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PANCHAKSHARI’S PROFESSIONAL ACADEMY PVT LTD
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Special Tree Diagram Notes For CA: CPT Law Prepared by : CA Yogesh Panchakshari
The Indian Partnership Act, 1932

1. Definition of Partnership-(Section
(Section 4) : “Partnership is the relation between persons who
have aged to share profits of a business carried on by all or anyone of them acting for all.”
all
Partnership
5. My be carried
1. Relation 3. Common 4. Sharing Prrofit on by all anyone
2. Agreement
between persons Business or Loss of them acting for
all
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
st
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545 1
2. Features of Partnership firm:
Features of
Partnership
2. An agreement
1. An association
(Oral or Written, 4. Profit/loss 5. Mutual Agency
of 2 or more 3. Business
Expressed or Sharing between Partners
persons
implied)
st
3. Types of Partners: “P” Means Partner
Actual P
Dormant/
P by Holding out
Sleeping P
Minor P Types of Nominal P
Partner
Outgoing P P in Profit
Incoming P Sub P
st
4. Types of Partnership:
Types of
Partnership
On the basis of Duration On the basis of Extent of Business
2. Partnership
1. Partnership 1. Particular 2. General
for a fixed
at will Partnership Partnership
period
st
5. Registration of Partnership Firm: Section 58(1)
Types of Partnership
2. Details required in the application 3. Registrar Confirms the

1. Registration is not Compulsoy form: egistation & records the name
in the Register of Firms
Name, Register office, Other places of Business, Date of partner's joining the Firm, Name & Addresses of Partners, Duration of
o firm
st
6. Changes allowed after registration of Firm:
1. Firm name
2. Principal place of Business
3. Opening or Closing of Branches
4. Address of any partner
5. Constitution of Firm/ Dissolution
6. Minor Partner's Decision after becoming Major
st
7. Effect (Disability) of Non-Registered firm:
1. Partners can't file suit against firm or

other partners. Section 69(1)
2. Firm can't file suit

3. Partners can't Claim
against Partners Section
set-off. Section 69(3)
69(2)
st
8. Rights of Partners:
1. Take part in
9. To use firm property
business
2. to be 10. to be consulted on
consulted admission of new partner
3. To have access
to books 11. To retire
4. To share 12. To carry on competing

Rights to: Rights to:
profits business after retirement
5. Intrest on
capital (If 13. To share subsequent profits
Agreed)
6. Intrest on loan
to firm 14. Not to be expelled
7. Right to
indemnity 15. Remuneration
st
9. Duties of Partners:
7. To share losses
1. Of good faith
8. To account for personal

2. Of gratest profit
common
advantage
9. To account for profit of
3. To render true competing business
accounts
Duty:
Duty :
4. To give full
10. To use firm property
Information for firm only
5. To indemnify
loss due to fraud
11. To act within Authority
6. To attend 12. Not to transfer his

deligently
rights & intrests.
st
10. Position of Minor Partner in the Firm: Section 30(1):
Minor Partner
B. After attaining the age of

A. During the age of minority
majority
IF HE ACCEPTS IF HE REJECTS
a. Same a. Liabilities
position as as a partner
30(5): Public that of others, will be same
30(4): He can
Notice by till notice
He can't be a 30(3): He is file a suit b. Personally
30(1): He can him/her date,
partner but 30(2): He has not personally against for his liable for the
receive the within 6
he can be right to access liable, only his profit & acts from b. Not liable
profits & part Months about
admitted to books of share of Profit property but when he was for further
of property of the decision
the benefits accounts & property is Firm can't file admitted to liabilities,
Firm otherwise
of Firm liable a suit against benefits,
assumed to c. He can sue
him c. Share of
be a partner the partner
profit & for his share
property will of profit &
be same. Property
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
10
11. Authority of Partners:
As per section 25, “Every partner is liable Jointly with all the other partners & also severally for all acts of the firm done while he is a
partner". But the point to be noted that he is liable for only those acts which are within the authority of the other partners. Thus we must
know the concept “Authority of Partners”.
Expressed Specifically decided by all

