LexThe Indian Partnership Act, 1932
Maharashtra · state statute
Open in Lexace · Ask the AI about this act
1
THE INDIAN PARTNERSHIP ACT, 1932
________
ARRANGEMENT OF SECTIONS
________
CHAPTER I
PRELIMINARY
SECTIONS
1. Short title, extent and commencement.
2. Definitions.
3. Application of provisions of Act 9 of 1872.
CHAPTER II
THE NATURE OF PARTNERSHIP
4. Definition of “partnership ”, “partner ”, “firm ” and “firm name ”.
5. Partnership not created by status.
6. Mode of determining existence of partnership.
7. Partnership at will.
8. Particular partnership.
CHAPTER III
RELATIONSOF PARTNERS TO ONE ANOTHER
9. General duties of partners.
10. Duty to indemnify for loss caused by fraud.
11. Determination of rights and duties of partners by contract between the partners.
Agreements in restraint of trade.
12. The conduct of the business.
13. Mutual rights and liabilities.
14. The property of the firm.
15. Application of the property of the firm.
16. Personal profits earned by partners .
17. Rights and duties of partners —
after a change in the firm,
after the expiry of the term of the firm, and
where addition al undertakings are carried out.
CHAPTER IV
RELATIONS OF PARTNERS TO THIRD PARTIES
18. Partner to be agent of the firm.
19. Implied authority of partner as agent of the firm.
20. Extension and restriction of partner ’s implied authority.
2
SECTIONS
21. Partner ’s authority in an emergency.
22. Mode of doing act to bind firm.
23. Effect of admissions by a partner.,
24. Effect of notice to acting partner.
25. Liability of a partner for acts of the firm.
26. Liability of the firm for wrongful acts of a partner.
27. Liability of firm for misapplication by partners.
28. Holding out.
29. Rights of transferee of a partner ’s interest.
30. Minors admitted to the benefits of partnership.
CHAPTER V
INCOMING AND OUTGOING PARTNERS
31. Introduction of a partner.
32. Retirement of a partner.
33. Expulsion of a partner.
34. Insolvency of a partner.
35. Liability of estate of deceased partner.
36. Rights of outgoing partner to carry on competing business.
Agreements in restraint of trade.
37. Right of outgoing partner in certain cases to share subsequent profits.
38. Revocation of continuing guarantee by change in firm.
CHAPTER VI
DISSOLUTION OF A FIRM
39. Dissolution of a firm.
40. Dissolution by agreement.
41. Compulsory dissolution.
42. Dissolution on the happening of certain contingencies.
43. Dissolution by notice of partnership at will.
44. Dissolution by the Court.
45. Liability for acts of partners done after dissolution.
46. Right of partners to have business wound up after dissolution.
47. Continuing authority of partners for purposes of winding up.
48. Mode of settlement of accounts between partners.
49. Payment of firm debts and of separate debts.
50. Personal profits earned after dissolution.
51. Return of premium on premature dissolution.
3
SECTIONS
52. Rights where partnership contract is rescinded for fraud or misrepresentation.
53. Right to restrain from use of firm name or firm property.
54. Agreements in restraint of trade.
55. Sale of goodwill after dissolution.
Rights of buyer and seller of goodwill.
Agreements in restraint of trade.
CHAPTER VII
REGISTRATION OF FIRMS
56. Power to exempt from application of this Chapter.
57. Appointment of Registrars.
58. Application for registration.
59. Registration.
60. Recording of alterations in firm name and principal place of business.
61. Noting of closing and opening of branches.
62. Noting of changes in names and addresses of partners.
63. Recording of changes in and dissolution of a firm.
Recording of withdrawal of a minor.
64. Rectification of mistakes.
65. Amendment of Register by order of Court.
66. Inspection of Register and filed documents.
67. Grant of copies.
68. Rules of evidence.
69. Effect of non -registration.
70. Penalty for furnishing false particulars.
71. Power to make rules.
CHAPTER VIII
SUPPLEMENTAL
72. Mode of giving public notice.
73. [Repealed.].
74.Savings.
SCHEDULE I. —MAXIMUM FEES
SCHEDULE II.—[Repealed. ].
4
THE INDIAN PARTNERSHIP ACT, 1932
ACT NO. 9 OF 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 ishereby enacted as
follows:—
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement. —(1) This Act may be called the Indian Partnership Act,
1932.
1[(2) It extends to the whole of India 2[3***].]
