The INDIAN PARTNERSHIP ACT, 1932

INDIAN PARTNERSHIP ACT 1932 
The Indian partnership Act, 1932 
[8TH April, 1932] 
An Act to define and amend the Law Relating to Partnership. 
WHEREAS it is expedient to define and amend the law relating to partnership. It Is hereby 
enacted as follows:- 
Chapter I 
Preliminary 
1. Short title, extent and commencement - 
(1) This Act may be called the Indian Partnership Act, 1932. 
(2) It extends to the whole of India 3[except the State of Jammu and Kashmir].] 
(3) It shall come Into force on the 1st day of October, 1932, except section 69, which shall come 
into force on the 1st day of October, 1933. 
2. Definitions - In this Act, unless there is anything repugnant in the subject or context - 
1. an "act of a firm" means any act or omission by all the partners, or by any partner or agent of 
the firm which gives rise to a right enforceable by or against the firm; 
2. "business" includes every trade, occupation and profession; 
3. "prescribed" means prescribed by rules made under this Act; 
4. "third party" used in relation to a firm or to a partner therein means any person who is not 
partner in the firm; and 
5. expressions used but not defined in this Act and defined in the Indian Contract Act, 1872 (9 
of 1872), shall have the meanings assigned to them in that Act. 
3. Application of provisions of Act 9 of 1872 - 
The unrepeated provisions of the Indian Contract Act, 1872, save in so far as they are 
inconsistent with the express provisions of this Act, shall continue to apply to firms. 
1. For Statement of Objects and Reasons and for Report of Special Committee, see Gazette of 
India, 1931, Pt. V, p 31 for Report of Select Committee, see Gazette of India, 1932, Pt. V, p 
7.The Act has been applied to Bear by the Bear Laws Act, 1941 (4 of 1941).The Act has been 
extended to Dadra and Nagar Havell by Reg. 6 of 1963, sec. 2 and Sch. 1, to Pondicherry by 
Reg. 7 of 1963, sec. 3 and Sch. I, to Goa, Daman and Diu by Reg. 11 of 1963, sec.3 and sch., 
and to Laccadive, Minicoy and Amindivi Islands by Reg. 8 of 1965, sec.3 and sch. 
2. Subs. By the A. 0. 1950 for the former sub-section. 
3. Subs. By Act 3 of 1951, sec. 3 and sch., for "except Part B States". 
Chapter II 
The Nature of partnership 
4. Definition of "partnership", "partner", "firm" and "firm name" - 
"Partnership" is 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. 
Persons who have entered Into partnership with one another are called individually "partners" 
and collectively a "firm", and the name under which their business is carried on is called the 
"firm name". 
5. Partnership not created by status - 
The relation of partnership arises from contract and not from status; 
and, in particular, the members of a Hindu undivided family carrying on a family business as 
such, or a Burmese Buddhist husband and wife carrying business as such, are not partners in 
such business. 
6. Mode of determining existence of partnership - 
In determining whether a group of persons Is or is not firm, or whether a person is or is not a 
partner in a firm, regard shall be had to the real relation between the parties„ as shown by all 
relevant facts taken together. 
Explanation 1 - The sharing of profits or of gross returns arising from property by persons 
holding a joint or common Interest in that property does not of itself make such persons 
partners. 
Explanation 2 - The receipt by a person of a share of the profits of a business, or of a payment 
contingent upon the earning of profits or varying with the profits earned by a business, does not 
of itself make him a partner with the persons carrying on the business; 
and in particular, the receipt of such share or payment- 
(a) by a lender of money to persons engaged or about to engage in any business, 
(b) by a servant or agent as remuneration, 
(c) by the widow or child of a deceased partner, as annuity, or 
(d) by a previous owner or part owner of the business, as consideration for the sale of the 
goodwill or 
share thereof, does not of itself make the receiver a partner with the persons carrying on the 
business. 
7. Partnership at will - 
Where no provision is made by contract between the partners for the duration of their 
partnership, or for the determination of their partnership, the partnership is 'partnership at will'. 
8. Particular partnership - 
A person may become a partner with another person in particular adventures or undertakings. 
Chapter III 
Relations of Partners to one another 
9. General duties of partners - 
Partners are bound to carry on the business of the firm to the greatest common advantage, to be 
just and faithful to each other, and to render true accounts and full information of all things 
affecting the firm to any partner or his legal representative. 
