Presented by:-

MOHD ANAS KHAN

OBAID UL HAQ KHAN
MUBASHHIR JAVED
MOHD ANEESH KM
SEBIN JACOB THOMAS
 NATURE & DEFINITION

 Partnership Act extends to the whole of India except the state of Jammu & Kashmir.

 It came into force on 1st October 1932 except Section 69 which came on 1st October
1933.

 According to Sec 4 of Partnership Act 1932, “Partnership is a relation between

persons who have agreed to share profits of the business carried on by all or any of
them acting for all.”

 Person who have entered into partnership with one another are individually called
partners and collectively a firm and the name under which business is carried on is
called the firm name.
 ESSENTIALS OF PARTNERSHIP

• THERE MUST BE ATLEAST TWO PERSONS

1

• AGREEMENT
2

• REGULATING BUSINESS
3

• SHARING OF PROFITS
4

• MUTUAL AGENCY
5
 DIFFERENCE B/W COMPANY & PARTNERSHIP:
PARTNERSHIP COMPANY

1) It is governed by the partnership act 1932. 1) A company is governed by the

companies act 2013.

2) The firm has no legal or separate entity or 2) By registration, company becomes a

rights. separate legal entity.

3) Minimum Members -2, In case of banking 3) Private company-50

10 and In non banking business 20. Public company –No Limit

4) The firm cannot sue any other firm. 4) A company can sue the other company
like any natural person.

5) Audit of firm accounts is not compulsory. 5) Audit is compulsory in case of company

 Rights of Partners
1) To take part in the Conduct of Business

2) To Access the Books of Accounts

1) To take part in the Conduct of Business
3) To Share Profit
2) To Access the Books of Accounts
4) Interest on Capital
3) To Share Profit
5) Interest on Advances
4) Interest on Capital
6) To be Indemnified
5) Interest on Advances

7) To stop
6) To beadmission of new partner
Indemnified

8) To Retire
7) To stop admission of new partner

8) TotoRetire
9) Not be Expelled
9) Not to be Expelled
 Duties of a Partner
1) General Duties: Carry out business activities in a just and faithful manner,
to give true accounts and full information of things affecting the firm to
other partners.
1) General Duties: Carry out business activities in a just and faithful
2) Tomanner,
Indemnify for Loss
to give caused byand
true accounts Frauds/Willful Neglect
full information of things affecting
the firm to other partners.
3) To attend diligently
2) To Indemnify for Loss caused by Frauds/Willful Neglect
4) Not to carry any other related business
3) To attend diligently
5) Account for extra profits
4) Not to carry any other related business

6) 5)
Not to claim
Account forRemuneration
extra profits

7) 6)
ToNot
share lossesRemuneration
to claim

7) To share losses
 TYPES OF PARTNERS
 ACTIVE OR MANAGING PARTNER
A person who takes active interest in the conduct and management of the business of
the firm is known as active or managing partner. He carries on business on behalf of
the other partners. If he wants to retire, he has to give a public notice of his
retirement, otherwise he will continue to be liable for the acts of the firm.

 SLEEPING PARTNER

A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in the
management of the business. Such a partner only contributes to the share capital of
the firm and do not take part in its management and shares the profits and losses of
the business. A sleeping partner, unlike an active partner, is not required to give a
public notice of his retirement.
 NOMINAL PARTNER
A Nominal partner, on the contrary, is admitted with the purpose of taking advantage
of his name or reputation. As such he is known to the outsiders, he neither
contributes to the capital, nor has any share in profits and does not take part in
conduct of business of the firm. Nonetheless, he is liable for all acts of firm.

 PARTNER BY ESTOPPEL
Partner by Estoppel is not a partner of the firm but by his words and conduct he
leads the outsiders to believe that he is also a partner of the firm. Usually this arises,
when the outgoing partner fails to give notice about his retirement. The person who
thus becomes liable to third parties to pay the debts of the firm is known as a holding
out partner.
 SUB-PARTNER
When a partner agrees to share his profits derived from the firm with a third person, that
third person is known as a sub-partner. A sub-partner cannot represent himself as
a partner in the original firm. He has no right against the original firm nor is he liable
for the acts of the firm.

 PARTNER IN PROFITS ONLY

When a partner agrees with the others that he would only share the profits of the firm
and would not be liable for its losses, he is in own as partner in profits only.

 OTHER PARTNERS
In partnership firms,several other types of partners are also found namely, secret partner
who does not want to disclose his relationship with the firm to the general public.
Outgoing partner, who retires voluntarily without causing dissolution of the firm,
limited partner who is liable only up to the value of his capital contributions in the firm.
 The Process of Registering a Partnership under
Indian Partnership Act, 1932
1. Application to the registrar of firms of the area in which the place of
business of the firm is situated or proposed to be situated at any time
in prescribed form along with prescribes fees.
2. statement should contain
i. The name of the firm.
ii. The full names and permanent resident address of the partners.
iii. The timespan of the firm.
iv. Business the date when each partner effuse to the firm.
v. The principal place of business transaction of the firm.
vi. The names of any other places where the firm carries its functional
obligations.
This undertaking is needed to be signed by all the associate partners,
or by their respective agents principally given authority in their behalf.
3.) If the registrar is satisfied that the requirements of section 58
are compiled with he shall record the entry of this statement in
the register called register of firms and shall file the statement
and issue a certificate of registration.

The application as mentioned above has to be sent to the

Registrar at the enumerated address along with the prescribed
fees. As per section 71 of Indian Partnership Act, states are
authorized to make their own regulations with respect to
prescribe the fee structure for registration or incorporation of
partnership. However, Schedule I of Indian Partnership act
states the at most or maximum prescribed fees that can be
charged by the states. As per Schedule I, the maximum
registration fees for a statement under section 58 is Rs.525
 DISSOLUTION OF PARTNERSHIP

“ Dissolution of the partnership may result in dissolution of the

firm, but the dissolution of the firm will necessarily will result
in dissolution of the partnership.”

Dissolution of Partnership:
Partnership is dissolved due to change in relation of partners, for ex.,
admission, retirement or death of a partner happens.

Dissolution of Firm (Sec.39):

Dissolution of partnership between all the partners of the firm, for ex.,
when the business is closed, assets are realized, liabilities paid off &
the surplus is distributed among the partners
 Modes of Partnership

Dissolution without the intervention of Court:

1) By Agreement(Sec.40):
 Happens with the consent of all partners
 It’s at will or for a fixed duration
 Due to the terms put up in the Partnership deed or any agreement
2) i) Compulsory dissolution(Sec.41)
When all the partners or all the partners except one becomes insolvent
ii) Unlawful Business:
Business becomes unlawful, when firm doing business with an alien country
3) Happening of any contingent event(Sec.42):
i) Expiry of fixed period
ii)Achievement of specified task
iii) Death of any Partner
iv) Insolvency of partner
v) Resignation of partner
4)Dissolution by notice(Sec.43):
 In case of partnership at will, a partner can give written notice to other partners
duly signed by him
 Notice must be very clear & certain
 Notice once given cannot be withdrawn without the consent of other partners.

5)Dissolution by court(Sec.44):
1) Insanity/Unsound mind of partner
2) Incapacity of partner
3) Misconduct of partner
4) Constant breach of agreement by partner
5) Transfer of interest
6) Continuous Losses
THANK YOU