3

ThE |N0|AN PARTNER8h|P A6T, 1932

0uest|on 1
wnar acrs oo nor la|| u|rn|n rne |mp||eo aurnor|r, ol a parrner unoer rne lno|an Parrnersn|p /cr,
'9J2? {hov. 2002j
Answer
|mp||ed Author|ty of a partner :
3ecl|or 19(1) ard 22 ol lre lrd|ar Parlrersr|p Acl, 1932 dea| W|lr lre |rp||ed aulror|ly.
Accord|rg|y, lre acl ol a parlrer Wr|cr |s dore or, |r lre usua| Way, ous|ress ol lre ||rd
carr|ed or oy lre l|rr o|rds lre l|rr, prov|ded lral lre acl |s dore |r lre l|rr rare or ary
rarrer express|rg or |rp|y|rg ar |rlerl|or lo o|rd lre l|rr. 3ucr ar aulror|ly ol a parlrer
o|rds lre l|rr |s ca||ed r|s |rp||ed aulror|ly.
wnen |mp||eo aurnor|r, cannor oe ava||eo o, a parrner
3ecl|or 19(2) ol lre lrd|ar Parlrersr|p Acl, 1932 |ays doWr lral, |r lre aoserce ol ary usage
or cuslor ol lrade lo lre corlrary, lre |rp||ed aulror|ly ol a parlrer does rol erpoWer r|r lo-
(a) suor|l a d|spule re|al|rg lo lre ous|ress ol lre l|rr lo aro|lral|or.
(o) oper a oar| accourl or oera|l ol lre l|rr |r r|s oWr rare.
(c) corpror|se or re||rqu|sr ary c|a|r or porl|or ol a c|a|r oy lre l|rr aga|rsl a lr|rd parly.
(d) W|lrdraW a su|l or proceed|rg l||ed or oera|l ol lre l|rr.
(e) adr|l ary ||qu|d|ly |r a su|l or proceed|rg aga|rsl lre l|rr.
(l) acqu|re |rrovao|e properly or oera|l ol lre l|rr;
(g) lrarsler |rrovao|e properly oe|org|rg lo lre l|rr or
(r) erler |rlo parlrersr|p or oera|l ol lre l|rr.
$ome orner |nsrances ol |mp||eo aurnor|r, are a|so noreuorrn,.
(|) a parlrer ras ro |rp||ed aulror|ly lo o|rd lre l|rr oy g|v|rg a guararlee Wr|cr |s
apparerl|y urcorrecled W|lr lre parlrersr|p lrade.
(j) re carrol accepl srares ol a corpary aga|rsl lre deol due lo lre l|rr.
(|) ro r|grl ol sel oll r|s oWr separale deols aga|rsl deol due lo lre l|rr.
Business and Corporate Laws 3.2
0uest|on 2
wnerner a m|nor ma, oe aom|rreo |n rne ous|ness ol a parrnersn|p l|rm? Exp|a|n rne r|gnrs ol
a m|nor |n rne parrnersn|p l|rm. {hov. 2002j
Answer
H|nor as a partner :
A r|ror |s |rcorpelerl lo do lre corlracl ard sucr corlracl |s vo|d-ao-|r|l|o {Von|r|o|o| vs.
0naram 0as Snosej. Trerelore, a r|ror carrol oe adr|lled |r lre ous|ress ol lre parlrersr|p
l|rr oecause lre parlrersr|p |s lorred or a corlracl. Trougr a r|ror carrol oe a parlrer |r a
l|rr, re car reverlre|ess oe adr|lled lo lre oerel|ls ol parlrersr|p urder secl|or 30 ol lre
Parlrersr|p Acl, 1932. le ray oe va||d|y rave a srare |r lre prol|l ol lre l|rr oul lr|s car oe
dore W|lr lre corserl ol a|| lre parlrers ol lre l|rr.
R|ghts of the m|nor |n the f|rm :
(|) a r|ror ras a r|grl lo r|s agreed srare ol lre prol|ls ard ol lre l|rr.
(||) re car rave access lo, |rspecl ard copy lre accourls ol lre l|rr.
(|||) re car sue lre parlrers lor accourls or lor payrerls ol r|s srare oul or|y, Wrer
sever|rg r|s correcl|or W|lr lre l|rr, ard rol olrerW|se. Tre arourl ol srare sra|| oe
delerr|red oy a va|ual|or rade |r accordarce W|lr lre ru|es upor a d|sso|ul|or.
(|v) or alla|r|rg rajor|ly re ray W|lr|r rorlrs e|ecl lo oecore a parlrer or rol lo
oecore a parlrer. ll re e|ecls lo oecore a parlrer, lrer re |s erl|l|ed lo lre srare lo
Wr|cr re Was erl|l|ed as a r|ror. ll re does rol, lrer r|s srare |s rol ||ao|e lor ary acls
ol lre l|rr aller lre dale ol lre puo||c rol|ce served lo lral ellecl.
0uest|on 3
ls |r poss|o|e lor rne parrners |n a l|rm nav|ng maor|r, ro expe| a parrner unoer rne prov|s|ons
ol rne lno|an Parrnersn|p /cr, '9J2? 0oes rne l|rm ger o|sso|veo |l rne expu|s|on ol a parrner |s
nor va||o? {Va, 200Jj
Answer
Expu|s|on of A Partner
Accord|rg lo lre prov|s|ors ol lre lrd|ar Parlrersr|p Acl, 1932 as corla|red |r 3ecl|or JJ, a
parlrer ray oe expe||ed lror lre parlrersr|p suojecl lo lre lo||oW|rg lrree cord|l|ors:
1. Tre poWer ol expu|s|or ol a parlrer srou|d oe corlerred oy lre corlracl oelWeer lre
parlrers.
2. Tre poWer srou|d oe exerc|sed oy a rajor|ly ol lre parlrers.
3. Tre poWer srou|d oe exerc|sed |r good la|lr Wr|cr |rc|udes |rleresl ol parlrersr|p,
rol|ce lo lre parlrer lo oe expe||ed, ard ar opporlur|ly ol oe|rg reard. lerce, rere
rajor|ly |s rol erougr.
The Indian Partnership Act, 1932 3.3
Accord|rg|y, |l |s poss|o|e lor lre rajor|ly ol parlrers |r a l|rr lo expe| a parlrer oul |l |s
suojecl lo lu|l|||rerl ol olrer cord|l|ors as slaled aoove.
ll srou|d oe roled lral lre expu|s|or ol parlrers does rol recessar||y resu|l |r d|sso|ul|or ol
lre l|rr. Tre |rva||d expu|s|or ol a parlrer a|so does rol pul ar erd lo lre parlrersr|p ever |l
lre parlrersr|p |s al W||| ard |l W||| oe deered lo corl|rue as oelore. {J|uan $|ngn v. laksnm|
0nano /|R {'9J5j ln. JJ2. 0uaraka 0as v. 0nun| la| {'907j.
0uest|on 4
wnar |s rne proceoure ol reg|srrar|on ol a parrnersn|p l|rm unoer rne lno|an Parrnersn|p /cr,
'9J2 ? wnar are rne consequences ol non-reg|srrar|on? {Va, 200Jj
Answer
Reg|strat|on of a Partnersh|p & 6onsequences of Non-Reg|strat|on
Procedure: (3ecl|or 58 & 59 lrd|ar Parlrersr|p Acl, 1932)
Tre reg|slral|or ol a l|rr ray oe ellecled al ary l|re oy l|||rg ar app||cal|or |r lre lorr ol a
slalererl, g|v|rg lre recessary |rlorral|or, W|lr lre Reg|slrar ol F|rrs ol lre area. Tre
app||cal|or sra|| oe accorpar|ed oy lre prescr|oed lee. ll sra|| a|so slale:
(a) lre rare ol lre l|rr;
(o) lre p|ace or pr|rc|pa| p|ace ol ous|ress ol lre l|rr;
(c) lre rares ol olrer p|aces Wrere lre l|rr carr|es or ous|ress;
(d) lre dale Wrer eacr parlrer jo|red lre l|rr
(e) lre rares |r lu|| ard perrarerl address ol lre parlrers;
(l) lre dural|or ol lre l|rr.