10. Duty to indemnify for loss caused by fraud - 
Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the 
business of the firm. 
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 firm 
may be determined by contract between the partners, and such contract may be expressed 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 expressed 
or may be implied by a course of dealing. 
Agreements in restraints of trade - 
(2) Notwithstanding anything contained in section 27 of the Indian Contract Act, 1872 (9 of 
1872), such contracts may provide that a partner shall not carry on any business other than that 
of the firm while he is a partner. 
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 difference arising as to ordinary matters connected with the business may be decided by 
a 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 the partners; and 
(d) every partner has a right to have access to and to inspect and copy any of the books of the 
firm. 
13. Mutual rights and liabilities - Subject to contract between the partners - 
(a) a partner is not entitled to receive remuneration for taking part in the conduct of the 
business; 
(b) the partners are entitled to share equally in the profits earned, and shall contribute equally to 
the losses sustained by the firm; 
(c) where a partner is entitled to interest on the capital subscribed by him such interest shall be 
payable only out of profits; 
(d) a partner making, for the purposes of the business, any payment or advance beyond the 
amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of six per 
cent per annum; 
(e) the firm shall indemnify a partner in respect of payments made and liabilities incurred by him 
(i) in the ordinary and proper conduct of the business, and 
(H) in doing such act, in any emergency, for the purpose of protecting the firm from loss, as 
would be done by a person of ordinary prudence, in his own case, under similar circumstances; 
and 
(f) a partner shall indemnify the firm for any loss caused to it by his willful neglect in the conduct 
of the business of the firm. 
14. The property of the firm - 
Subject to contract between the partners, the property of the firm includes all property and 
rights and Interests in property originally brought Into the stock of the firm, or acquired, by 
purchase or otherwise, by or for the firm, or for the purposes and In the course of business of 
the firm, and includes also the goodwill of the business. 
Unless the contrary intention appears, property and rights and interests In property acquired 
with money belonging to the firm are deemed to have been acquired for the firm. 
15. Application of the property of the firm - 
Subject to contract between the partners, the property of the firm shall be held and used by the 
partners exclusively for the purposes of the business. 
16. Personal profits earned by partners - Subject to contract between the partners:- 
(a) if a partner derives any profit for himself from any transaction of the firm, or from the use of 
the property or business connection of the firm or the firm name, he shall account for that profit 
and pay it to the firm; 
(b) if a partner carries on any business of the same nature as and competing with that of the 
firm, he shall account for and pay to the firm all profits made by him in that business. 
17. Rights and duties of partners - Subject to contract between the partners 7- 
( a ) after a change in the firm - where a change occurs in the constitution of a firm, the mutual 
rights and duties of the partners in the reconstituted firm remain the same as they were 
immediately before the change, as far as may be; 
(b) after the expiry of the term of the firm, and - where a firm constituted for a fixed term 
continues to carry on business after the expiry of that term, the mutual rights and duties of the 
partners remain the same as they were before the expiry, so far as they may be consistent with 
the incidents of partnership at will; and 
(c) where additional undertakings are carried out - where a firm constituted to carry out one or 
more adventures or undertakings carries out other adventures or undertakings, the mutual rights 
and duties of the partners In respect of the other adventures or undertakings are the same as 
those in respect of the original adventures or undertakings. 
Chapter IV 
Relations of partners to third parties 
18. Partner to be agent of the firm - 
Subject to the provisions of this Act, a partner is the agent of the firm for the purpose of the 
business of the firm. 
19. Implied authority of partner as agent of the firm - 
(1) Subject to the provisions of section 22, the act of a partner which is done to carry on, In the 
usual way, business of the kind carried on by the firm, binds the firm. 
The authority of a partner to bind the firm conferred by this section is called his "implied 
authority". 
(2) In the absence of any usage or custom of trade to the contrary, the implied authority of a 
partner does not empower him to - 
(a) submit a dispute relating to the business of the firm to arbitration, 
(b) open a banking account on behalf of the firm in his own name, 
(c) compromise or relinquish any claim or portion of a claim by the firm, 
(d) withdraw a suit or proceeding filed on behalf of the firm, 
(e) admit any liability in a suit or proceeding against the firm, 
(f) acquire immovable property on behalf of the firm, 
(g) transfer immovable property belonging to the firm, or 
(h) enter into partnership on behalf of the firm. 
