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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
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
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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Special Tree Diagram Notes For CA: CPT Law Prepared by : CA Yogesh Panchakshari
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
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
3. Types of Partners: “P” Means Partner
Actual P
Dormant/
Sleeping P
P by Holding out
Minor P
Types of
Partner
Nominal P
Outgoing P
P in Profit
Incoming P
Sub P
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
4. Types of Partnership:
Types of
Partnership
On the basis of Duration
1. Partnership
at will
2. Partnership
for a fixed
period
On the basis of Extent of Business
1. Particular
Partnership
2. General
Partnership
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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Special Tree Diagram Notes For CA: CPT Law Prepared by : CA Yogesh Panchakshari
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
o firm
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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Special Tree Diagram Notes For CA: CPT Law Prepared by : CA Yogesh Panchakshari
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
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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Special Tree Diagram Notes For CA: CPT Law Prepared by : CA Yogesh Panchakshari
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)
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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Special Tree Diagram Notes For CA: CPT Law Prepared by : CA Yogesh Panchakshari
8. Rights of Partners:
Rights to:
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
4. To share
profits
5. Intrest on
capital (If
Agreed)
Rights to:
12. To carry on competing
business after retirement
13. To share subsequent profits
6. Intrest on loan
to firm
14. Not to be expelled
7. Right to
indemnity
15. Remuneration
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
9. Duties of Partners:
7. To share losses
1. Of good faith
8. To account for personal
profit
2. Of gratest
common
advantage
3. To render true
accounts
Duty :
4. To give full
Information
9. To account for profit of
competing business
Duty:
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.
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1 Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
10. Position of Minor Partner in the Firm: Section 30(1):
Minor Partner
B. After attaining the age of
majority
A. During the age of minority
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
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
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
Implied
Assumed by some indirect permission
Authority
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
12. Implied Authority:
Implied Authority
Conditions to be
satisfied: the act
must be
Examples: The
partner can:
1. Engage the
lawyer,
1. Related to the
firm,
2. Purchase usual
goods,
2. Done in a usual
way,
3. Appoint servants
3. Done in the
firm's name
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. to open bank a/c in own name on behalf of Firm,
3. To compromise or relinquish the calim of firm on outsiders,
4. To withdraw such suit,
5. To accept any suit / liability against firm,
6. To acquire/ transfer immovable peroerty for/of firm
7. To enter into partnership on behalf of the firm
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
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
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
14. Reconstitution of Firm:
Changes in Firm
1. Admission of
Partner 31(1)
2. Retirement of
Partner 32(1)
a. He can be
admitted with the
consent of all,
a. He can retire by
the consent with
all or by notice,
b. Not laible for
any liability before
his admission,
b. Laible for any
liability before his
retirement,
c. Liable for all the
liabilities after his
admission
c. Not liable for
any liabilitiy after
his retirement
3. Expulsion of
Partner
33(1)
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.
4. Insolvency of
Partner 34(1)
5. Death of Partner
a. By default, the
insolvancy of any
partner result in
dissolution of firm,
a. By default, the
death of any
partner result in
dissolution of firm,
b. Partners may
decide otherwise
in agreement,
b. Partners may
decide otherwise
in agreement,
c. Insolvent
partner is not
liable for any
further liabilty.
c. Heirs of
Deceased partner
is not liable for any
further liabilty.
42(c)
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
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
1. By the consent of
partners (Section 40)
2. By Contract
between partners
(Section 40)
3. Compulasory
Dissolution (Section
41)
4. Dissolution due to
contingency
5. Dissolution by
Notice
( Section 42)
(Section 43)
a. Expiry of fixed term,
a. Insolvency of all partners,
b. Business of firm becoming
unlawful
b. Completion of adventure,
c. Death of partner,
d. Insolvency of partner
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
Dissolution with court intervention
1. Insanity of
partner
Section:
44(a)
2.
Permenant
incapacity of
partner
3.
Miscounduct
of partner
4. Persistent
breach of
agreement
Section:
44(b)
Section:
44(c)
Section:
44(d)
5. Transfer
of intrest
Perpetual
losses in
business
Section:
44(e)
Section:
44(f)
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
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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
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)
Payment shall be
made as:
Partners can sell off
all the firm assets to
pay firm liabilites &
can share the
surplus
Partners shall keep
the authority for
decisions for
disslution of firm
( Section 46)
( Section 47)
Losses on realisation
shall be adjusted
first from past
profits then from
capital & if balance
then shared by
solvent partners
( Section 48).
a. External debt of
firm,
b. Partner's Loans,
c. Partner's capital,
d. surplus shared by
all partners in PSR
( Section 48)
HO- 1st Floor Gajanan Plaza, Opp. Kashiba Medical, Ashok Stambh, Nasik
College Road Branch: 1st Floor, Parshuram Apartment, Above Woodland Shoes, College Road, Nasik. 98220 26393, 2571545
17