Tre slalererl sra|| oe s|gred oy a|| lre parlrers or oy lre|r agerls spec|a||y aulror|zed |r lr|s
oera|l 3ecl|or 58(|). ll sra|| a|so oe ver|l|ed oy lrer |r lre prescr|oed rarrer (3ecl|or 58(2).
wrer lre Reg|slrar |s sal|sl|ed lral lre aoove prov|s|ors rave oeer du|y corp||ed W|lr, re
sra|| record ar erlry ol lre slalererl |r lre Reg|sler ol F|rrs ard l||e lre slalererl (3ecl|or
59). le sra|| lrer |ssue urder r|s rard a cerl|l|cale ol reg|slral|or.
Tne non-reg|srrar|on ol rne l|rm ooes nor allecr rne lo||ou|ng.
1. Tre r|grl ol a l|rr or parlrers ol a l|rr rav|rg ro p|ace ol ous|ress |r lrd|a.
2. Tre r|grl lo l||e ary su|l or c|a|r ol sel oll exceed|rg Rs. 100 |r va|ue.
3. Tre r|grl ol a parlrer lo sue lor lre d|sso|ul|or ol lre l|rr, or lor lre accourls ol lre
d|sso|ved l|rr, or lor srare ol lre properly ol lre d|sso|ved l|rr. Tr|s d|sao|||ly ol a
parlrer lo sue d|sappears W|lr lre d|sso|ul|or ol lre l|rr.
1. Tre poWers ol ar 0ll|c|a| Rece|ver, Ass|gree, or Courl lo rea||ze lre properly ol ar
|rso|verl parlrer ol ar urreg|slered l|rr.
Business and Corporate Laws 3.4
5. Tre r|grl ol a lr|rd parly lo proceed aga|rsl ar urreg|slered l|rr or ary ol |ls parlrers.
. Tre r|grl ol ar urreg|slered l|rr lo erlorce a r|grl ar|s|rg olrerW|se lrar oul ol a
corlracl (3ecl|or 9(3) ard (1).
0uest|on 5
$rare rne mooes o, un|cn a parrner ma, rransler n|s |nreresr |n rne l|rm |n lavour ol anorner
person, unoer rne lno|an Parrnersn|p /cr, '9J2. wnar are rne r|gnrs ol sucn a rransleree?
{hovemoer 200Jj
Answer
Hodes by wh|ch a partner may transfer h|s |nterest ent|t|ements & non ent|t|ements:
Accord|rg lo 3ecl|or 29 ol lre lrd|ar Parlrersr|p Acl, 1932 a parlrer ray lrarsler r|s |rleresl
|r lre l|rr oy sa|e, rorlgage or crarge. Tre lrarsler ray oe aoso|ule or parl|a|. Tre lrarsler
does rol erl|l|e lre lrarsleree, dur|rg lre corl|ruarce ol lre l|rr:
(a) lo |rlerlere |r lre corducl ol lre ous|ress ol lre l|rr, or
(||) lo requ|re accourls ol lre l|rr, or
(|||) lo |rspecl lre ooo|s ol lre l|rr
0r lrarsler ol |rleresl oy a parlrer, lre lrarsleree or|y oecores erl|l|ed lo rece|ve srare ol
prol|l ol lre lrarslerr|rg parlrer. 8ul |r lr|s case a|so lre lrarsleree ras lo accepl lre accourl
ol prol|ls agreed lo oy lre parlrers [3ecl|or 29(|)|.
ll lre l|rr |s d|sso|ved or |l lre lrarslerr|rg parlrer ceases lo oe a parlrer, lre lrarsleree |s
erl|l|ed lo rece|ve lre lrarslerr|rg parlrer's srare |r lre assels ol lre l|rr. For lre purpose ol
ascerla|r|rg lral srare, re |s erl|l|ed lo ar accourl as lror lre dale ol lre d|sso|ul|or
(3ecl|or 29(2)).
0uest|on
wnar oo ,ou unoersrano o, "lmp||eo /urnor|r, ol a parrner? ls sucn aurnor|r, suoecr ro an,
cono|r|on? wn|cn ol rne acrs ol a parrner come u|rn|n rne |mp||eo aurnor|r, unoer rne lno|an
Parrnersn|p /cr,. '9J2? {hovemoer 200Jj
Answer
|mp||ed Author|ty of a Partner:
Meaning: wrere lrere |s ro parlrersr|p agreererl or Wrere lre agreererl |s s||erl, lre acl
ol a parlrer Wr|cr |s dore lo carry or |r lre usua| Way, ous|ress ol lre ||rd carr|ed or oy lre
l|rr, o|rds lre l|rr (3ecl|or 19(1) lrd|ar Parlrersr|p Acl, 1932). Tr|s aulror|ly ol a parlrer lo
o|rd lre l|rr oy r|s acls |s ca||ed |rp||ed aulror|ly. ll |s suojecl lo lre lo||oW|rg cord|l|ors:
1. Tre acl dore oy lre parlrer rusl re|ale lo lre rorra| ous|ress ol lre l|rr.
The Indian Partnership Act, 1932 3.5
2. Tre acl rusl oe sucr as |s dore W|lr|r lre scope ol lre ous|ress ol lre l|rr |r lre usua|
Way.
Tre acl rusl oe dore |r lre rare ol lre l|rr, or |r ary olrer rarrer express|rg or |rp|y|rg
ar |rlerl|or lo o|rd lre l|rr (3ecl|or 22).
Acts fa|||ng w|th|n the |mp||ed Author|ty of a partner:
1. Purcras|rg goods or oera|l ol lre l|rr, |r Wr|cr lre l|rr dea|s or Wr|cr are erp|oyed |r
lre l|rr's ous|ress.
2. 3e|||rg goods ol lre l|rr.
3. Rece|v|rg payrerl ol lre deol due lo lre l|rr ard g|v|rg rece|pls lor lrer.
1. 3ell||rg accourls W|lr lre persors dea||rg W|lr lre l|rr.
5. Ergag|rg servarls lor lre parlrersr|p ous|ress.
. 8orroW|rg rorey or lre cred|l ol lre l|rr.
Z. 0raW|rg, accepl|rg, |rdors|rg o|||s ard olrer regol|ao|e |rslrurerls |r lre
rare ol lre l|rr.
8. P|edg|rg ary goods ol lre l|rr lor lre purpose ol oorroW|rg rorey.
9. Erp|oy|rg a so||c|lor lo delerd ar acl|or aga|rsl lre l|rr lor goods supp||ed.
0uest|on 7
"Vere snar|ng |n rne prol|rs ol a ous|ness |s nor a conc|us|ve prool ol ex|srence ol
parrnersn|p.- 0ommenr. {Va, 2004j
Answer
8har|ng of Prof|t
Accord|rg lo 3ecl|or 1 ol lre lrd|ar Parlrersr|p Acl, 1932, 'Parlrersr|p |s lre re|al|or
oelWeer persors Wro rave agreed lo srare lre prol|ls ol a ous|ress carr|ed or oy a|| or ary ol
lrer acl|rg lor a||. Tr|s c|ear|y revea|s lral srar| rg ol prol|ls ol a ous|ress |s ar |rporlarl
cr|ler|or ol parlrersr|p. 8ul |r delerr|r|rg Wrelrer |l |s corc|us|ve ev|derce ol parlrersr|p or
rol, lre regard sra|| oe rad lo lre rea| re|al|ors oelWeer lre parl|es, as sroWr oy a|| re|evarl
lacls la|er logelrer. 3ecl|or ol lre lrd|ar Parlrersr|p Acl, 1932, calegor|ca||y |ays doWr
lral rece|pl oy a persor ol a srare ol lre prol|ls ol a ous|ress does rol oy |lse|l ra|e r|r a
parlrer W|lr lre persors carry|rg or lre ous|ress as lrere are ruroer ol cases Wrere lre
persors srar|rg lre prol|ls do rol rave re|al|orsr|p ol parlrers.