(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,—
(a) 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;
(b) “business” includes every trade, occupation and profession;
(c) “prescribed” means prescribed by rules made under this Act;
(d) “third party”, used in relation to a firm or to a partner therein, means any person who is not a
partner in the firm; and
(e) 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. —Theunrepealed provisions of the Indian Contract
Act, 1872 (9 of 1872), save in so far as they are inconsisten t with the express provisions of this Act, shall
continue to apply to firms.
STATE AMENDMENT
Goa, Daman and Diu
In exercise of the powers conferred by sub -section (2) of Section 3 of the Goa, Daman and Diu
(Laws) No. 2 Regulation, 1963, the Lieutenant Governor hereby appoints the 15th March 1964, as the
date on which the provisions of the Acts mentioned in the Schedule below shall come into force in
the Union Territory of Goa, Daman and Diu.
SCHEDULE
1. The Indian Partnership Act, 1932.
By order and in the name of the Lieutenant Governor of Goa, Daman and Diu.
[Published in the Official Gazette Series I No. 11 dated 12-3-1964] (w.e.f. 22nd January 1964)
1. Subs. by the A. O. 1950, for sub-section (2).
2. Subs. by Act 3 of 1951, s. 3 and the Schedule, for “except Part B States”.
3. The words “except the State of Jammu and Kashmir” omitted by Act 34 of 2019, s. 95 and the Fifth Schedule (w.e.f. 31-10-
2019).
5
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 entere d 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 on business as such are not partners in such business
6. Mode of determining existence of partnership. —In determining whether a group of personsisor
is not a 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 per sons 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 t he 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 .—Everypartner 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.
Agreements in restraint of trade.—(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.
6
Such contract may be varied by consent of a ll the partners, and such consent may be expressed or
may be implied by a course of dealing.
(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
(ii) in doing such act, in an 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 wilful 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 in to 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 the
business of the firm, and includes also the goodwill of the business.
Unless the contrary intention appears, property and righ ts 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 profits 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.
7
17. Rights and duties of partners—after a change in the firm, after the expiry of the term of the
firm, and —where additional undertakings are carried out. —Subject to contract between the
partners,—
(a) 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) 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 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 purposes 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,
(h) transfer immovable property belonging to the firm, or
(g) 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 i s 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 or representation made by a partner
concerning the affairs of th e 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.
8
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 therefor 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) Anyone 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
anyone who has on the faith of any such representation given credit to the firm, whether the per son
representing himself or represented to be a 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 itself make his legal representative
or his estate liable for any act of the firm done after his death.
29. Rights of t ransferee of 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 charge on such interest, does not
entitle the transferee, during the continuance of the firm, to inte rfere 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 t o 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 assetsof 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 fir m 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 part ners 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
9
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 fails 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 was entitled as a
minor.
(8)Where such person elects not to become a partner, —
(a) his rights and 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 -sections ( 7) and (8)shall affect 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) Notwithstandi ng 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 r etirement:
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.
10
33. Expulsion of a partner. —(1) Apartner 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 -sections (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 th e firm is
thereby 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 decea sed 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. Rights of outgoing partner to carry on competin g business. Agreements in restraint of
trade.—(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.
(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 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 prop erty 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 representat ives 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 pa rtner 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 t he 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 A 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.
11
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, wilfully or persistently commits breach of
agreements relating to the management of the affairs of the firm or the conduct of it s 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 hint;
(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 i n 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 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.
12
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 affairs 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;
(ii) in paying to each partner rateably what is due to him from the firm for advances as
distinguished from capital;
(iii) in paying to each partner rateably 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 the 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 e arned 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, unde rtaken after the firm is dissolved on account of the death of a
partner and before its affairs 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.
51. Return of premium on premature dissolution. —Where a partner has paid a premium on
entering into partnership for 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 a 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.
13
52. Rights whe re partnership contract is rescinded for fraud or misrepresentation. —Where a
contract creating partn ership is rescinded on the ground of the fraud or misrepresentationof 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 t he 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 de bts 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 in restraint of trad e.—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 any thing contained in
section 27 of the Indian Contract Act, 1872 (9 of 1 872), such agreement shall be valid if the restrictions
imposed are reasonable.
55. Sale of goodwill after dissolution. Rights of buyer and seller of goodwill. Agreements in
restraint of trade.—(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.
(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,
(c) 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.
(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. —The1[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.
1. Subs. by the A.O. 1937, for “G. G. in C.”.
2. Subs. ibid., for “any province”.
14
(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).
