec.42b)
 By the death of a partner (sec.42c)
 By insolvency of any partner (sec.42d)
 By retirement of a partner.

18. DISSOLUTION OF THE PARTNERSHIP
FIRM
DISSOLUTION OF THE FIRM MAY TAKE PLACE:
 By mutual consent.
 By insolvency of all partners (sec.41a)
 By business becoming illegal (sec.41b)
 By notice of dissolution (sec.43)

19. DISSOLUTION THROUGH COURT
(SEC.44)
PARTNERSHIP OR A PARTNERSHIP FIRM MAY BE
DISSOLVED BY THE ORDERS OF THE COURT IN CASE:
 When a partner becomes of unsound mind.
 Permanent incapacity of partner.
 Persistent disregard of partnership agreement by a partner.
 Business working at loss.
 Misconduct of a partner affecting the business.
 Transfer of interest or share by a partner.