For |nstance, |n the fo||ow|ng cases partnersh|p re|at|on does not ex|st: -
1. Jo|rl oWrers ol sore properly |r srar|rg ol prol|ls or gross relurrs ar|s|rg lror lre
properly.
2. A |eader ol lre l|rr Wro rece|ves a srare ol prol|l.
Business and Corporate Laws 3.6
3. A W|doW or cr||d ol a deceased parlrer Wro rece|ves a srare ol prol|l.
1. A servarl or agerl Wro rece|ves a srare ol prol|l as parl ol r|s rerureral|or.
5. A persor Wro rece|ves a srare ol prol|l |r cors|deral|or ol sa|e ol ous|ress or goodW|||
ol lre ous|ress.
lerce, rere parl|c|pal|or |r lre prol|ls ol a lrade |s rol a corc|us|ve ev|derce ol parlrersr|p.
0uest|on 8
Ram, $n,am ano Sopa| are parrners |n a l|rm. Ram rer|res. $n,am ano Sopa| conr|nue ro
carr, on l|rms ous|ness |n rne same "l|rm name. 0o ,ou agree rnar |n rn|s s|ruar|on cnange |n
rne re|ar|onsn|p oerueen parrners |s |nvo|veo, our rn|s |s nor exr|ngu|snmenr ol rne ex|srence ol
rne l|rm |rse|l? S|ve reasons. {Va, 2004j
Answer
Effect of Ret|rement of Partner
As per lre prov|s|or ol 3ecl|or 39 ol lre lrd|ar Parlrersr|p Acl, 1932, 'Tre d|sso|ul|or ol
parlrersr|p oelWeer a|| lre parlrers ol a l|rr |s ca||ed lre d|sso|ul|or ol l|rr. 8ul Wrer ore
or rore parlrer cease lo oe a parlrer |r a l|rr, oul olrer corl|rue lre ous|ress ol parlrersr|p,
|l |s ca||ed d|sso|ul|or ol parlrersr|p. Trus |r lr|s case Wrer Rar rel|res ard 3ryar ard
0opa| corl|rue lo carry or l|rr's ous|ress |r lre o|d l|rr's rare. Tre l|rr |r sucr a case |s
ca||ed a recorsl|luled l|rr. Re-corsl|lul|or ol a l|rr |rvo|ves a crarge |r lre re|al|or ol
parlrer ard rol lre erd ol lre l|rr.
0uest|on 9
Exp|a|n rne prov|s|ons ol rne lno|an Parrnersn|p /cr, '9J2 re|ar|ng ro rne crear|on ol
Parrnersn|p o, no|o|ng our. upro unar exrenr sucn parrner u||| oe ||ao|e ro rne Parrnersn|p l|rm.
{hovemoer 2004j
Answer
Partnersh|p by 'ho|d|ng 0ut'
Accord|rg lo 3ecl|or 28 ol lre lrd|ar Parlrersr|p Acl, 1932 'aryore Wro oy Words spo|er or
Wr|ller or oy corducl represerls r|rse|l, or |roW|rg|y perr|ls r|rse|l lo oe represerled, lo oe
a parlrer |r a l|rr, |s ||ao|e as a parlrer. Tre slalererl |rc|udes W|lr |ls purv|eW
represerlal|or oy a|| poss|o|e rears erureraled |r lr|s secl|or. Trus lre persor sougrl lo oe
crarged W|lr ||ao|||ly oy ro|d|rg oul rusl rave dore sorelr|rg Wr|cr arourls lo a
represerlal|or lral re Was a parlrer |r lre ous|ress. Tr|s |s |roWr as creal|or ol parlrersr|p
oy 'ro|d|rg oul'.
Extent of liability of a partner by holding out:
(|) A parlrer oy ro|d|rg oul |s ||ao|e as a parlrer |r lre l|rr lo aryore Wro ras or lre la|lr
ol, ary sucr represerlal|or g|ves cred|l lo lre l|rr, Wrelrer lre persor represerl|rg
The Indian Partnership Act, 1932 3.7
r|rse|l or represerled lo oe a parlrer does or does rol |roW lral lre represerlal|or
ras reacred lre persor so g|v|rg cred|l [secl|or 28(1)|.
(||) Prov|s|ors ol secl|or 28 are a|so app||cao|e lo a lorrer parlrer Wro ras rel|red lror lre
l|rr W|lroul g|v|rg proper puo||c rol|ce ol r|s rel|rererl. lr sucr case a persor, Wro,
ever suosequerl lo lre rel|rererl, g|ves cred|l lo lre l|rr or oera|l lral re Was a
parlrer, W||| oe erl|l|ed lo ro|d r|r ||ao|e.
(|||) wrere aller a parlrer's dealr lre ous|ress |s corl|rued |r lre o|d l|rr rare, lre
corl|rued use ol lral rare or ol lre deceased parlrer's rare as a parl lrereol sra||
rol oe |lse|l ra|e r|s |ega| represerlal|ve or r|s eslale ||ao|e lor ary acl ol lre l|rr dore
aller r|s dealr [3ecl|or 28(2)|.
(|v) ll a persor ro|ds r|rse|l oul lo oe lre parlrer ol a l|rr, re oecores persora||y ||ao|e.
le does rol oecore parlrer ol lre l|rr ard |s rol erl|l|ed lo ary r|grls as aga|rsl lrose
Wro |r lacl are parlrers |r lre l|rr. 8y ro|d|rg oul re does rol oecore ar agerl ol lre
l|rr.
0uest|on 10
0escr|oe rne prov|s|ons ol lno|an Parrnersn|p /cr. '9J2 regaro|ng rne aom|ss|on ol m|nor |n
rne parrnersn|p l|rm. $rare rne r|gnrs ano ||ao|||r|es ol sucn m|nor oelore or alrer ne arra|ns
maor|r,. {hovemoer 2004j
Answer
H|nor's Adm|ss|on |nto a Partnersh|p F|rm: Accord|rg lo 3ecl|or 11 ol lre lrd|ar Corlracl
Acl, 18Z2 ar agreererl oy or W|lr a r|ror |s vo|d {Vonr| 3|o| vs. 0narm 0as Snosej. As
sucr, a r|ror |s |rcapao|e ol erler|rg |rlo a corlracl ol parlrersr|p. 8ul W|lr lre corserl ol a||
lre parlrers lor lre l|re oe|rg, a r|ror ray oe adr|lled lo lre oerel|ls ol parlrersr|p [3ecl|or
30(1)|. Tr|s prov|s|or |s oased or lre ru|e lral a r|ror carrol oe a pror|sor, oul re car oe a
pror|see or a oerel|c|ary.
Position before and on his attaining the age of majority
Pos|r|on oelore arra|n|ng maor|r,.
R|ghts:
1. le ras a r|grl lo sucr srare ol lre properly ard ol prol|ls ol lre l|rr as ray rave oeer
agreed upor.
2. le ras a r|grl lo rave access lo ard |rspecl ard copy ary ol lre accourls ol lre l|rr
oul rol ooo|s. (3ecl|or 30(2).
