Partnership Act Rajsirasignment

8/11/2019 Partnership Act Rajsirasignment

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Contents:1.Overview

2.Legal Obligations

3.Objectives

4.Legal Rights


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The Indian Partnership Act, 1932is an act enactParliament of India to regulate partnership firms ireceived the assent of the Governor-General o1932 and came into force on 1 October 1932. B

enactment of this act, partnerships were governeprovisions of the Indian Contract Act. Theadministered through the Ministry of Corporate Afact is not applicable to Limited Liability Partnershthey are governed by the Limited liability Partner

2008.THE term partner is defined under section 4 opartnership act 1932 as under "partnershipagreement between two or more persons who havto share profits and loses of the business carried

or anyone of them acting upon all"


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Section 2 of the act defines,

(a) an "act of a firm" means any act or omissionpartners, or by any partner or agent of the firm whichto a right enforceable by or against the firm;

(b) "business" includes every trade, occupation and p(c) "prescribed" means prescribed by rules made und(c-1) "Registrar" means the Registrar of Firms apposub-section (1) of section 57 and includes the Deputof Firms and Assistant Registrar of Firms appointed section (2) of that section;

(d) "third party" used in relation to a firm or to a partmeans any person who is not a partner in the firm; an

(e) expressions used but not defined in this Act andthe Indian Contract Act, 1872, shall have the meaningto them in that Act.


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Definition: Partnership refers to an agreementpersons to share their profits or losses arising on aactions carried by all or one of them acting on beThe persons who have entered such an agree

called partners and give their collective businesswhich is necessarily their firm-name. This relationpartners arises out of a contract or an agreememeans a husband and wife carrying on a bumembers of a Hindu undivided family re

partnership. The share of profits received by anyfrom the firm, money received by a lender of monreceived by a worker or a servant, annuity recewidow or a child of a deceased partner, does them a partner of the firm.


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ELIGIBILITY

A partnership agreement can be entered intobetween persons who are competent to contract.Every person who is of the age of majority

according to the law to which he is subject andwho is of sound mind and is not disqualified fromcontracting by any law to which he is subject canenter into a partnership.

The following can enter into a partnership

INDIVIDUAL FIRM

HINDU UNDIVIDED FAMILY

COMPANY

TRUSTEES


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INDIVIDUAL:An individual, who is competent tocontract, can become a partner in the partnershipfirm. If there are more than two partners in a firm,

an individual can be a partner in his individualcapacity as well as in a representative capacity asKarta of the Hindu undivided family.

FIRM: A partnership firm is not a person andtherefore a firm can not enter into partnership with

any firm or individual. But a partner of thepartnership firm can enter into partnership withother persons and he can share the profits of thesaid firm with his other co-partners of the parentfirm.


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HINDU UNDIVIDED FAMILY: A Karta of the Hinduundivided family can become a partner in a partnehis individual capacity, provided the member has chis self acquired or personal skill and labour .

COMPANY: A company is a juristic person and thecan become a partner in a partnership firm, if it is ato do so by its objects.

TRUSTEES: Trustees of private religious trust, fam

and trustees of Hindu mutts or other religious endoare juristic persons and can therefore enter into paunless their constitution or objects forbid


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NUMBER OF PARTNERS

The number of partners in a firm shall not exceed partnership having more than 20 persons is illegal

If the partnership is between the karta or memberundivided family the members of the joint Hindu fanot be taken into account.


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ESSENTIALS OF A PARTNERSAGREEMENT- The relationship between partnersfrom contract and not status. If after the death of s

proprietor of a firm, his heirs inherit firm they do nopartners, as there is no agreement between them

SHARING OF PROFITSThe partners may agreprofits out of partnership business, but not share thSharing of losses is not necessary to constitute thepartnership. The partners may agree to share the the business in any way they like.

BUSINESSBusiness includes every trade, occuprofession. There must be course of dealings eithecontinued or contemplated to be continued with a motive and not for sport or pleasure.


