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Indian Partnership Act, 1932 – Section Summary

SectionRuleKey ConceptCase Law
4Definition of PartnershipPartnership = relation between persons who share profits of a business carried by all or any acting for all.Cox v Hickman
5Partnership not Created by StatusPartnership comes from agreement, not from family or status.M.P. Davis v CIT
6Test of PartnershipReal relation depends on facts, not just agreement words.Cox v Hickman
7Partnership at WillPartnership with no fixed time can be ended anytime.Abbott v Abbott
8Particular PartnershipPartnership for one specific work or project.Re English and Irish Church Assurance Society
9General Duties of PartnersPartners must act honestly and for benefit of firm.Bentley v Craven
10Duty to Indemnify for FraudPartner must pay for loss caused by fraud.Hamlyn v Houston & Co.
11Mutual Rights and DutiesRights and duties decided by agreement between partners.Sadler v Whiteman
12Conduct of BusinessAll partners have right to take part in business.Exp Scarf
13Mutual Rights and LiabilitiesPartners share profits and losses equally unless agreed otherwise.Robinson v Ashton
14Property of the FirmProperty of firm includes all assets used for business.Armstrong v Jackson
15Use of Firm PropertyProperty must be used only for firm business.Bentley v Craven
16Personal Profits EarnedPartner must not make secret profit from firm business.Bentley v Craven
17Rights after Change in FirmRights continue even after change unless agreed otherwise.Scarf v Jardine
18Partner as AgentEvery partner acts as agent of firm.Mercantile Credit Co v Garrod
19Implied AuthorityPartner can bind firm by usual business acts.Watteau v Fenwick
20Extension/Restriction of AuthorityAuthority can be increased or limited by agreement.Hely-Hutchinson v Brayhead Ltd
21Partner's Authority in EmergencyPartner can act in emergency to protect firm.Great Northern Railway v Swaffield
22Mode of Doing ActsActs must be done in firm name or showing intent to bind firm.Bank of Bengal v Fagan
23Admission by PartnerStatement by partner can bind firm.Slater v Pooley
24Effect of NoticeNotice to partner is notice to firm.Re David Payne & Co Ltd
25Liability of PartnersPartners are jointly and personally (individually) liable.Hamlyn v Houston & Co.
26Liability for Wrong ActsFirm liable for wrongful acts of partner in business.Lloyd v Grace Smith & Co.
27Liability for Misuse of MoneyFirm liable if partner misuses money received.Blyth v Fladgate
28Holding OutPerson acting as partner is treated as partner.Young v Axtell
29Rights of TransfereeBuyer of partner’s share gets only profit share, not management rights.Sadler v Whiteman
30Minor as PartnerMinor cannot be full partner but can share benefits.CIT v Dwarkadas Khetan
31Introduction of PartnerNew partner added only with consent of all.Cox v Hickman
32Retirement of PartnerPartner can retire as per agreement or consent.Re Nichols
33Expulsion of PartnerPartner can be removed if allowed by agreement.Blisset v Daniel
34Insolvency of PartnerInsolvent partner stops being partner.Re Smith
35Death of PartnerFirm ends on death unless agreed otherwise.Commissioner of Income Tax v Seth Govindram Sugar Mills
36Right to Carry on Competing BusinessOutgoing partner can start competing business with limits.Nordenfelt v Maxim Nordenfelt Guns
37Right after Leaving FirmOutgoing partner can claim share of profits or interest.Pathak v Bhola Nath
39Dissolution of FirmDissolution means end of partnership between all partners.CIT v A.W. Figgies & Co.
40Dissolution by AgreementFirm can be dissolved by agreement of partners.Re Yenidje Tobacco Co Ltd
41Compulsory DissolutionFirm must dissolve if business becomes illegal.Nordenfelt v Maxim Nordenfelt Guns
42Dissolution on EventsFirm dissolves on expiry, completion, death, or insolvency.CIT v Seth Govindram Sugar Mills
43Dissolution by NoticeIn partnership at will, notice can dissolve firm.Abbott v Abbott
44Dissolution by CourtCourt can dissolve firm on certain grounds.Re Yenidje Tobacco Co Ltd
46Right to Have Business Wound UpPartners have right to settle accounts after dissolution.Garner v Murray
47Continuing Authority after DissolutionAuthority continues to wind up firm affairs.National Bank of India v Ketan Parekh
48Settlement of AccountsAssets used to pay debts and balance shared.Garner v Murray
49Payment of Firm DebtsFirm debts paid from firm property first.Madan Mohan v Krishan Kumar
50Personal Profits after DissolutionPartners must not earn secret profits after dissolution.Bentley v Craven
52Premium on Premature DissolutionPartner paying premium may get refund if firm ends early.Hamlyn v Houston & Co.
69Effect of Non-RegistrationUnregistered firm cannot file suit to enforce rights.Raptakos Brett & Co Ltd v Ganesh Property