20. Extension and restriction of partner's implied authority - 
The partners in a firm may, by contract between the partners, extend or restrict the implied 
authority of any partner. 
Notwithstanding any such restriction, any act done by a partner on behalf of the firm which falls 
within his implied authority binds the firm, unless the person with whom he is dealing knows of 
the restriction or does not know or believe that partner to be a partner. 
21. Partner's authority in an emergency - 
A partner has authority, in an emergency, to do all such acts for the purpose of protecting the 
firm 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 firm. 
22. Mode of doing act to bind firm - 
In order to bind a firm, an act or instrument done or executed by a partner or other person on 
behalf of the firm shall be done or executed in the firm name, or In any other manner expressing 
or implying an intention to bind the firm. 
23. Effect of admissions by a partner - 
An admission on representation made by a partner concerning the affairs of the firm is evidence 
against the firm, if it is made in the ordinary course of business. 
24. Effect of notice to acting partner - 
Notice to a partner, who habitually acts in the business of the firm of any matter relating to the 
affairs of the firm operates as notice to the firm, except in the case of a fraud on the firm 
committed by or with the consent of that partner. 
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 
firm done while he is a partner. 
26. Liability of the firm for wrongful acts of a partner - 
Where, by the wrongful act or omission of a partner acting in the ordinary course of the business 
of a firm or with the authority of his partners, loss or injury is caused to any third party, or any 
penalty is incurred, the firm is liable therefore to the same extent as the partner. 
27. Liability of firm for misapplication by partners - Where - 
(a) a partner acting within his apparent authority receives money or property from a third party 
and misapplies it, or 
(b) a firm 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 firm, 
the firm is liable to make good the loss. 
28. Holding out - 
(1) Any one who by words spoken or written or by conduct represents himself or knowingly 
permits himself to be represented, to be a partner in a firm, is liable as a partner in that firm to 
any one who has on the faith of any such representation given credit to the firm, whether the 
person representing himself or represented to be partner does or does not know that the 
representation has reached the person so giving credit. 
(2) Where after a partner's death the business is continued In the old firm name, the continued 
use of that name or of the deceased partner's name as a part thereof shall not of itself make his 
legal representative or his estate liable for any act of the firm done after his death. 
29. Rights of transferee or a partner's interest - 
(1) A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the 
creation by him of a change on such interest, does not entitle the transferee, during the 
continuance of the firm, to interfere In the conduct of the business, or to require accounts, or to 
inspect the books of the firm, but entitles the transferee only to receive the share of profits of 
the transferring partner, and the transferee shall accept the account of profits agreed to by the 
partners. 
(2) If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is 
entitled as against the remaining partners to receive the share of the assets of the firm to which 
the transferring partner Is entitled, and, for the purpose of ascertaining that share, to an account 
as from the date of the dissolution. 
30. Minors admitted to the benefits of partnership - 
(1) A person who is a minor according to the law to which he is subject may not be a partner in a 
firm, but with the consent of all the partners for the time being, he may be admitted to the 
benefits of partnership. 
(2) Such minor has a right to such share of the property and of the profits of the firm as may be 
agreed upon, and he may have access to and inspect and copy any of the accounts of the firm. 
(3) Such minor's share is liable for the acts of the firm, but the minor Is not personally liable for 
any such act. 
(4) Such minor may not sue the partners for an account or payment of his share of the property 
or profits of the firm, save when severing his connection with the firm, and in such case the 
amount of his share shall be determined by a valuation made as far as possible in accordance 
with the rules contained in section 48: 
Provided that all the partners acting together or any partner entitled to dissolve the firm upon 
notice to other partners may elect in such suit to dissolve the firm, and thereupon the court shall 
proceed with the suit as one for dissolution and for settling accounts between the partners, and 
the amount of the share of the minor shall be determined along with the shares of the partners. 
(5) At any time within six months of his attaining majority, or of his obtaining knowledge that he 
had been admitted to the benefits of partnership, whichever date is later, such person may give 
public notice that he has elected to become or that he has elected not to become a partner in the 
firm, and such notice shall determine his position as regards the firm: 
Provided that, if he falls to give such notice, he shall become a partner in the firm on the expiry 
of the said six months. 