3. wrer re |s rol g|ver r|s due srare ol prol|l, re ras a r|grl lo l||e a su|l lor r|s srare ol
lre properly ol lre l|rr. 8ul re car do so or|y |l re Warls lo sever r|s correcl|or W|lr
lre l|rr. [3ecl|or 30(1)|.
Business and Corporate Laws 3.8
L|ab|||t|es:
1. Tre ||ao|||ly ol lre r|ror parlrer |s corl|red or|y lo lre exlerl ol r|s srare |r lre prol|ls
ard properly ol lre l|rr. 0ver ard aoove lr|s, re |s re|lrer persora||y ||ao|e ror |s r|s
pr|vale eslale ||ao|e [3ecl|or 30(3)|.
2. le carrol oe dec|ared |rso|verl, oul |l lre l|rr |s dec|ared |rso|verl r|s srare |r lre l|rr
vesls |r lre 0ll|c|a| Rece|ver or 0ll|c|a| Ass|gree.
Position on attaining majority:
0r alla|r|rg rajor|ly sucr a r|ror ras lo dec|de W|lr|r rorlrs Wrelrer re sra|| corl|rue |r
lre l|rr or |eave |l. Trese s|x rorlrs rur lror lre dale ol r|s alla|r|rg rajor|ly or lror lre
dale Wrer re l|rsl cores lo |roW lral re rad oeer adr|lled lo lre oerel|ls ol parlrersr|p
Wr|crever dale |s |aler. w|lr|r lr|s per|od re srou|d g|ve a puo||c rol|ce ol r|s cro|ce: (a) lo
oecore, or (o) rol lo oecore, a parlrer |r lre l|rr.
ll re la||s lo g|ve a puo||c rol|ce, re |s deered lo rave oecore a parlrer |r lre l|rr or lre
exp|ry ol lre sa|d s|x rorlrs. [3ecl|or 30(5)|.
when such a minor elects to become a partner:
1. le oecores persora||y ||ao|e lo lr|rd parl|es lor a|| acls ol lre l|rr dore s|rce re Was
adr|lled lo lre oerel|ls ol parlrersr|p.
2. l|s srare |r lre properly ard prol|ls ol lre l|rr |s lre srare lo Wr|cr re Was erl|l|ed as
a r|ror parlrer [3ecl|or 30(Z)|.
when such a minor elects not to become a partner:
1. l|s r|grls ard ||ao|||l|es corl|rue lo oe lrose ol a r|ror up lo lre dale ol lre rol|ce.
2. l|s srare |s rol ||ao|e lor ary acls ol lre l|rr dore aller lre dale ol lre puo||c rol|ce.
3. le |s erl|l|ed lo sue lre parlrers lor r|s srare or lre properly ard prol|ls |r lre l|rr
[3ecl|or 30(8)|.
0uest|on 11
0escr|oe rne proceoure ol reg|srrar|on ol l|rm unoer rne lno|an Parrnersn|p /cr. wnar |s rne
ru|e ol ev|oence u|rn regaro ro enrr|es |n rne Reg|srer ol l|rms? {Va, 2005j
Answer
Tre lrd|ar Parlrersr|p Acl, 1932 prov|des lral reg|slral|or ol l|rrs ray oe ellecled al ary
l|re oy l|||rg ar app||cal|or |r lre lorr ol a slalererl, g|v|rg lre recessary |rlorral|or, W|lr
lre Reg|slrar ol F|rrs ol lre area. 3ecl|or 5Z ol lre Acl erpoWers lre 3lale 0overrrerl lo
appo|rl Reg|slrar ol F|rrs lor lre purposes ol lre Parlrersr|p Acl ard del|res lre areas W|lr|r
Wr|cr lrey sra|| exerc|se lre|r poWers ard perlorr lre|r dul|es.
App||cal|or lor reg|slral|or ol a l|rr sra|| oe accorpar|ed oy lre prescr|oed lee. ll sra|| slale:
(a) lre rare ol lre l|rr;
The Indian Partnership Act, 1932 3.9
(o) p|ace or pr|rc|pa| p|ace ol ous|ress ol lre l|rr;
(c) rares ol olrer p|aces Wrere lre l|rr carr|es or ous|ress;
(d) dale Wrer eacr parlrer jo|red lre l|rr;
(e) rares |r lu|| ard perrarerl addresses ol lre parlrers;
(l) dural|or ol lre l|rr.
Tre app||cal|or sra|| oe s|gred oy a|| lre parlrers or oy lre|r agerls spec|a||y aulror|zed |r
lr|s oera|l. ll sra|| a|so oe cerl|l|ed oy lrer |r lre prescr|oed rarrer.
wrer lre Reg|slrar |s sal|sl|ed lral lre aoove prov|s|ors rave oeer corp||ed, re sra|| record
ar erlry |r lre Reg|slrar ol F|rrs ard |ssue a cerl|l|cal|or ol reg|slral|or. Reg|slral|or la|es
ellecl lror lre dale or Wr|cr lre Reg|slrar ra|es erlr|es |r lre Reg|sler ol F|rrs.
Ary slalererl, rol|ce or |rl|ral|or recorded W|lr lre Reg|slrar oy ary persor sra| | oe a
corc|us|ve prool aga|rsl r|r ol ary lacl lrere|r slaled. Tre lr|rd parl|es car, roWever,
cra||erge lre lacl ol slalererl ard prove lral |l |s la|se ard |s oased or r|s-represerlal|or or
lraud (3ecl|or 8).
0uest|on 12
Ram & 0o., a l|rm cons|srs ol rnree parrners /, 3 ano 0 nav|ng one rn|ro snare eacn |n rne
l|rm. /ccoro|ng ro / ano 3, rne acr|v|r|es ol 0 are nor |n rne |nreresr ol rne parrnersn|p ano
rnus uanr ro expe| 0 lrom rne l|rm. /ov|se / ano 3 unerner rne, can oo so quor|ng rne
re|evanr prov|s|ons ol rne lno|an Parrnersn|p /cr. {Va, 2005j
Answer
Norra||y |l |s rol poss|o|e lor lre rajor|ly ol parlrers lo expe| a parlrer lror lre l|rr W|lroul
sal|sly|rg lre cord|l|ors as |a|d doWr |r 3ecl|or 33 ol lre lrd|ar Parlrersr|p Acl, 1932. Tre
esserl|a| cord|l|ors oelore expu|s|or car oe dore are:
(|) poWer ol expu|s|or srou|d ex|sl |r lre parlrersr|p deed (corlracl oelWeer lre parlrers.
(||) poWer ras oeer exerc|sed oy lre rajor|ly ol lre parlrers |r good la|lr.
Tre lesl ol good la|lr |rc|udes:
(a) lral lre expu|s|or rusl oe |r lre |rleresl ol lre parlrersr|p;
(o) lral lre parlrer lo oe expe||ed |s served W|lr a rol|ce; ard
(c) lral lre parlrer ras oeer g|ver ar opporlur|ly ol oe|rg reard.
Trus, |r lre g|ver case A ard 8 lre rajor|ly parlrers car expe| lre parlrer or|y |l lre aoove
cord|l|ors are sal|sl|ed ard procedure as slaled aoove ras oeer lo||oWed.
Furlrer lre |rva||d expu|s|or ol a parlrer does rol pul ar erd lo lre parlrersr|p ard |l W||| oe
deered lo corl|rue as oelore.
Business and Corporate Laws 3.10
0uest|on 13
$rare rne acrs un|cn are cons|oereo oe,ono rne |mp||eo aurnor|r, ol a parrner unoer rne
prov|s|ons ol rne lno|an Parrnersn|p /cr, '9J2. {hovemoer 2005j
Answer
Accord|rg lo 3ecl|or 19 ol lre lrd|ar Parlrersr|p Acl, 1932, ur|ess lrere |s usage or cuslor
ol lrade lo lre corlrary, lre lo||oW|rg acls ol a parlrer are cors|dered oeyord r|s |rp||ed
aulror|ly.