STATE AMENDMENT
Goa, Daman and Diu
In exercise of power conferred under sub -section (1) of Section 57 of the Indian Partnership
Act, 1932 (IX of 1932) (hereinafter referred to as the Act), the Government of Goa, in supersession
of all earlier Notifications which may have been issued i n the context and which may render to be
contradictory to present Notification hereby appoints the Officers shown in Column No. II of the
table below as Registrar of Firms who shall exercise, perform and discharge the powers, functions
and duties of the Re gistrar under the Act within the jurisdiction mentioned in Column No. III of the
table below:–
Sr.
No.
Designation of Officer Jurisdiction
I II III
1. Civil Registrar-cum-Sub-Registrar, Pernem Pernem Taluka
2. Jt. Civil Registrar-cum-Sub-Registrar-I, Bardez Bardez Taluka
3. Civil Registrar-cum-Sub-Registrar, Bicholim Bicholim Taluka
4. Civil Registrar-cum-Sub-Registrar, Sattari Sattari Taluka
5. Jt. Civil Registrar-cum-Sub-Registrar-I, Tiswadi Tiswadi Taluka
6. Jt. Civil Registrar-cum-Sub-Registrar-I, Ponda Ponda Taluka
7. Civil Registrar-cum-Sub-Registrar, Dharbandora Dharbandora Taluka
8. Jt. Civil Registrar-cum-Sub-Registrar-I, Mormugao Mormugao Taluka
9. Jt. Civil Registrar-cum-Sub-Registrar-I, Salcete Salcete Taluka
10. Civil Registrar-cum-Sub-Registrar, Quepem Quepem Taluka
11. Civil Registrar-cum-Sub-Registrar, Sanguem Sanguem Taluka
12. Civil Registrar-cum-Sub-Registrar, Canacona Canacona Taluka
This Notification shall come into force with immediate effect.
(Published in the Official Gazette Series I No. 49(Extraordinary) dated 7 -3-2019) (w.e.f. 8/42/2018-
LD(Estt)/469 dated 6-03-2019)
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 authorised in thisbehalf.
(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:—
15
“Crown”, “Emperor”, “Empress”, “Empire”, “Imperial”, “King”, “Queen”, “Royal”, orwords
expressing or implying the sanction, approval or patronage of 1*** Government 2***,except 3[when
the State Government] signifies 4[its] consent to the use of such words as part of the firm name by
order in writing 5***.
STATE AMENDMENT
Goa, Daman and Diu
The Government of Goa is hereby pleased to levy a non -refundable processing fee of Rs.
1,000/- (Rupees one thousand only) for processing the documents for registration of Partnership
Firm under the Indian Partnership Act, 1932 (Central Act 9 of 1932).
This Order shall come into force with effect from the 1st day of April, 2017.
(Published in the Official Gazette Series I No. 52 (Extraordinary -2) dated 31 -3-2017) (w.e.f. 8-5-2017-
LD(Estt.) (C)/407 dated 31-3-2017)
Uttarakhand
Substitution of section 58. —In the Indian Partnership Act, 1932, (hereinafter referred to as the
Principal Act) section 58 shall be substituted as follows, namely:-
58. Application for registration .—(1) The registration of a firm may be effected at any time by
uploading on the website following statement in the prescribed online form and accompanied with
prescribed fees to the Registrar of the area in which any place of business of the firm is situated or
proposed to be situated, 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 film.
The statement shall be digitally signed by all the partners or by their agents specially authorized
in this behalf.
(2) The applicant, signing the statement shall also upload to the website, verifying the statement
recorded in the online format mentioned in sub -section (1), verifying it in the affidavit certified by the
Notary on the non-judicial stamp paper of Rs. 10/.
(3) The desired enclosed shall also be uploaded on website, by the applicant.
(4) A firm name shall not c ontain the word Union, State, Land Mortgage, Land development,
Cooperative, Gandhi, Reserve Bank or any of the words expressing or implying the sanction, approval or
patronage of Government, except when the State Government signifies its consent to the use of such
words as part of the firm name by order in writing.
(5) The prescribed fee of registration shall be submitted online after the online approval given by the
Registrar.
1. The words “the Crown or the Central Government or any Provincial” omitted by the A. O. 1950. The words “the
CentralGovernment or any Provincial Government or the Crown Representative” were subs. by the A. O. 1937 for “the G. of I.
or a L. G.”
2. The words “orExcerpt shown. Open the full act in Lexace.