(6) Where any person has been admitted as a minor to the benefits of partnership in a firm, the 
burden of proving the fact that such person had no knowledge of such admission until a 
particular date after the expiry of six months of his attaining majority shall lie on the persons 
asserting that fact. 
(7) Where such person becomes a partner - 
(a) his rights and liabilities as a minor continue up to the date on which he becomes a partner, 
but he also becomes personally liable to third parties for all acts of the firm done since he was 
admitted to the benefits of partnership, and 
(b) his share in the property and profits of the firm shall be the share to which he has entitled as 
a minor. 
(8) Where such person elects not to become a partner - 
(a) his rights an liabilities shall continue to be those of a minor under this section up to the 
date on which he gives public notice, 
(b) his share shall not be liable for any acts of the firm done after the date of the notice, 
and 
(c) he shall be entitled to sue the partners for his share of the property and profits in 
accordance with sub-section (4). 
(9) Nothing in sub-section (7) and (8) shall effect the provisions of section 28. 
Chapter V 
Incoming and outgoing partners 
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 firm 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 firm 
does not thereby become liable for any act of the firm done before he became a partner. 
32. Retirement of a partner - 
(1) A partner may retire - 
(a) with the consent of all the other partners, 
(b) in accordance with an express agreement by the partners, or 
(c) where the partnership is at will, by giving notice in writing to all the other partners of his 
intention to retire. 
(2) A retiring partner may be discharged from any liability to any third party for acts of the firm 
done before his retirement by an agreement made by him with such third party and the partners 
of the reconstituted firm, and such agreement may be implied by a course of dealing between 
such third party and the reconstituted firm after he had knowledge of the retirement. 
(3) Notwithstanding the retirement of a partner from a firm, he and the partners continue to be 
liable as partners to third parties for any act done by any of them which would have been an act 
of the firm if done before the retirement, until public notice is given of the retirement: 
Provided that a retired partner is not liable to any third party who deals with the firm without 
knowing that he was a partner. 
(4) Notices under sub-section (3) may be given by the retired partner or by any partner of the 
reconstituted firm. 
33. Expulsion of a partner - 
(1) A partner may not be expelled from a firm 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 s (2), (3) and (4) of section 32 shall apply to an expelled 
partner as if he were a retired partner. 
34. Insolvency of a partner - 
(1) Where a partner in a firm 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 firm is hereby dissolved. 
(2) Where under a contract between the partners the firm 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 
firm and the firm is not liable for any act of the insolvent, done after the date on which the order 
of adjudication is made. 
35. Liability of estate of deceased partner - 
Where under a contract between the partners the firm is not dissolved by the death of a partner, 
the estate of a deceased partner is not liable for any act of the firm done after his death. 
36. Right of outgoing partner to carry on competing business - 
(1) An outgoing partner may carry on a business competing with that of the firm and he may 
advertise such business, but, subject to contract to the contrary, he may not - 
(a) use the firm name, 
(b) represent himself as carrying on the business of the firm, or 
(c) solicit the custom of persons who were dealing with the firm before he ceased to be a 
partner. 
Agreements in restraint of trade - 
(2) A partner may make an agreement with his partners that on ceasing to be a partner he will 
not carry on any business similar to that of the firm within a specified period or within a specified 
local limits; and notwithstanding anything contained in section 27 of the Indian Contract Act, 
1872 (9 of 1872), such agreement shall be valid if the restrictions imposed are reasonable. 
37. Right of outgoing partner in certain cases to share subsequent profits - 
Where any member of a firm has died or otherwise ceased to be a partner, and the surviving or 
continuing partners carry on the business of the firm with the property of the firm without any 
final settlement of accounts as between them and the outgoing partner or his estate, then, in the 
absence of a contract to the contrary, the outgoing partner or his estate is entitled at the option 
of himself or his representatives to such share of the profits made since he ceased to be a 
partner as may be attributable to the use of his share of the property of the firm or to interest at 
the rate of six per cent per annum on the amount of his share in the property of the firm: 
Provided that whereby contract between the partners an option is given to surviving or 
continuing partners to purchase the interest of a deceased or outgoing partner, and that option 
is duly exercised, the estate of the deceased partner, or the outgoing partner or his estate, as 
the case may be, is not entitled to any further or other share of profits; but if any partner 
assuming to act in exercise of the option does not In all material respects comply with the terms 
thereof, he is liable to account under the foregoing provisions of this section. 