(1) 3uor|l a d|spule re|al|rg lo lre ous|ress ol lre l|rr lo aro|lral|or.
(2) 0per a oar| accourl or oera|l ol lre l|rr |r r|s oWr rare.
(3) Corpror|se or re||rqu|sr ary c|a|r or porl|or ol a c|a|r oy lre l|rr aga|rsl a lr|rd parly
(|.e. ar ouls|der).
(1) w|lrdraW a su|l or proceed|rgs l||ed or oera|l ol lre l|rr.
(5) Adr|l ary ||ao|||ly |r a su|l a proceed|rgs aga|rsl lre l|rr.
() Acqu|re |rrovao|e properly or oera|l ol lre l|rr.
(Z) Trarsler |rrovao|e properly oe|org|rg lo lre l|rr.
(8) Erler |rlo parlrersr|p or oera|l ol lre l|rr.
0uest|on 14
wnen ooes o|sso|ur|on ol a parrnersn|p l|rm rake p|ace unoer rne prov|s|ons ol rne lno|an
Parrnersn|p /cr, '9J2? Exp|a|n. {hovemoer2005j
Answer
0|sso|ut|on of F|rm: Tre 0|sso|ul|or ol F|rr rears lre d|scorl|rual|or ol lre jura| re|al|or
ex|sl|rg oelWeer a|| lre parlrers ol lre F|rr. 8ul Wrer or|y ore ol lre parlrers rel|res or
oecores |r capac|laled lror acl|rg as a parlrer due lo dealr, |rso|vercy or |rsar|ly, lre
parlrersr|p, |.e., lre re|al|orsr|p oelWeer sucr a parlrer ard olrer |s d|sso|ved, oul lre resl
ray dec|de lo corl|rue. lr sucr cases, lrere |s |r pracl|ce, ro d|sso|ul|or ol lre l|rr. Tre
parl|cu|ar parlrer goes oul, oul lre rera|r|rg parlrers carry or lre ous|ress ol lre F|rr. lr
lre case ol d|sso|ul|or ol lre l|rr, or lre olrer rard, lre Wro|e l|rr |s d|sso|ved. Tre
parlrersr|p lerr|rales as oelWeer eacr ard every parlrer ol lre l|rr.
0|sso|ul|or ol a F|rr ray la|e p|ace (3ecl|or 39 - 11)
(a) as a resu|l ol ary agreererl oelWeer a|| lre parlrers (|.e., d|sso|ul|or oy agreererl);
(o) oy lre adjud|cal|or ol a|| lre parlrers, or ol a|| lre parlrers oul ore, as |rso|verl (|.e.,
corpu|sory d|sso|ul|or);
(c) oy lre ous|ress ol lre F|rr oecor|rg ur|aWlu| (|.e., corpu|sory d|sso|ul|or);
The Indian Partnership Act, 1932 3.11
(d) suojecl lo agreererl oelWeer lre parl|es, or lre rapper|rg ol cerla|r corl|rgerc| es,
sucr as: (|) ell|uerce ol l|re; (||) corp|el|or ol lre verlure lor Wr|cr |l Was erlered |rlo;
(|||) dealr ol a parlrer; (|v) |rso|vercy ol a parlrer. lr case ol dealr, |l |s lo oe roled lral
lre parlrers ray ra|e a corlrary agreererl or|y |l lre|r ruroer exceeds lWo. ll lrere
are or|y lWo parlrers lre or|y resu|l ol e|lrer's dealr W||| recessar||y oe lre d|sso|ul|or ol
lre l|rr. Tr|s Was rade c|ear oy lre 3uprere Courl |r 0omm|ss|oner ol lncome-rax vs.
S.$. V|||s.
(e) oy a parlrer g|v|rg rol|ce ol r|s |rlerl|or lo d|sso|ve lre l|rr, |r case ol parlrersr|p al
W||| ard lre l|rr oe|rg d|sso|ved as lror lre dale rerl|ored |r lre rol|ce, or |l ro dale |s
rerl|ored, as lror lre dale ol lre corrur|cal|or ol lre rol|ce; ard
(l) oy |rlerverl|or ol courl |r case ol: (|) a parlrer oecor|rg lre ursourd r|rd; (||)
perrarerl |rcapac|ly ol a parlrer lo perlorr r|s dul|es as sucr; (|||) V|scorducl ol a
parlrer allecl|rg lre ous|ress; (|v) W|||lu| or pers|slerl orarcres ol agreererl oy a
parlrer; (v) lrarsler or sa|e ol lre Wro|e |rleresl ol a parlrer; (v|) |rprooao|||ly ol lre
ous|ress oe|rg carr|ed or save al a |oss; (v||) lre courl oe|rg sal|sl|ed or olrer equ|lao|e
grourds lral lre l|rr srou|d oe d|sso|ved.
0uest|on 15
Ram, Vonan ano Sopa| uere parrners |n a l|rm. 0ur|ng rne course ol parrnersn|p, rne l|rm
oroereo $unr|se lro. ro supp|, a macn|ne ro rne l|rm. 3elore rne macn|ne uas oe||vereo, Ram
exp|reo. Tne macn|ne, nouever, uas |arer oe||vereo ro rne l|rm. Tnerealrer, rne rema|n|ng
parrners oecame |nso|venr ano rne l|rm la||eo ro pa, rne pr|ce ol macn|ne ro $unr|se lro.
Exp|a|n u|rn reasons.
{|j wnerner Rams pr|vare esrare |s ||ao|e lor rne pr|ce ol rne macn|ne purcnaseo o, rne
l|rm?
{||j /ga|nsr unom can rne creo|ror oora|n a oecree lor rne recover, ol rne pr|ce?{Va, 2006j
Answer
Partnersh|p L|ab|||ty: Tre proo|er |r quesl|or |s oased or lre prov|s|ors ol lre lrd|ar
Parlrersr|p Acl, 1932 corla|red |r 3ecl|or 35. Tre 3ecl|or prov|des lral Wrere urder a
corlracl oelWeer lre parlrers lre l|rr |s rol d|sso|ved oy lre dealr ol a parlrer, lre eslale ol
a deceased parlrer |s rol ||ao|e lor ary acl ol lre l|rr dore aller r|s dealr. Trerelore,
cors|der|rg lre aoove prov|s|ors, lre proo|er ray oe arsWered as lo||oWs:
(|) Rar's eslale |r lr|s case W||| rol oe ||ao|e lor lre pr|ce ol lre Vacr|rery purcrased.
j3age| vs. w|||erj
(||) Tre cred|lors |r lr|s case car rave or|y a persora| decree aga|rsl lre surv|v|rg parlrers
ard decree aga|rsl lre parlrersr|p assels |r lre rards ol lrose parlrers. loWever,
s|rce lre surv|v|rg parlrers are a|ready |rso|verl, ro su|l lor recovery ol lre deol Wou|d
||e aga|rsl lrer. A su|l lor goods so|d ard de||vered Wou|d rol ||e aga|rsl lre
Business and Corporate Laws 3.12
represerlal|ve ol lre deceased parlrer. Tr|s |s oecause lrere Was rol deol due |r
respecl ol lre goods |r Rar's ||le l|re. j3age| vs. w|||erj.
0uest|on 1
wnen |s rne reg|srrar|on ol a Parrnersn|p l|rm oeemeo ro oe comp|ere unoer rne lno|an
Parrnersn|p /cr, '9J2? wnar are rne consequences unen a parrnersn|p l|rm |s nor reg|srereo?