Authority
Implied Assumed by some indirect permission
11
12. Implied Authority:
Implied Authority
Examples: The If the act is outside the implied authority then the other
Conditions to be partner can: partners shall not be liable & that specific partner shall be
satisfied: the act 1. Engage the personally liable. Such acts as per Section 19(2) are:
must be lawyer, 1. To submit firm's dispute to arbitration,
1. Related to the 2. Purchase usual 2. to open bank a/c in own name on behalf of Firm,
firm, goods,
3. To compromise or relinquish the calim of firm on outsiders,
2. Done in a usual 3. Appoint servants
4. To withdraw such suit,
way, 4. Make collection
5. To accept any suit / liability against firm,
3. Done in the from debtors,
firm's name 6. To acquire/ transfer immovable peroerty for/of firm
5. Sell the goods,
7. To enter into partnership on behalf of the firm
6. Settle the
accounts etc.
12
13. Liability of a firm & partners towards third party:
Sec 26: Firm is

liable for the
activities of
Partners done
within actual or
implied Authority
Liability of Firm
Section 27: If Section 28(1)

partner made any
misappropriation If firm accepted the
of Money then liability impliedly
Firm is liable if the (Liability by holding
act is within his out) then the firm
authority is liable for it
13
14. Reconstitution of Firm:
Changes in Firm
3. Expulsion of
1. Admission of 2. Retirement of 4. Insolvency of 5. Death of Partner
Partner
Partner 31(1) Partner 32(1) Partner 34(1) 42(c)
33(1)
a. By default, the a. By default, the

a. He can retire by a. Partner can't be insolvancy of any death of any
a. He can be
the consent with expelled even by partner result in partner result in
admitted with the
all or by notice, majority but only dissolution of firm, dissolution of firm,
consent of all,
by legal suit,
b. Not laible for b. Laible for any b. Partners may b. Partners may
liability before his b. majority is decide otherwise decide otherwise
any liability before
retirement, allowed if they can in agreement, in agreement,
his admission,
prove that
c. Liable for all the c. Not liable for c. Insolvent c. Heirs of
expulsion is in the
liabilities after his any liabilitiy after partner is not Deceased partner
intrest of firm &
admission his retirement liable for any is not liable for any
done in good faith.
further liabilty. further liabilty.
14
15. Dissolution of a firm: Sec 39: Dissolution is of 2 types:
types 1. Dissolution of Firm: The activities of firm closed down
2. Dissolution of partnership: Some of the partners goes out by death, retirement etc.
Dissolution without court intervention
2. By Contract 3. Compulasory 4. Dissolution due to 5. Dissolution by

1. By the consent of contingency Notice
between partners Dissolution (Section
partners (Section 40)
(Section 40) 41) ( Section 42) (Section 43)
a. Expiry of fixed term,

a. Insolvency of all partners,
b. Completion of adventure,
b. Business of firm becoming
c. Death of partner,
unlawful
d. Insolvency of partner
15
Dissolution with court intervention
2. Perpetual
1. Insanity of Permenant 3. 4. Persistent 5. Transfer
Miscounduct breach of losses in
partner incapacity of of intrest business
partner of partner agreement
Section: Section: Section:
44(a) Section: Section: Section: 44(e)
44(c) 44(d) 44(f)
44(b)
16
16. Effect of Dissolution of firm:
Effect of Dissolution of firm
a. After public Payment shall be

notice, partners are made as:
not liable for further Losses on realisation
Partners can sell off a. External debt of
liabilties, shall be adjusted
all the firm assets to Partners shall keep firm,
first from past
( Section 45) pay firm liabilites & the authority for profits then from b. Partner's Loans,
can share the decisions for capital & if balance
b. Any private profit disslution of firm c. Partner's capital,
under firm name surplus then shared by
( Section 47) solvent partners d. surplus shared by
must be accounted ( Section 46) all partners in PSR
for to firm. ( Section 48).
( Section 48)
( Section 50)
17

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PANCHAKSHARI’S PROFESSIONAL ACADEMY PVT LTD

Your Lifelong Knowledge Partner

The Indian Partnership Act, 1932

2. Features of Partnership firm:

Minor P Types of Nominal P

On the basis of Duration On the basis of Extent of Business

2. Details required in the application 3. Registrar Confirms the

6. Changes allowed after registration of Firm:

2. Principal place of Business

3. Opening or Closing of Branches

4. Address of any partner

5. Constitution of Firm/ Dissolution

6. Minor Partner's Decision after becoming Major

1. Partners can't file suit against firm or

2. Firm can't file suit

4. To share 12. To carry on competing

8. To account for personal

6. To attend 12. Not to transfer his

B. After attaining the age of

Expressed Specifically decided by all

Sec 26: Firm is

Section 27: If Section 28(1)

a. By default, the a. By default, the

Dissolution without court intervention

2. By Contract 3. Compulasory 4. Dissolution due to 5. Dissolution by

a. Expiry of fixed term,

Dissolution with court intervention

Effect of Dissolution of firm

a. After public Payment shall be

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