38. Revocation of continuing guarantee by change in firm - 
A continuing guarantee given to a firm, or to a third party in respect of the transactions of a firm, 
is in the absence of agreement to the contrary, revoked as to future transactions from the date 
of any change in the constitution of the firm. 
Chapter VI 
Dissolution of firm 
39. Dissolution of a firm - 
The dissolution of partnership between all the partners of a firm is called the 'dissolution of the 
firm'. 
40. Dissolution by agreement - 
A firm may be dissolved with the consent of all the partners or in accordance with a contract 
between the partners. 
41. Compulsory dissolution -
A firm is dissolved - 
(a) by the adjudication of all the partners or of all the partners but one as insolvent, or 
(b) by the happening of any event which makes it unlawful for the business of the firm to be 
carried on or for the partners to carry it on In partnership. 
Provided that, where more than one separate adventure or undertaking is carried on by the firm 
the illegality of one or more shall not of itself cause the dissolution of the firm in respect of its 
lawful adventures and undertakings. 
42. Dissolution on the happening of certain contingencies -
Subject to contract between the partners a firm is dissolved - 
(a) if constituted for a fixed term, by the expiry of that term; 
(b) if constituted to carry out one or more adventures or undertakings, by the completion 
thereof; 
(c) by the death of a partner; and 
(d) by the adjudication of a partner as an insolvent. 
43. Dissolution by notice of partnership at will - 
(1) Where the partnership is at will, the firm may be dissolved by any partner giving notice in 
writing to all the other partners of his Intention to dissolve the firm. 
(2) The firm 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. 
44. Dissolution by the court - 
At the suit of a partner, the court may dissolve a firm on any of the following grounds, namely:- 
(a) that a partner has become of unsound mind, in which case the suit may be brought as well 
by the next friend of the partner who has become of unsound mind as by any other partner; 
(b) that a partner, other than the partner suing, has become in any way permanently incapable 
of performing his duties as partner; 
(c) that a partner, other than the partner suing, is guilty of conduct which Is likely to affect 
prejudicially the carrying on of the business, regard being had to the nature of the business; 
(d) that a partner, other than the partner suing, willfully or persistently commits breach of 
agreements relating to the management of the affairs of the firm or the conduct of its business, 
or otherwise so conducts himself in matters relating to the business that it is not reasonably 
practicable for the other partners to carry on the business in partnership with him; 
(e) that a partner, other than the partner suing, has in any way transferred the whole of his 
interest in the firm to a third party, or has allowed his share to be charged under the provisions 
of rule 49 of Order XXI of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908) or 
has allowed it to be sold in the recovery of arrears of land revenue or of any dues recoverable as 
arrears of land revenue due by the partner; 
(f) that the business of the firm cannot be carried on save at a loss; or 
(g) on any other ground which renders it just and equitable that the firm should be dissolved. 
45. Liability for acts of partners done after dissolution - 
(1) Notwithstanding the dissolution of a firm, 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 firm 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 firm to be a partner, retires from the 
firm, 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. 
46. Right of partners to have business wound up after dissolution - 
On the dissolution of a firm every partner or his representative is entitled, as against all the 
other partners or their representatives, to have the property of the firm applied in payment of 
the debts and liabilities of the firm, and to have the surplus distributed among the partners or 
their representatives according to their rights. 
47. Continuing authority of partners for purposes of winding up - 
After the dissolution of a firm the authority of each partner to bind the firm, and the other 
mutual rights and obligations of the partners continue notwithstanding the dissolution, so far as 
may be necessary to wind up the affair of the firm and to complete transactions begun but 
unfinished at the time of the dissolution, but not otherwise; 
Provided that the firm is in no case bound by the acts of a partner who has been adjudicated 
insolvent; but this proviso does not affect 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. 
48. Mode of settlement of accounts between partners - 
In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement 
by the partners, be observed:- 
(a) losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, 
and, lastly, if necessary, by the partners individually in the proportions in which they were 
entitled to share profits; 
(b) the assets of the firm, including any sums contributed by the partners to make up 
deficiencies of capital, shall be applied in the following manner and order:- 
(i) in paying the debts of the firm to third parties; 
(H) in paying to each partner ratably what is due to him from the firm for advances as 
distinguished from capital; 
(Hi) in paying to each partner ratably what is due to him on account of capital; and 
(iv) the residue, if any, shall be divided among the partners In the proportions in which they 
were entitled to share profits. 
