Indian partnership act 1932

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UNIT– 2: RELATIONS OF PARTNERS
1	Section	9	GENERAL DUTIES OF PARTNERS		Partners are bound to carry on the business of the  rm to the greatest common advantage, to be just and faithful to each other, and to render true accounts and full information of all things a ecting the  rm to any partner or his legal representative
2	Section	10	DUTY TO INDEMNIFY FOR LOSS CAUSED BY FRAUD		Every partner shall indemnify the  rm for any loss caused to it by his fraud in the conduct of the business of the  rm.
3	Section	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  rm may be determined by contract between the partners, and such contract may be express or may be implied by a course of dealing. Such contract may be varied by consent of all the partners, and such consent may be express or may be implied by a course of dealing
4	Section	11(1)			Section 11(1) provides that, subject of the provisions of the 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 express or may be implied by a course of dealing. It further provides that such contract may be varied by consent of all the partners.
5	Section	11(2)			Section 11(2) clearly provides that, notwithstanding anything contained in section 27 of the Indian Contract Act, the contract between the partners may provide that a partner shall not carry on any business other than that of the  rm while he is a partner
6	Section	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 di erence arising as to ordinary matters connected with the business may be decided by 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 partners; and (d) every partner has a right to have access to and to inspect and copy any of the books of the  rm.
7	Section	12(a)	Right to take part in the conduct of the Business		Right to take part in the conduct of the Business [Section 12(a)]: Every partner has the right to take part in the business of the  rm. This is because partnership business is a business of the partners and their management powers are generally coextensive.
8	Section	12(c)	Right to be consulted		Where any difference arises between the partners with regard to the business of the  rm, it shall be determined by the views of the majority of them, and every partner shall have the right to express his opinion before the matter is decided. But no change in the nature of the business of the  rm can be made without the consent of all the partners. This means that in routine matters, the opinion of the majority of the partners will prevail. Of course, the majority must act in good faith and every partner must be consulted as far as practicable. It may be mentioned that the aforesaid majority rule will not apply where there is a change in the nature of the  rm itself. In such a case, the unanimous consent of the partners is needed.
9	Section	12(d)	Right of access to books		Every partner whether active or sleeping is entitled to have access to any of the books of the  rm and to inspect and take out of copy thereof. The right must, however, be exercised bona  de.
10	Section	13	MUTUAL RIGHTS AND LIABILITIES
11	Section	13(a)	Right to remuneration		No partner is entitled to receive any remuneration in addition to his share in the pro ts of the  rm for taking part in the business of the  rm. But this rule can always be varied by an express agreement, or by a course of dealings, in which event the partner will be entitled to remuneration. Thus, a partner can claim remuneration even in the absence of a contract, when such remuneration is payable under the continued usage of the  rm. In other words, where it is customary to pay remuneration to a partner for conducting the business of the  rm he can claim it even in the absence of a contract for the payment of the same.
12	Section	13(b)	Right to share Pro ts		Partners are entitled to share equally in the pro ts earned and so contribute equally to the losses sustained by the  rm. The amount of a partner’s share must be ascertained by enquiring whether there is any agreement in that behalf between the partners. If there is no agreement then you should make a presumption of equality and the burden of proving that the shares are unequal, will lie on the party alleging the same. There is no connection between the proportion in which the partners shall share the pro ts and the proportion in which they have contributed towards the capital of the  rm.
13	Section	13(c)	Interest on Capital		The following elements must be there before a partner can be entitled to interest on moneys brought by him in the partnership business: (i) an express agreement to that e ect, or practice of the particular partnership or (ii) any trade custom to that e ect; or (iii) a statutory provision which entitles him to such interest.
14	Section	13(d)	Interest on advances		Suppose a partner makes an advance to the  rm in addition to the amount of capital to be contributed by him, in such a case, the partner is entitled to claim interest thereon @ 6% per annum. While interest on capital account ceases to run on dissolution, the interest on advances keep running even after dissolution and up to the date of payment
15	Section	13(e)	Right to be indemni ed		Every partner has the right to be indemni ed by the  rm in respect of payments made and liabilities incurred by him in the ordinary and proper conduct of the business of the  rm as well as in the performance of an act in an emergency for protecting the  rm from any loss, if the payments, liability and act are such as a prudent man would make, incur or perform in his own case, under similar circumstances
16	Section	13(f)	Right to indemnify the  rm		A partner must indemnify the  rm for any loss caused to it by wilful neglect in the conduct of the business of the  rm.
17	Section	14	THE PROPERTY OF THE FIRM		Subject to contract between the partners, the property of the  rm includes all property and rights and interest in property originally brought into the stock of the  rm, or acquired, by purchase or otherwise, by or for the  rm, or for the purposes and in the course of the business of the  rm, and includes also the goodwill of the business
18	Section	15	APPLICATION OF THE PROPERTY OF THE FIRM		Subject to contract between the partners, the property of the  rm shall be held and used by the partners exclusively for the purposes of the business.
19	Section	16	PERSONAL PROFIT EARNED BY PARTNERS		According to section 16, subject to contract between the partners,- (a) If a partner derives any pro t for himself from any transaction of the  rm, or from the use of the property or business connection of the  rm or the  rm name, he shall account for that pro t and pay it to the  rm; (b) If a partner carries on any business of the same nature as and competing with that of the  rm, he shall account for and pay to the  rm all pro ts made by him in that business.
20	Section	17	RIGHTS AND DUTIES OF PARTNERS AFTER A CHANGE IN THE FIRM
21			RELATION OF PARTNERS TO THIRD PARTIES
22	Section	18	PARTNER TO BE AGENT OF THE FIRM		Subject to the provisions of this Act, a partner is the agent of the  rm for the purposes of the business of the  rm.
23	Section	19	IMPLIED AUTHORITY OF PARTNER AS AGENT OF THE FIRM
24	Section	22	MODE OF DOING ACT TO BIND FIRM		In order to bind a  rm, an act or instrument done or executed by a partner or other person on behalf of the  rm shall be done or executed in the  rm name, or in any other manner expressing or implying an intention to bind the  rm.
25	Section	19(1)			Sections 19(1) and 22 deal with the implied authority of a partner.
26	Section	19(2)			contains the acts which are beyond the implied authority of the partners.
27	Section	20	EXTENSION AND RESTRICTION OF PARTNERS’ IMPLIED AUTHORITY		According to section 20, the partners in a  rm may, by contract between the partners, extend or restrict implied authority of any partners. Notwithstanding any such restriction, any act done by a partner on behalf of the  rm which falls within his implied authority binds the  rm, unless the person with whom he is dealing knows of the restriction or does not know or believe that partner to be a partner.
28	Section	21	PARTNER’S AUTHORITY IN AN EMERGENCY		According to section 21, a partner has authority, in an emergency, to do all such acts for the purpose of protecting the  rm 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  rm.
29	Section	23	EFFECT OF ADMISSIONS BY A PARTNER		According to section 23, an admission or representation made by a partner concerning the a airs of the  rm is evidence against the  rm, if it is made in the ordinary course of business.
30	Section	24	EFFECT OF NOTICE TO ACTING PARTNER		According to section 24, notice to a partner who habitually acts in the business of the  rm of any matter relating to the a airs of the  rm operates as notice to the  rm, except in the case of a fraud on the  rm committed by or with the consent of that partner.
31			LIABILITY TO THIRD PARTIES (SECTION 25 TO 27)
32	Section	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  rm done while he is a partner
33	Section	26	LIABILITY OF THE FIRM FOR WRONGFUL ACTS OF A PARTNER		Where, by the wrongful act or omission of a partner in the ordinary course of the business of a  rm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred, the  rm is liable therefor to the same extent as the partner
34	Section	27	LIABILITY OF FIRM FOR MISAPPLICATION BY PARTNERS		(a) a partner acting within his apparent authority receives money or property from a third party and misapplies it, or (b) a  rm 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  rm, the  rm is liable to make good the loss.
35	Section	29	RIGHTS OF TRANSFEREE OF A PARTNER’S INTEREST
36	Section	30	MINORS ADMITTED TO THE BENEFITS OF PARTNERSHIP
			LEGAL CONSEQUENCES OF PARTNER COMING IN AND GOING OUT (SECTION 31 – 35)
37	Section	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 a partner into a  rm 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  rm does not thereby become liable for any acts of the  rm done before he became a partner.
38	Section	32	RETIREMENT OF A PARTNER
			Case 1		Vishnu Chandra Vs. Chandrika Prasad [Supreme Court]
39	Section	33	EXPULSION OF A PARTNER		(1) A partner may not be expelled from a  rm 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-section (2), (3) and (4) of section 32 shall apply to an expelled partner as if he were a retired partner.
40	Section	34	INSOLVENCY OF A PARTNER		(1) Where a partner in a  rm 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  rm is hereby dissolved. (2) Where under a contract between the partners the  rm 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  rm and the  rm is not liable for any act of the insolvent, done after the date on which the order of adjudication is made.
41	Section	35	LIABILITY OF ESTATE OF DECEASED PARTNER		Where under a contract between the partners, the  rm is not dissolved by the death of a partner, the estate of a deceased partner is not liable for any act of the  rm done after his death.
42	Section	36	RIGHTS OF OUTGOING PARTNER TO CARRY ON COMPETING BUSINESS
43	Section	37	RIGHT OF OUTGOING PARTNER IN CERTAIN CASES TO SHARE SUBSEQUENT PROFITS
44	Section	38	REVOCATION OF CONTINUING GUARANTEE BY CHANGE IN FIRM		According to section 38, a continuing guarantee given to a  rm or to third party in respect of the transaction of a  rm is, in the absence of an agreement to the contrary, revoked as to future transactions from the date of any change in the constitution of the  rm.
UNIT 3: REGISTRATION AND DISSOLUTION OF A FIRM
45	Section	58	APPLICATION FOR REGISTRATION		The registration of a  rm may be e ected at any time by sending by post or delivering to the Registrar of the area in which any place of business of the  rm is situated or proposed to be situated, a statement in the prescribed form and accompanied by the prescribed fee, stating-
46	Section	59	REGISTRATION		When the Registrar is satis ed that the provisions of section 58 (above mentioned provisions) have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and shall  le the statement.
47	Section	69	CONSEQUENCES OF NON-REGISTRATION
			DISSOLUTION OF FIRM (SECTIONS 39 - 47)
			Modes of Dissolution of a  rm (Sections 40-44)
48	Section	40	Dissolution by agreement		A  rm may be dissolved with the consent of all the partners or in accordance with a contract between the partners.
49	Section	41	Compulsory dissolution		A  rm is compulsorily dissolved by the happening of any event which makes it unlawful for the business of the  rm to be carried on or for the partners to carry it on in partnership: Provided that, when more than one separate adventure or undertaking is carried on by the  rm, the illegality of one or more shall not of itself cause the dissolution of the  rm in respect of its lawful adventures and undertakings.
50	Section	42	Dissolution on the happening of certain contingencies
51	Section	43	Dissolution by notice of partnership at will		(1) Where the partnership is at will, the  rm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the  rm. (2) If the date is mentioned, the  rm 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.
52	Section	44	DISSOLUTION BY THE COURT
			CONSEQUENCES OF DISSOLUTION (SECTIONS 45 - 55)
53	Section	45	Liability for acts of partners done after dissolution		(1) Notwithstanding the dissolution of a  rm, 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  rm 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  rm to be a partner, retires from the  rm, 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.
54	Section	46	Right of partners to have business wound up after dissolution		On the dissolution of a  rm every partner or his representative is entitled, as against all the other partners or their representative, to have the property of the  rm applied in payment of the debts and liabilities of the  rm, and to have the surplus distributed among the partners or their representatives according to their rights
55	Section	47	Continuing authority of partners for purposes of winding up		After the dissolution of a  rm the authority of each partner to bind the  rm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the a airs of the  rm and to complete transactions begun but un nished at the time of the dissolution, but not otherwise: Provided that the  rm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this proviso does not a ect 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.
56	Section	48	Settlement of partnership accounts
57	Section	49	Payment of  rm debts and of separate debts		Where there are joint debts due from the  rm and also separate debts due from any partner: (i) the property of the  rm shall be applied in the  rst instance in payment of the debts of the  rm, and if there is any surplus, then the share of each partner shall be applied to the payment of his separate debts or paid to him; (ii) the separate property of any partner shall be applied  rst in the payment of his separate debts and surplus, if any, in the payment of debts of the  rm.
58	Section	50	Personal pro ts earned after dissolution
59	Section	51	Return of premium on premature dissolution
60	Section	52	Rights where partnership contract is rescinded for fraud or misrepresentation
61	Section	55 (1)	Sale of Goodwill after dissolution		In settling the accounts of a  rm 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  rm.
62	Section	55 (2)	Rights of buyer and seller of goodwill:		Where the goodwill of a  rm 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  rm name, (b) represent himself as carrying on the business of the  rm, or (c) solicit the custom of persons who were dealing with the  rm before its dissolution.
63	Section	55 (3)	Agreement in restraint of trade:		(3) Any partner may, upon the sale of the goodwill of a  rm, make an agreement with the buyer that such partner will not carry on any business similar to that of the  rm within a speci ed period or within speci ed local limits, and, notwithstanding anything contained in section 27 of the Indian Contract Act, 1872 such agreement shall be valid if the restrictions imposed are reasonable.
64	Section	72	Mode of giving public notice		(a) Where it relates to the retirement or expulsion of a partner from a registered  rm, or to the dissolution of a registered  rm, or to the election to become or not to become a partner in a registered  rm by a person attainting majority who was admitted as a minor to the bene ts of partnership, by notice to the Registrar of Firms under section 63, and by publication in the O cial Gazette and in at least one vernacular newspaper circulation in the district where the  rm to which it relates has its place or principal place of business, and (b) in any other case, by publication in the O cial Gazette and in at least one vernacular newspaper circulating in the district where the  rm to which it relates has its place or principal place of business.