{Va, 2006j
Answer
Reg|strat|on of f|rm: Reg|slral|or ol a parlrersr|p l|rr |s allecled oy de||ver|rg lo lre
Reg|slrar ol F|rrs, a slalererl |r lre prescr|oed lorr accorpar|ed oy lre prescr|oed lee
(3ecl|or 58 ol lre lrd|ar Parlrersr|p Acl). Tre acl ol lre parly oy Way ol preserlal|or ol
3lalererl urder 3ecl|or 58 ra|es reg|slral|or ellecl|ve; Wrereas lre Acl ol lre Reg|slrar |r
record|rg ar erlry ol lre slalererl |r lre Reg|slrar ol lre F|rrs |s or|y a c|er|ca| acl
{Ja,a|aksnm| R&D V vs. lncome Tax comm|ss|onerj.
Tre ellecls ol ror-reg|slral|or ol a l|rr as corla|red |r secl|or 9 are as lo||oWs:
1. 3u|ls oelWeer Parlrers & F|rr [3ecl|or 9 (1)| A parlrer ol ar urreg|slered l|rr carrol
sue lre l|rr or ary parlrer ol lre l|rr lo erlorce a r|grl ar|s|rg lror a corlracl or
corlerred oy lre Parlrersr|p Acl. le car do so |l (|) lre l|rr |s reg|slered ard (||) lre
persor su|rg |s or ras oeer sroWr |r lre Reg|slrar ol F|rrs as a parlrer |r lre l|rr.
2. 3u|ls oelWeer F|rr ard lr|rd parl|es [3ecl|or 9(2)| Ar urreg|slered l|rr carrol sue a
lr|rd parly lo erlorce a r|grl ar|s|rg lror a corlracl.
3. C|a|r ol sel-oll [3ecl|or 9(3)|: Ar urreg|slered l|rr or ary parlrer lrereol carrol c|a|r
a sel-oll |r a proceed|rg |rsl|luled aga|rsl lre l|rr oy a lr|rd parly lo erlorce a r|grl
ar|s|rg lror a corlracl url|| lre reg|slral|or ol lre l|rr |s ellecled. Tr|s r|grl ol sel -oll,
roWever, |s rol allecled |l lre c|a|r ol sel-oll |s |ess lrar Rs. 100 |r va|ue [3ecl|or
9(1)(o)|.
0uest|on 17
/, 3 ano 0 are parrners |n a l|rm. / |nrroouces 0 ro X as a parrner |n ous|ness. 0, |nlacr, uas
nor a parrner |n rne l|rms ous|ness. 0 o|o nor oen, rn|s sraremenr. X aovanceo a |oan ol Rs.
20 |akns ro rne l|rm. F|rms la||ure ro repa, rne |oan X uanr ro no|o 0 respons|o|e lor rne
repa,menr ol rne aoove |oan. Relerr|ng ro rne prov|s|ons ol rne lno|an Parrnersn|p /cr, '9J2
oec|oe unerner X uou|o succeeo |n recover|ng rne |oan lrom 0. {hovemoer 2006j
Answer
Yes, X car ro|d 0 respors|o|e lor lre repayrerl ol |oar as re |s lre parlrer oy Eslopp|e or oy
ro|d|rg oul. 3ecl|or 28(1) lrd|ar Parlrersr|p Acl, 1932 |ays doWr lr|s pr|rc|p|e as lo||oWs:
'Aryore Wro oy Words spo|er or Wr|ller or oy corducl represerls r|rse|l, or |roW|rg|y
perr|ls r|rse|l lo oe represerled, lo oe a parlrer |r a l|rr, |s ||ao|e as a parlrer |r lral l|rr lo
aryore Wro ras or lre la|lr ol ary sucr represerlal|or g|ver cred|l lo lre l|rr, Wrelrer lre
The Indian Partnership Act, 1932 3.13
persor represerled lo oe a parlrer does or does rol |roW lral represerlal|or ras reacred
lre persor so g|v|rg cred|l. lerce 0 oecores a parlrer oy ro|d|rg oul as re d|d rol dery
lre slalererl g|ver oy A. lerce 0 |s ||ao|e lo ra|e repayrerl ol |oar.
0uest|on 18
"$nar|ng ol prol|rs |s on|, a pr|ma lac|e nor a conc|us|ve ev|oence ol rne ex|srence ol
parrnersn|p. Exam|ne rne va||o|r, ol rne sraremenr |n rne ||gnr ol rne prov|s|ons ol rne lno|an
Parrnersn|p /cr, '9J2 ano srare as ro nou uou|o ,ou oererm|ne unerner a group ol persons
ooes or ooes nor consr|rure parrnersn|p. {hovemoer 2006j
Answer
ll |s lrue lral srar|rg ol prol|ls ol ous|ress |s ar esserl|a| e|ererl lo corsl|lule a parlrersr|p.
8ul |l |s or|y a pr|ra lac|e ev|derce oul rol a corc|us|ve ev|derce ol lre ex|slerce ol
parlrersr|p. ll |s a|so lrue lral lre parlrers agree lo srare lre prol|ls ol a ous|ress Wr|cr |s
carr|ed or oy a|| or oy ore ol lrer acl|rg lor a||. loWever, lre srar|rg ol prol|ls Wou|d rol oy
|lse|l ra|e sucr persor parlrer W|lr lre persors carry|rg or a ous|ress. 3rar|rg ol prol|ls oy
lre lo||oW|rg persor W||| rol ra|e lrer parlrers |r lre parlrersr|p l|rr:
(|) oy a |erder ol rorey lo persors ergaged or aooul lo ergage |r ary ous|ress;
(||) oy a servarl or agerl as rerureral|or.
(|||) oy W|doW or cr||d or a deceased parlrer as arru|ly, or
(|v) oy a prev|ous oWrer or parl oWrer ol lre ous|ress as cors|deral|or lor lre sa|e ol
goodW||| or srare lrereol.
To delerr|re Wrelrer a group ol persors rurr|rg a ous|ress does or does rol corsl|lule
parlrersr|p, 3ecl|or ol lre lrd|a Parlrersr|p Acl, 1932 ras lo oe relerred. Accord|rg lo
3ecl|or 'lr delerr|r|rg Wrelrer a group ol persors |s or |s rol l|rr, regard sra|| oe rad lo
lre rea| re|al|or oelWeer lre parl|es as sroWr oy a|| re|evarl lacls la|er logelrer. ll |s very
c|ear lror lr|s lral |r delerr|r|rg re|al|orsr|p oelWeer parl|es ard ascerla|r|rg lre ex|slerce
ol parlrersr|p a|| re|evarl lacls sucr as lo||oWs are lo oe cors|dered -
(|) Trere rusl oe ar agreererl oelWeer lWo or rore persors
(||) Trere rusl oe a ous|ress ol parlrersr|p
(|||) Tre parlrers rusl rave agreed lo srare lre prol|ls ol ous|ress
(|v) Tre ous|ress rusl oe carr|ed or oy a|| or ary ore ol lrer acl|rg lor a||. lr olrer Words
lrere rusl oe rulua| agercy oelWeer lre parlrers. Ex|slerce ol rulua| agercy Wr|cr |s
lre card|ra| pr|rc|p|e ol parlrersr|p |aW, |s very rucr re|plu| |r reacr|rg a corc|us|or |r
lr|s regard. lr lr|s s|lual|or eacr parlrer |s lre pr|rc|pa| as We|| as agerl ol lre olrer
parlrers.
lerce, |r order lo delerr|re Wrelrer lre re|al|or ol parlrersr|p ex|sls oelWeer lWo or rore
persors or rol, ore srou|d exar|re a|| lre lacls ard c|rcurslarces as c|led aoove.
Business and Corporate Laws 3.14
0uest|on 19
/ ano 3 enrereo |nro an agreemenr ro carr, on a ous|ness ol manulacrur|ng ano se|||ng ro,s.