49. Payment of firm debts and of separate debts - 
Where there are joint debts due from the firm, and also separate debts due from any partner, 
the property of the firm shall be applied in the first instance In payment of debts of the firm, and, 
if there is any surplus, then the share of each partner shall be applied in payment of his separate 
debts or paid to him. The separate property of any partner shall be applied first in the payment 
of his separate debts, and the surplus (if any) in the payment of the debts of the firm. 
50. Personal profits earned after dissolution - 
Subject to contract between the partners, the provisions of clause (a) of section 16 shall apply to 
transactions by any surviving partner or by the representatives of a deceased partner, 
undertaken after the firm Is dissolved on account of death of a partner and before its affairs have 
been completely wound up. 
Provided that where any partner or his representative has brought the goodwill of the firm, 
nothing in this section shall affect his right to use the firm name. 
51. Return of premium on premature dissolution - 
Where a partner has paid a premium on entering into partnership of a fixed term and the firm is 
dissolved before the expiration of that term otherwise than by the death of a partner, he shall be 
entitled to repayment of the premium or of such part thereof as may be reasonable, regard being 
had to the terms upon which he became a partner and to the length of time during which he was 
partner, unless- 
(a) the dissolution is mainly due to his own misconduct, or 
(b) the dissolution is in pursuance of an agreement containing no provision for the return of the 
premium or any part of it. 
52. Rights where partnership contract is rescinded for fraud or misrepresentation - 
Where a contract creating partnership is rescinded on the ground of the fraud or 
misrepresentation of any of the parties thereto the party entitled to rescind is, without prejudice 
to any other right, entitled - 
(a) to a lien on, or a right of retention of, the surplus or the assets of the firm remaining after 
the debts of the firm have been paid, for any sum paid by him for the purchase of a share in the 
firm and for any capital contributed by him; 
(b) to rank as a creditor of the firm in respect of any payment made by him towards the debts 
of the firm; and 
(c) to be indemnified by the partner or partners guilty of the fraud or misrepresentation against 
all the debts of the firm. 
53. Right to restrain from use of firm name or firm property - 
After a firm is dissolved, every partner or his representative may, in the absence of a contract 
between the partners to the contrary, restrain any other partner or his representative from 
carrying on a similar business in the firm name or from using any of the property of the firm for 
his own benefit, until the affairs of the firm have been completely wound up: 
Provided that where any partner or his representative has bought the goodwill of the firm, 
nothing in this section shall affect his right to use the firm name. 
54. Agreements of restraint of trade - 
Partners may, upon or in anticipation of the dissolution of the firm, make an agreement that 
some or all of them will not carry on a business similar to that of the firm within a specified 
period or within specified local limits; and notwithstanding anything contained in section 27 of 
the Indian Contract Act, 1872 (9 of 1872), such agreement shall be valid if the restrictions 
imposed are reasonable. 
55. Sale of goodwill after dissolution - 
(1) In settling the accounts of a firm 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 firm. 
Rights of buyer and seller of good will - 
(2) Where the goodwill of a firm 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 firm name, 
(b) represent himself as carrying on the business of the firm, or 
(c) solicit the custom of persons who were dealing with the firm before its dissolution. 
Agreements in restraint of trade - 
(3) Any partner may, upon the sale of the goodwill of a firm, make an agreement with the buyer 
that such partner will not carry on any business similar to that of the firm within a specified 
period or within specified local limits and notwithstanding anything contained in section 27 of the 
Indian Contract Act, 1872 (9 of 1872), such agreement shall be valid if the restrictions Imposed 
are reasonable. 
Chapter VII 
Registration of firms 
56. Power to exempt from application of this Chapter - 
The '[State Government of any State], may, by notification in the Official Gazette, direct that 
the provisions of this Chapter shall not apply to 2[that State] or to any part thereof specified in 
the notification. 
57. Appointment of Registrars - 
(1) The State Government may appoint Registrars of Firms for the purposes of this Act, and may 
define the areas within which they shall exercise their powers and perform their duties. 
