The Indian Partnership Act, 1932

Transcription

1 The Indian Partnership Act, Definition of Partnership-(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. Partnership 1. Relation between persons 2. Agreement 3. Common Business 4. Sharing Prrofit or Loss 5. My be carried on by all anyone of them acting for all College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

2 2. Features of Partnership firm: Features of Partnership 1. An association of 2 or more persons 2. An agreement (Oral or Written, Expressed or implied) 3. Business 4. Profit/loss Sharing 5. Mutual Agency between Partners College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

3 3. Types of Partners: P Means Partner Actual P P by Holding out Dormant/ Sleeping P Minor P Types of Partner Nominal P Outgoing P P in Profit Incoming P Sub P College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

4 4. Types of Partnership: Types of Partnership On the basis of Duration On the basis of Extent of Business 1. Partnership at will 2. Partnership for a fixed period 1. Particular Partnership 2. General Partnership College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

5 5. Registration of Partnership Firm: Section 58(1) Types of Partnership 1. Registration is not Compulsoy 2. Details required in the application form: 3. Registrar Confirms the 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 firm College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

6 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 College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

7 7. Effect (Disability) of Non-Registered firm: 1. Partners can't file suit against firm or other partners. Section 69(1) 3. Partners can't Claim set-off. Section 69(3) 2. Firm can't file suit against Partners Section 69(2) College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

8 8. Rights of Partners: 1. Take part in business 9. To use firm property 2. to be consulted 10. to be consulted on admission of new partner 3. To have access to books 11. To retire Rights to: 4. To share profits Rights to: 12. To carry on competing business after retirement 5. Intrest on capital (If Agreed) 13. To share subsequent profits 6. Intrest on loan to firm 14. Not to be expelled 7. Right to indemnity 15. Remuneration College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

9 9. Duties of Partners: 7. To share losses 1. Of good faith Duty : 2. Of gratest common advantage 3. To render true accounts 4. To give full Information Duty: 8. To account for personal profit 9. To account for profit of competing business 10. To use firm property for firm only 5. To indemnify loss due to fraud 11. To act within Authority 6. To attend deligently 12. Not to transfer his rights & intrests. College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

10 10. Position of Minor Partner in the Firm: Section 30(1): Minor Partner A. During the age of minority B. After attaining the age of majority He can't be a partner but he can be admitted to the benefits of Firm 30(1): He can receive the profits & part of property of Firm 30(2): He has right to access books of accounts 30(3): He is not personally liable, only his share of Profit & property is liable 30(4): He can file a suit against for his profit & property but Firm can't file a suit against him 30(5): Public Notice by him/her within 6 Months about the decision otherwise assumed to be a partner IF HE ACCEPTS a. Same position as that of others, b. Personally liable for the acts from when he was admitted to benefits, c. Share of profit & property will be same. IF HE REJECTS a. Liabilities as a partner will be same till notice date, b. Not liable for further liabilities, c. He can sue the partner for his share of profit & Property College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

11 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. Authority Expressed Implied Specifically decided by all Assumed by some indirect permission College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

12 12. Implied Authority: Implied Authority Conditions to be satisfied: the act must be 1. Related to the firm, 2. Done in a usual way, 3. Done in the firm's name Examples: The partner can: 1. Engage the lawyer, 2. Purchase usual goods, 3. Appoint servants 4. Make collection from debtors, 5. Sell the goods, 6. Settle the accounts etc. If the act is outside the implied authority then the other partners shall not be liable & that specific partner shall be personally liable. Such acts as per Section 19(2) are: 1. To submit firm's dispute to arbitration, 2.toopenbanka/cinownnameonbehalf of Firm, 3. To compromise or relinquish the calimoffirmonoutsiders, 4. To withdraw such suit, 5.Toacceptanysuit/liabilityagainstfirm, 6. To acquire/ transfer immovable peroerty for/of firm 7.Toenterintopartnershiponbehalfofthefirm College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

13 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 partner made any misappropriation of Money then Firm is liable if the act is within his authority Section 28(1) If firm accepted the liability impliedly (Liability by holding out) then the firm is liable for it College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

14 14. Reconstitution of Firm: Changes in Firm 1. Admission of Partner 31(1) 2. Retirement of Partner 32(1) 3. Expulsion of Partner 33(1) 4. Insolvency of Partner 34(1) 5. Death of Partner 42(c) a. He can be admitted with the consent of all, b. Not laible for any liability before his admission, c. Liable for all the liabilities after his admission a. He can retire by the consent with all or by notice, b. Laible for any liability before his retirement, c. Not liable for any liabilitiy after his retirement a. Partner can't be expelled even by majority but only by legal suit, b. majority is allowed if they can prove that expulsion is in the intrest of firm & done in good faith. a. By default, the insolvancy of any partner result in dissolution of firm, b. Partners may decide otherwise in agreement, c. Insolvent partner is not liable for any further liabilty. a. By default, the death of any partner result in dissolution of firm, b. Partners may decide otherwise in agreement, c. Heirs of Deceased partner is not liable for any further liabilty. College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

15 15. Dissolution of a firm: Sec 39: Dissolution is of 2 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 1. By the consent of partners (Section 40) 2. By Contractt between partners (Section 40) 3. Compulasory Dissolution (Section 41) 4. Dissolution due to contingency ( Section 42) 5. Dissolution by Notice (Section 43) a. Insolvency of all partners, b. Business of firm becoming unlawful a. Expiry of fixed term, b. Completion of adventure, c. Death of partner, d. Insolvency of partner College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

16 Dissolution with court intervention 1. Insanity of partner Section: 44(a) 2. Permenant incapacity of partner Section: 44(b) 3. Miscounduct of partner Section: 44(c) 4. Persistent breach of agreement Section: 44(d) 5. Transfer of intrest Section: 44(e) Perpetual losses in business Section: 44(f) College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,

17 16. Effect of Dissolution of firm: Effect of Dissolution of firm a. After public notice, partners are not liable for further liabilties, ( Section 45) b. Any private profit under firm name must be accounted for to firm. ( Section 50) Partners can sell off all the firm assetss to pay firm liabilites & can share the surplus ( Section 46) Partners shall keep the authority for decisions for disslution of firm ( Section 47) Losses on realisation shall be adjusted first from past profits then from capital & if balance then shared by solvent partners ( Section 48). Payment shall be made as: a. External debt of firm, b. Partner's Loans, c. Partner's capital, d. surplus shared by all partners in PSR ( Section 48) College Road Branch: 1 st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik ,