Indian Partnership Act Notes and Reading Materials
Indian Partnership Act, 1932
1. Introduction
Governs partnership firms and the rights, duties, and liabilities of partners.
Applies to the whole of India except Jammu & Kashmir.
Partnership: Defined under Section 4 as “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”
2. Key Definitions
| Term | Meaning |
|---|---|
| Partner | Person who shares profits in a business (Section 2(7)) |
| Firm | Collective name of partners conducting business (Section 4) |
| Firm Name | Name under which the firm operates |
3. Nature of Partnership
It is a voluntary relation.
Based on mutual agency: Every partner is an agent of the firm.
No separate legal entity (firm and partners are same legally).
Limited to a maximum of 10 partners for banking firms, 20 for others.
4. Registration of Firms (Section 58 to 69)
Registration is optional but provides legal benefits.
Registered firms can sue/be sued in firm’s name.
Unregistered firms cannot file suit against third parties.
5. Relations of Partners
a) Mutual Rights and Duties (Sections 18–30)
Share of profits and losses.
Right to participate in management.
Duty to act in good faith.
No partner can carry on competing business without consent.
b) Incoming and Outgoing Partners (Sections 31–39)
Rules for admission, retirement, and expulsion of partners.
6. Liabilities of Partners
Joint and several liability for all debts and obligations.
Liability extends to acts done in the ordinary course of business.
Incoming partner liable only for debts after joining unless otherwise agreed.
Outgoing partner liable for debts incurred before retirement for 2 years (public notice or private notice).
7. Dissolution of Firm (Sections 39–55)
Can be dissolved by:
Mutual consent.
Expiry of term or completion of venture.
Notice by partner.
Insolvency or death of partner.
Court order.
Consequences of dissolution: settlement of accounts, paying debts, distributing surplus.
8. Minor’s Position (Section 30)
Minor can be admitted as a partner only with consent of all partners.
Minor’s liability limited to the extent of their share.
Minor cannot participate in management.
9. Partnership vs Company
| Aspect | Partnership | Company |
|---|---|---|
| Legal entity | No separate legal entity | Separate legal entity |
| Number of members | Max 10 (banking), 20 (others) | No such limit |
| Liability | Unlimited personal liability | Limited liability |
| Registration | Optional | Compulsory |
📚 Recommended Reading Materials
Bare Act – Indian Partnership Act, 1932
Available free online on government law websites.
Read sections along with notes.
Books
M.C. Shukla’s Indian Partnership Act (widely used in law studies)
Pollock and Mulla on Partnership – comprehensive commentary.
Online Resources
Legal education websites like Lawctopus, Legal Bites for summaries and case laws.
YouTube channels offering law lectures on partnership law.
Case Laws
Important cases like Cox v. Hickman (agency and partnership)
Amrit Lal v. Bishop (partners’ liability)
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