Eacn one ol rnem conrr|oureo Rs. J5 |acs as rne|r cap|ra| u|rn a cono|r|on rnar / ano 3 u|||
snare rne prol|rs equa||,, our rne |oss, |l an, |s ro oe oorne o, / a|one. Relerr|ng ro rne
prov|s|ons ol rne lno|an Parrnersn|p /cr, '9J2 oec|oe unerner rnere ex|srs a parrnersn|p
oerueen / ano 3. {Va, 2007j
Answer
Yes, |l |s a case ol parlrersr|p oelWeer A ard 8 as srar|rg |osses |s rol ar esserl|a|
cord|l|or lo creale a parlrersr|p. 3ecl|or 13(o) ol lre lrd|ar Parlrersr|p acl 1932 prov|des
3uojecl lo lre corlracl oelWeer lre parlrers, lre parlrers are erl|l|ed lo srare equa||y |r lre
prol|ls earred, ard sra|| corlr|oule equa||y lo lre |osses susla|red oy lre l|rr. lr lre g|ver
case lre parlrers ra|e a corlracl corlrary lo lr|s prov|s|or Wrere A agrees lo oear a|| lre
|osses ol lre ous|ress.
0uest|on 20
/, 3 ano 0 are parrners |n a l|rm ca||eo /30 F|rm. /, u|rn rne |nrenr|on ol oece|v|ng 0, a
supp||er ol oll|ce srar|oner,, ou,s cerra|n srar|oner, on oena|l ol rne /30 F|rm. Tne srar|oner,
|s ol use |n rne oro|nar, course ol rne l|rms ous|ness. / ooes nor g|ve rne srar|oner, ro rne
l|rm, |nsreao or|ngs |r ro n|s oun use. Tne supp||er 0, uno |s unauare ol rne pr|vare use ol
srar|oner, o, /, c|a|ms rne pr|ce lrom rne l|rm. Tne l|rm reluses ro pa, lor rne pr|ce, on rne
grouno rnar rne srar|oner, uas never rece|veo o, |r {l|rmj. Relerr|ng ro rne prov|s|ons ol rne
lno|an Parrnersn|p /cr, '9J2 oec|oe.
{|j wnerner rne F|rms conrenr|on sna|| oe renao|e ?
{||j wnar uou|o oe ,our ansuer |l a parr ol rne srar|oner, so purcnaseo o, / uas oe||vereo ro
rne l|rm o, n|m, ano rne resr ol rne srar|oner, uas useo o, n|m lor pr|vare use, aoour
un|cn ne|rner rne l|rm nor rne supp||er 0 uas auare? {Va, 2007j
Answer
Tre proo|er |r lre quesl|or |s oased or lre 'lrp||ed Aulror|ly' ol a parlrer prov|ded |r
3ecl|or 19 ol lre lrd|ar Parlrersr|p Acl 1932. Tre secl|or prov|des lral suojecl lo lre
prov|s|ors ol 3ecl|or 22 ol lre Acl, lre acl ol a parlrer, Wr|cr |s dore lo carry or, |r lre usua|
Way, ous|ress ol lre ||rd carr|ed or oy lre l|rr, o|rds lre l|rr. Tre aulror|ly ol a parlrer lo
o|rd lre l|rr corlerred oy lr|s secl|or |s ca||ed r|s 'lrp||ed Aulror|ly' [3uo-3ecl|or (|) ol
secl|or 19|. Furlrerrore, every parlrer |s |r corlerp|al|or ol |aW lre gerera| ard accred|led
agerl ol lre parlrersr|p ard ray corsequerl|y o|rd a|| lre olrer parlrers oy r|s acls |r a||
rallers Wr|cr are W|lr|r lre scope ard oojecl ol lre parlrersr|p lerce, |l lre parlrersr|p |s ol
a gerera| correrc|a| ralure, re ray ouy goods or accourl ol lre parlrersr|p.
Cors|der|rg lre aoove prov|s|ors ard exp|aral|or, lre quesl|ors as as|ed |r lre proo|er ray
oe arsWered as urder:
(|) Tre l|rr's corlerl|or |s rol lerao|e, lor lre reasor lral lre parlrer, |r lre usua| course ol
lre ous|ress or oera|l ol lre l|rr ras ar |rp||ed aulror|ly lo o|rd lre l|rr. Tre l|rr |s,
lrerelore, ||ao|e lor lre pr|ce ol lre goods,
The Indian Partnership Act, 1932 3.15
(||) lr lre secord case a|so lre arsWer Wou|d oe lre sare as aoove, |.e. lre |rp||ed aulror|ly
ol lre parlrer o|rds lre l|rr.
lr oolr lre cases, roWever, lre l|rr A8C car la|e acl|or aga|rsl A, lre parlrer oul |l ras lo
pay lre pr|ce ol slal|orery lo lre supp||er 0.
0uest|on 21
/on|nav ou,s cerra|n gooos uorrn Rs. 50,000 lrom an unreg|srereo l|rm Ram & $ons. Ram & $ons
nas ro pa, Rs. 60,000 ro /on|nav lor rne gooos purcnaseo o, rne l|rm |n rne pasr. Relerr|ng ro rne
prov|s|ons ol rne lno|an Parrnersn|p /cr, '9J2 oec|oe unerner Ram & $ons can compe| /on|nav ro
accepr Rs. '0,000 |.e. rne o|llerence oerueen Rs. 60,000 ano 50,000 as rne l|na| serr|emenr?
{hovemoer 2007j
Answer
3ecl|or 9 ol lre lrd|ar Parlrersr|p Acl, 1932 prov|des lral ar urreg|slered l|rr car rol c|a|r
a sel oll exceed|rg Rs. 100 |r va|ue. lr lre g|ver case lre d|llererce oelWeer Rs. 0,000 ard
50,000 |s ol Rs. 10,000 lor Wr|cr lre r|grl ol sel oll |s rol ava||ao|e. Trerelore, Rar & 3ors
car rol corpe| Aor|rav lo accepl Rs. 10,000 as lre l|ra| sell|ererl.
0uest|on 22
"lmp||eo aurnor|r, ol a parrner can oe exrenoeo or resrr|creo. 0|scuss rne aoove sraremenr |n rne
||gnr ol rne prov|s|ons ol rne lno|an Parrnersn|p /cr, '9J2. lou lar, are rn|ro parr|es allecreo o,
resrr|cr|ons p|aceo on sucn |mp||eo aurnor|r,? {hovemoer 2007j
Answer
3ecl|or 19 (2) ol lre lrd|ar Parlrersr|p Acl, 1932, prov|des lral lre acl ol a parlrer Wr|cr |s
dore lo carry or lre usua| Way, ous|ress ol lre ||rd carr|ed or oy lre l|rr o|rd lre l|rr,
prov|ded lre acl |s dore |r lre l|rr's rare or |r ary rarrer express|rg or |rp|y|rg ar
|rlerl|or lo o|rd lre l|rr. Tre |rp||ed aulror|ly ol a parlrer exlerds or|y lo sucr acls Wr|cr
are corror |r lre lype ol ous|ress carr|ed or oy lre l|rr ard are dore oy r|r |r usua| Way ol
carry|rg or lre l|rr's ous|ress. Trus, |l |l |s usua| lo g|ve cred|l lo cuslorers, |r a parl|cu|ar
ous|ress, lre g|v|rg ol cred|l oy a parlrer lo a cuslorer W||| o|rd lre l|rr. loWever, |l a usua|
acl |s dore |r ar urusua| rarrer, lr|s rusl ra|se a susp|c|or as lo lre aulror|ly ol a parlrer
ard lre prolecl|or or lre grourd ol |rp||ed aulror|ly ray rol lre ava||ao|e.