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RELATION BETWEEN PARTNERS:

The partner while carrying on the business of thepartnership acts a principle and an agent. He is a pbecause he acts for himself, and he is an agent as

simultaneously acts for the rest of the partners.


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GENERAL DUTIES OF A PARTN Subject to a contract to the contrary between the p

following are the duties of a partner.

To carry on the business of the firm to the greatestadvantage. Good faith requires that a partner shalobtain a private advantage at the expense of the fir

Where a partner carries on a rival business in comwith the partnership, the other partners are entitledhim.

To bejust and faithful. Partnership as a rule is prebe based on mutual trust and confidence of each ponly in the skill and knowledge, but also in the integeach other partner .


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To render true accounts and full informatthings done by them to their co-partners.

To indemnify for loss caused by fraud. Eve

shall indemnify the firm for loss caused to it byin the conduct of the business of the firm.

Not to carry on business competing with thepartner carries on any business of the same and competing with that of the firm, he shall a

and pay to the firm all profits made by hibusiness.

To indemnify the firm for willful neglectof a partner shall indemnify the firm for any loss caby his willful neglect in the conduct of the busin

firm.


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To carry out the duties created by the conpartners are bound to perform all the duties cthe agreement between the partners.


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RIGHTS OF THE PARTNER

Subject to a contract to the contrary a partne

the following rights. To take part in the conduct and management of

business

To express opinion in matters connected with thbusiness. He has a right to be consulted and hematters affecting the business of the firm

To have free access to all the records, books of of the firm and take copy from them.

To share in the profits of the business. Every paentitled to share in the profits in proportion agrebetween the parties.


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Under the Partnership Act in the absence of anytrade to the contrary, the implied authority of a pdoes not empower him to do the following acts:

Submit a dispute relating to the business of a firarbitration

Open a bank account in his own name .

Compromise or relinquish any claim of the firm

Withdraw a suit or proceeding on behalf of the f

Admit any liability in a suit or proceeding agains Acquire immovable property on behalf of the firm

Transfer immovable property belonging to the fi

Enter into partnership on behalf of the firm.


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RIGHTS OF A MINOR

A person who is a minor according to the law to

is subject may not be a partner in a firm, butconsent of all the partners for the time being, hadmitted to the benefits of partnership.

Such minor has a right to such share of the proof the profits of the firm as may be agreed upo

may have access to and inspect and of the acthe firm

Such minorsshare is liable for the acts of thethe minor is not personally liable for any such ac

Such minor may not sue the partners for an a

payment of his share of the property or profits o


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At any time within six months of his attaining mof his obtaining knowledge that he had been athe benefits of partnership, whichever date is lperson may give public notice that he has ebecome or not to become a partner in the firm,notice shall determine his position as regardsprovided that, if he fails to give such noticebecome a partner in the firm on the expiry of thmonths.

Where any person has been admitted as a mibenefits of partnership in a firm, the burden of pfact that such person had no knowledge admission until a particular date after the expmonths of his attaining majority shall lie on thassertin that fact .


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Where such person becomes a partner :

his rights and liabilities as a minor continue upto twhich he becomes a partner, but he also becomes liable to third parties for all acts of the firm done sin

admitted to the benefits of the partnership, and hthe property and profits of the firm shall be the shahe was entitled as a minor

Where such person elects not to become a partner

his rights and liabilities shall continue to be those

upto the date on which he gives public notice, his share shall not be liable for any acts of the firm

the date of the notice, and

he shall be entitled to sue the partners for his shproperty and profits.


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DISSOLUTION OF A FIRM

A firm may be dissolved in the following mannerDissolution by Court

Dissolution by agreement

Dissolution by operation of law

Dissolution on the happening of certaincontingencies

Dissolution by notice


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DISSOLUTION BY COURT

The court may dissolve a firm at the suit of any partnerson any of the following grounds namely :

INSANITY OF A PARTNER: that a partner has become ofunsound mind. The insanity of a partner does not ipsofacto dissolve the firm and the next friend or continuingpartners has to file suit foe dissolution.