(2) Every Registrar shall be deemed to be a public servant within the meaning of section 21 of 
the Indian Penal Code (45 of 1860). 
58. Application for registration - 
(1) The registration of a firm may be effected at any time by sending by post or delivering to the 
Registrar of the area in which any place of business of the firm is situated or proposed to be 
situated, a statement in the prescribed form and accompanied by the prescribed fee, stating - 
(a) the firm name, 
(b) the place or principal place of business of the firm, 
(c) the names of any other places where the firm carries on business, 
(d) the date when each partner joined the firm, 
(e) the names in full and permanent addresses of the partners, and 
(f) the duration of the firm. 
The statement shall be signed by all the partners, or by their agents specially authorized in this 
behalf. 
(2) Each person signing the statement shall also verify it in the manner prescribed. 
(3) A firm name shall not contain any of the following words, namely:- 
"Crown", "Emperor", "Empress", "Empire", "Imperial", "King", "Queen", "Royal", or words 
expressing or implying the sanction, approval or patronage of '[Government], except 2[when the 
State Government] signifies 3[its] consent to the use of such words as part of the firm name by 
order in writing [***]. 
59. Registration - 
When the Registrar is satisfied that the provisions of section 58 have been duly complied with, 
he shall record an entry of the statement in a register called the Register of Firms and shall file 
the statement. 
1. Subs. By the A.O. 1937, for "Governor General in Council". 
2. Subs. By the A.O. 1937, for "any Province". 
60. Recording of alterations in firm name and principal place of business - 
(1) When an alteration is made in the firm name or in the location of the principal place of 
business of a registered firm, a statement may be sent to the Registrar accompanied by the 
prescribed fee, specifying the alteration and signed and verified in the manner required under 
section 58. 
(2) When the Registrar is satisfied that the provisions of sub-section (1) have been duly 
complied with, he shall amend the entry relating to the firm in the Register of Firms in 
accordance with the statement, and shall file it along with the statement relating to the firm filed 
under section 59. 
61. Noting of closing and opening of branches - 
When a registered firm discontinued business at any place or begins to carry on business at any 
place, such place not being its principal place of business, any partner or agent of the firm may 
send intimation thereof to the Registrar, who shall make a note of such intimation in the entry 
relating to the firm in the Register of Firms, and shall file the intimation along with the statement 
relating to the firm filed under section 59. 
62. Noting of changes in names and addresses of partners - 
When any partner in a registered firm alters his name or permanent address, an intimation of 
the alteration may be sent by any partner or agent of the firm to the Registrar, who shall deal 
with it in the manner provided in section 61. 
63. Recording of changes in and dissolution of a firm. - 
(1) When a change occurs in the constitution of a registered firm any incoming, continuing or 
outgoing partner, and when a registered firm is dissolved any person who was a partner 
immediately before the dissolution, or the agent of any such partner or person specially 
authorized in this behalf, may give notice to the Registrar of such change or dissolution, 
specifying the date thereof; and the Registrar shall make a record of the notice in the entry 
relating to the firm in the Register of Firms, and shall file the notice along with the statement 
relating to the firm filed under section 59. 
Recording of withdrawal of a minor - 
(2) When a minor who has been admitted to the benefits of partnership in a firm attains majority 
and elects to become or not to become a partner, and the firm is then a registered firm, he, or 
his agent specially authorized in this behalf, may give notice to the Registrar that he has or has 
not become a partner, and the Registrar shall deal with the notice in the manner provided in sub 
section(1). 
1. The words "the Crown or the Government of India or a Local Government", have been 
successively adapted by the A.O. 1937, the A.O. 1948 and the A.O. 1950 to read as above. 
2. Subs. by the A.O. 1937, for "when the Governor General in Council" 
3. Subs. by the A.O. 1937, for "his". 
4. The words "under the hand of one of the Secretaries of the Government of India" omitted by 
the A.O. 1937. 
5. In its application to the State of Madras, sec. 59A has been inserted by the Madras Added 
Territories (Adaptation of Laws) Order, 1961. 
64. Rectification of mistakes - 
(1) The Registrar shall have power at all times to rectify any mistake in order to bring the entry 
in the Register of Firms relating to any firm into conformity with the documents relating to that 
firm filed under this Chapter. 