0uest|on 23
wnar oo ,ou mean o, "|mp||eo aurnor|r, ol rne parrners |n a l|rm? Po|nr our rne exrenr ol parrners
|mp||eo aurnor|r, |n case ol emergenc,, relerr|ng ro rne prov|s|ons ol rne lno|an Parrnersn|p /cr,
'9J2. {Va, 2008j
Answer
|mp||ed author|ty of partner
As per 3ecl|or 19 ol lre lrd|ar Parlrersr|p Acl, 1932 '3uojecl lo lre prov|s|ors ol 3ecl|or 22,
lre acl ol a parlrer Wr|cr |s dore lo carry or, |r lre usua| Way, lre ous|ress ol lre ||rd
carr|ed or oy lre l|rr o|rds lre l|rrs. Tre aulror|ly ol a parlrer lo o|rd lre l|rr corlerred oy
lr|s secl|or |s ca||ed r|s '|rp||ed aulror|ly'. 3ecl|or 21 ol lre Acl prov|des lral a parlrer ras
Business and Corporate Laws 3.16
aulror|ly |r ar erergercy lo do a|| sucr acl lor lre purpose ol prolecl|rg lre l|rr lror lre |oss
as Wou|d oe dore oy a persor ol ord|rary pruderce, |r r|s oWr case, acl|rg urder s|r||ar
c|rcurslarces, ard sucr acls o|rd lre l|rr. Cord|l|ors lor lre aulror|ly ol a parlrer |r ar
erergercy:
(|) Tre acl srou|d oe dore oy lre parlrer |r ar erergercy
(||) Tre acl ol lre parlrer srou|d oe lor lre purpose ol prolecl|rg lre l|rr lror |oss.
(|||) Tre acl srou|d oe, as a persor ol ord|rary pruderce Wou|d do |r r|s oWr case.
(|v) 3ucr ar acl srou|d o|rd lre l|rr.
To prolecl lre l|rr, a parlrer ras ar aulror|ly lo do a|| sucr acls |r erergercy lo save lre l|rr
lror |oss. ll ray oe rol|ced lral lre poWers ol a parlrer lo acl |r ar erergercy are s|r||ar lo
lrose ol ar agerl |r s|r||ar c|rcurslarces urder 3ecl|or 139 ol lre lrd|ar Corlracl Acl, 18Z2.
0uest|on 24
/, 3 ano 0 are parrners |n a l|rm. /s per rerms ol rne parrnersn|p oeeo, / |s enr|r|eo ro 20
percenr ol rne parrnersn|p properr, ano prol|rs. / rer|res lrom rne l|rm ano o|es alrer '5 oa,s.
3 ano 0 conr|nue ous|ness ol rne l|rm u|rnour serr||ng accounrs. wnar are r ne r|gnrs ol /s
|ega| represenrar|ves aga|nsr rne l|rm unoer rne lno|an Parrnersn|p /cr, '9J2? {Va, 2008j
Answer
Ret|rement | 0eath of Partner
3ecl|or 3Z ol lre lrd|ar Parlrersr|p Acl, 1932 prov|des lral Wrere a parlrer d|es or olrerW|se
ceases lo oe a parlrer ard lrere |s ro l|ra| sell|ererl ol accourl oelWeer lre |ega|
represerlal|ves ol lre deceased parlrer or lre l|rrs W|lr lre properly ol lre l|rr, lrer, |r lre
aoserce ol a corlracl lo lre corlrary, lre |ega| represerlal|ves ol lre deceased parlrer or lre
rel|red parlrer are erl|l|ed lo c|a|r e|lrer.
(|) 3ucr srares ol lre prol|ls earred aller lre dealr or rel|rererl ol lre parlrer Wr|cr |s
allr|oulao|e lo lre use ol r|s srare |r lre properly ol lre l|rr; or
(||) lrleresl al lre rale ol per cerl arrur or lre arourl ol r|s srare |r lre properly.
8ased or lre aloresa|d prov|s|ors ol 3ecl|or 3Z ol lre lrd|ar Parlrersr|p Acl, 1932 A, |r lre
g|ver proo|er, A sra|| oe erl|l|ed, al r|s opl|or lo:
(|) lre 20 srares ol prol|ls (as per lre parlrersr|p deed); or
(||) |rleresl al lre rale ol per cerl per arrur or lre arourl ol A's srare |r lre properly.
0uest|on 25
Vanesn, $uresn ano 0|nesn are parrners |n a rrao|ng l|rm. Vanesn, u|rnour rne knou|eoge or
consenr ol $uresn ano 0|nesn oorrous n|mse|l Rs. 50,000 lrom Ramesn, a cusromer ol rne
l|rm, |n rne name ol rne l|rm. Vanesn, rnen ou,s some gooos lor n|s persona| use u|rn rnar
oorroueo mone,. 0an Vr. Ramesn no|o Vr. $uresn & Vr. 0|nesn ||ao|e lor rne |oan? Exp|a|n
rne re|evanr prov|s|ons ol rne lno|an Parrnersn|p /cr,'9J2. {hovemoer 2008j
The Indian Partnership Act, 1932 3.17
Answer
|mp||ed author|ty of a partner
Yes, as per secl|ors 19 ard 22 ol lre lrd|ar Parlrersr|p Acl,1932 ur|ess olrerW|se prov|ded
|r lre parlrersr|p deed, every parlrer ras ar |rp||ed aulror|ly lo o|rd every olrer parlrer lor
acls dore |r lre rare ol lre l|rr, prov|ded lre sare la||s W|lr|r lre ord|rary course ol
ous|ress ard |s dore |r a usua| rarrer. Varesr ras a r|grl lo oorroW lre rorey ol Rs.
50,000/- lror Raresr or oera|l ol r|s l|rr |r lre usua| rarrer. 3|rce, Raresr ras ro
|roW|edge lral lre arourl Was oorroWed oy Varesr W|lroul lre corserl ol lre olrer lWo
parlrers, Vr. 3uresr ard Vr. 0|resr, re car ro|d oolr ol lrer (3uresr ard 0|resr) ||ao|e lor
lre re-payrerl ol lre |oar.
0uest|on 2
/n|| ano $un|| purcnaseo a |orr, ro p|, |r |n parrnersn|p. Tne, p||eo rne |orr, lor aoour ruo
,ears unen /n||, u|rnour rne consenr ol $un||, o|sposeo ol rne |orr,. $un|| orougnr an acr|on ro
recover n|s snare |n rne sa|e proceeos. /n|| res|sreo $un||s c|a|m on rne p|ea rnar rne l|rm uas
nor reg|srereo. w||| $un|| succeeo |n n|s c|a|m? 0ec|oe u|rn relerence ro rne prov|s|ons ol rne
lno|an Parrnersn|p /cr, '9J2. {hovemoer 2008)
Answer
Effect of non-reg|strat|on
Tre proo|er |s oased or lre prov|s|ors ol 3ecl|or 9 ol lre lrd|ar Parlrersr|p Acl. As per
lr|s secl|or a parlrer ol ar urreg|slered l|rr |s exc|uded lror or|rg|rg |ega| acl|or aga|rsl lre
l|rr or ary persor a||eged lo oe or lo rave oeer a parlrer |r lre l|rr. 8ul sucr a persor ray
sue lor d|sso|ul|or ol lre l|rr or lor accourls ard rea||sal|or ol r|s srare |r lre l|rr's properly
Wrere lre l|rr |s d|sso|ved. App|y|rg lrese prov|s|ors, 3ur|| W||| succeed |r r|s c|a|r as lre
ous|ress rad oeer c|osed or lre sa|e ol lre |orry, ard lre acl|or roW Was lor lre rea||sal|or
ol lre assels ol a d|sso|ved l|rr.