LANDMARK JUDGEMENTS ON INDIAN PARTNERSHIP ACT

INDIAN PARTNERSHIP ACT

CASE NAME

HELD

1.       Smith v. Anderson, (1880) 15 Ch. D. 247

This is a foundational English company law case that addressed the legal definition of "carrying on a business" in the context of an illegal association. The specific quote, "Business refers to any activity which if successful would result in profit," is a general principle derived from the broader ruling.

2.       Abdul v. Century Wood Industries, AIR 1954 Kant 33

A partnership agreement does not need to be in writing and can be inferred from the conduct of the parties.

3.       Cox v. Hickman, (1860) 8 H.L.C. 268

The principle from Cox v. Hickman (1860) fundamentally reshaped partnership law by establishing that mutual agency, not merely sharing profits, is the true test of a partnership. This means that while a right to share in profits is a necessary condition for a partnership, it is not by itself sufficient to make someone a partner and therefore liable for the business's debts.

4.       Munshi Ram v. Municipal Committee, (1979) 3 SCC 83

The Supreme Court held that a partnership firm is not a legal person and lacks a separate legal existence from its partners. The Court clarified that a firm is merely a collective or compendious term for the individuals who comprise it.  

5.       CIT v. Dwarkadas Khetan & Co., AIR 1961 SC 680  

The Supreme Court confirmed that a minor cannot be a full-fledged partner in an Indian partnership firm under Section 30 of the Indian Partnership Act, 1932, due to their inability to enter a binding contract. However, minors can be admitted to the "benefits of partnership" with the consent of all adult partners, which grants them a share in the profits but not a role in management or liability for losses.

6.       Shailesh Ranka and Ors v. Windsor Machines Limited (2022) 

The Bombay High Court ruled that a partner's implied authority under Section 19(2)(a) of the Indian Partnership Act, 1932, does not extend to referring a firm dispute to arbitration without the consent of all partners. Consequently, an arbitration notice issued by some partners without others' consent is invalid, rendering any petition to appoint an arbitrator also invalid.

7.       ANNAPURNA B. UPPIN & ORS. VERSUS MALSIDDAPPA & ANR. (2024)

The Supreme Court of India held that the legal heirs of a deceased partner are not liable for the liabilities of the partnership firm.

8.       State of Kerala vs Laxmi Vasanth (2022)

The Supreme Court ruled that Section 30(5) of the Partnership Act does not apply to a minor partner who was not a partner at the time of reaching majority, meaning they are not liable for past dues of the partnership.