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PERMANENT INCAPACITY OF A PARTNER: that apartner has become permanently incapable ofperforming his duties as partner.

CONDUCT AFFECTING PREJUDICIALLY THEBUSINESS : that a partner is guilty of conduct, which islikely to affect prejudicially the carrying on the businessof the firm.


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BREACH OF PARTNERSHIP AGREEMENT that apartner willfully or persistently commits breach ofagreements relating to the management of the affairs ofthe firm or the conduct of its business or otherwiseconducts himself in matters relating to the business, thatit is not reasonably practical for the other partners tocarry on the business with him.


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TRANSFER OF INTEREST OF A PARTNER : that apartner has in any way transferred the whole of hisinterest in the firm to a third party.

LOSS: that the business of the firm cannot be carried onsave at a loss

JUST AND EQUITABLE : on any other ground thatrenders it just an equitable that the firm should bedissolved


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DISSOLUTION BY AGREEMENT

A firm may be dissolved with the consent of all the

partners or in accordance with the contractbetween the partners. The partnership agreementmay contain a proviso that the firm will bedissolved on the happening of certain contingency

DISSOLUTION BY OPERATION OF LAW


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DISSOLUTION BY OPERATION OF LAW

A firm is compulsorily dissolved on the following

groundsInsolvency of partners

By the happening of any event which makes itunlawful for the business of the firm to e carriedon.


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DISSOLUTION ON THE HAPPENING OFCERTAIN CONTINGENCIES

Subject to contract between the partners a firm is

dissolved on the happening of the followingcontingencies.

If constituted for a fixed term, by the expiry of thatterm


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If constituted to carry out one or more adventuresor undertakings, by its completion.

By the death of a partner

On insolvency of a partner


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DISSOLUTION BY NOTICE

If the partnership is at will, the same may bedissolved by service of a notice by one partner todissolve the firm.


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REGISTRATION

It is not compulsory to register the firm. Howethere are serious effects of non-registration.


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No suit to enforce a right arising from a contract orconferred by the Indian Partnership Act shall beinstituted in any court by or on behalf of anyperson suing as partner in a firm against the firmor any person alleged to be or to have been apartner in the firm, unless the firm is registeredand the person suing is or has been shown on theRegister of firms as a partner in the firm


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Similarly, no suit to enforce a right rising from acontract shall be instituted in any court by or onbehalf of a firm against any third party unless thefirm is registered.

PROCEDURE FOR REGISTRATIONTheregistration of a firm may be effected at any timeby sending by post or delivering to the Registrar ofFirms of the area in which any place of business

of the firm is situated or proposed to be situated, astatement in the prescribed form andaccompanied by the prescribed fee, stating :

the firm name

the place or principal place of b siness of the firm


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the place or principal place of business of the firm;

the names of any other places where the firmcarries on business;

the date when each partner joined the firm; thenames in full and permanent addresses of thepartners; and

the duration of the firm.

The statement shall be signed by all the partnersor by their agents specially authorised in thisbehalf. Each person signing the statement shallalso verify in the manner prescribed.

A fi h ll t t i f th f ll i


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A firm name shall not contain any of the followingwords viz. "Crown", Emperor", "Empress","Empire", "Imperial", "King", "Queen", "Royal", orwords expressing or implying the sanction,

approval or patronage of Government, exceptwhen the State Government signifies its consentto the use of such words as part of the firm nameby order in writing.

All the States have framed rules prescribing the

forms, fee for registration and verification of thestatement. The application for registration has tobe made to the Registrar of Firms in theprescribed form


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When the Registrar is satisfied that the provisiohave been complied with, he shall record andentry of the statement in a register called theRegister of Firms and shall file the statement. TRegistrar is the competent authority and if he ac

bona fide and follows the procedure, hissatisfaction cannot be challenged.


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ThankYou

Priyadarshi Amaresh Mahapatra

Documents

Partnership Act Rajsirasignment