(2) On application made by all the parties who have signed any document relating to a firm filed 
under this Chapter, the Registrar may rectify any mistake in such document or in the record or 
note thereof made in the Register of Firms. 
65. Amendment of Register by order of court - 
A court deciding any matter relating to a registered firm may direct that the Registrar shall make 
any amendment in the entry in the Register of Firms relating to such firm which Is consequential 
upon its decision; and the Registrar shall amend the entry accordingly. 
66. Inspection of Register and filed documents- 
(1) The Register of Firms shall be open to inspection by any person on payment of such fee as 
may be prescribed. 
(2) All statements, notices and intimations filed under this Chapter shall be open to inspection, 
subject to such conditions and on payment of such fee as may be prescribed. 
67. Grant of copies - 
The Registrar shall on application furnish to any person, on payment of such fee as may be 
prescribed, a copy, certified under his hand, of any entry or portion thereof in the Register of 
Firms. 
68. Rules of evidence - 
(1) Any Statement, intimation or notice recorded or noted in the Register of Firms shall, as 
against any person by whom or on whose behalf such statement, intimation or notice was 
signed, be conclusive proof of any fact therein stated. 
(2) A certified copy of an entry relating to a firm in the Register of Firms may be produced in 
proof of the fact of the registration of such firm, and of the contents of any statement, intimation 
or notice recorded or noted therein. 
69. Effect of non-registration - 
(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in 
any court by or on behalf of any person suing as a partner in a firm against the firm or any 
person alleged to be or to have been a partner in the firm unless the firm is registered and the 
person suing is or has been shown in the Register of Firms as a partner in the firm. 
(2) No suit to enforce a right arising from a contract shall be instituted in any court by or on 
behalf of a firm against any third party unless the firm is registered and the persons suing are or 
have been shown in the Register of Firms as partners in the firm. 
(3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other 
proceeding to enforce a right arising from a contract, but shall not affect - 
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a 
dissolved firm, or any right or power to realize the property of a dissolved firm, or 
(b) the powers of an official assignee, receiver or court under the Presidency towns Insolvency 
Act, 1909 (3 of 1909) or the Provincial Insolvency Act, 1920 (5 of 1920) to realize the property 
of an insolvent partner. 
(4) This section shall not apply - 
(a) to firms or to partners in firms which have no place of business in lithe territories to which 
this Act extends], or whose places of business in 2[the said territories], are situated in areas to 
which, by notification under 3[section 56], this Chapter does not apply, or 
(b) to any suit or claim of set-off not exceeding one hundred rupees in value which, in the 
Presidency-towns, is not of a kind specified In section 19 of the Presidency Small Cause Courts 
Act, 1882 (5 of 1882), or, outside the Presidency-towns, is not of a kind specified in the Second 
Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in 
execution or other proceeding incidental to or arising from any such suit or claim. 
70. Penalty for furnishing false particulars - 
Any person who signs any statement, amending statement, notice or intimation under this 
Chapter containing any particular which he knows to be false or does not believe to be true, or 
containing particulars which he knows to be incomplete or does not believe to be complete, shall 
be punishable with imprisonment which may extend to three months, or with fine, or with both. 
71. Power to make rules - 
(1) The 1[State Government] 2[may be notification in the Official Gazette make rules] describing 
the fees which shall accompany documents sent to the Registrar of Firms, or which shall be 
payable for the Inspection of documents in the custody of the Registrar of Firms, or for copies 
from the Register of Firms: 
Provided that such fees shall not exceed the maximum fees specified in Schedule-I. 
(2) The State Government may 3  [also] make rules - 
(a) prescribing the form of statement submitted under section 58 and of the verification thereof; 
(b) requiring statements, intimations and notices under sections 60,61,62 and 63 to be in 
prescribed form, and prescribing the form thereof; 
(c) prescribing the form of the Register of Firms, and the mode in which entries relating to firms 
are to be make therein, and the mode in which such entries are to be amended or notes made 
therein; 
(d) regulating the procedure of the Registrar when disputes arise; 
(e) regulating the filling of documents received by the Registrar; 
(f) prescribing conditions for the inspection of original documents; 
1.Subs. by Act 3 of 1951, sec. 3 and Sch.,

Excerpt shown. Open the full act in Lexace.

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