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 is hereby enacted as follows

CHAPTER I

PRELIMINARY

1. SHORT TITLE, EXTENT AND COMMENCEMENT

a. Act may be called the Indian Partnership Act, 1932.

b. It extends to the whole of India.

c. 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.

The reason for postponing the enforcement of Section 69 for one year was that since the section for the first time cut short the ability of an unregistered firm to sue in certain respects, it was necessary to give time to firms to get them- selves registered before any disability could be clinched on them.

2. DEFINITIONS

In this Act, unless there is anything repugnant in the subject or context,—

A. 'ACT OF A FIRM'

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;

Essential requisites

1. An Act or omission by all partners/by any partner.— It must be an act or omission by all the partners or by any partner or agent of the firm.

2. An Act or omission must provide an enforceable right. —The act or omission must give rise to a right enforceable by or against the firm.

Unless both the above requisites are fulfilled the act or omission cannot be said to be an act of a firm.

In the case of an act or omission by an agent of the firm, the agent must be an authorised one.

B. 'BUSINESS'

'business'  includes every trade, occupation and profession;

he word used in the definition is not exhaustive but only enumerative and does not limit the meaning of the word.

The word “business” does not necessarily mean some undertaking of an industrial or commercial nature, e.g., two owners putting their property in partnership and letting out the same jointly can form a partnership.

Similarly, two doctors or two lawyers can form a partnership to treat patients or to fight out the cases of their clients.

“What is a business?” It is nothing but a question of fact to be answered with reference to the particular facts of a case.

A single transaction or venture or an isolated act of money lending does not amount to business and consequently it does not come under the term “business”' as mentioned in Section 4 of Partnership Act.

The word occupation is used in the sense of an occupation continuously carried on for the purpose of profits. It is not every occupation which results in monetary gain that constitutes a business.

C. 'PRESCRIBED'

'prescribed' means prescribed by rules made under this Act;

D. 'THIRD PARTY’

'Third party’ used in relation to a firm or to a partner therein means any person who is not a partner in the firm;

e. expressions used but not defined in this Act and defined in the Indian Contract Act, 1872, shall have the meanings assigned to them in that Act.

3. APPLICATION OF PROVISIONS OF ACT 9 OF 1872

The unrepealed provisions of the Indian Contract Act, 1872, save in so far as they are inconsistent with the express provisions of this Act, shall continue to apply to firms.