THE LAW OF PARTNERSHIP(ALONGWITH THE LLP ACT, 2008) BY JUSTICE PS NARAYANA

The Law of Partnership is an important branch of law both on civil side and also on taxation side. Infact the Indian Partnership Act, 1932, is based on the provisions of English Partnership Act, 1890 and prior to the enactment of Indian Partnership Act, 1932, which received the assent of the Governer-General on 8-4-1932, the Law of Partnership in our country was dealt with, under Chapter II of the Indian Contract Act, 1872.

This branch of law is very popular in almost all the countries of the world in as much as this branch is intimately connected with business and commerce.

The Indian Partnership Act, 1932, Act 9 of 1932 is an Act to define and amend the law relating to partnership. Where the shares of the partners in profits and losses are ascertainable, the firm is entitled for registration AIR 1997 SC 2160 (M/s. Progressive Financers vs. Commissioner of Income Tax. Madras). It may be that in the absence of a contract to the contrary, new partner who is inducted into partnership may not be liable for the past debts of the partnership firm as provided in Section 31 (2) of the Act but however it is always open to a new partner to admit liability and agree to pay liability of the firm which were in existence when he became the partner. AIR 1997 Bom. 225 (Central Bank of India vs. Tarseema Compress Wood Manufacturing Company).

Section 48 prescribes the manner in which the accounts have to be settled between the partners. The same is completed only when payments are made to each partner rateably towards advances on account of capital and residue if any to be divided among the partners in proportions in which they are entitled to share profits AIR 1997 A.P. 331 (Sambasiva Rao vs. Venkateswagulu). It is true that in order to maintain the suit to enforce a right arising from a contract it must be mandatorily established that the plaintiff had confirmed to the ingredents of Section 69. 1997 (6) ALT 560 (M/s. Sreeram Finance Corporation Ongole vs. Devasahagam).

The present edition though not an exhaustive commentary on the subject,  every possible care has been taken so that the subject is dealt with section wise in an analytical and methodical fashion. In fact sufficient care has been taken to see that the relevant case law on the subject of different courts like the Privy Council, the Supreme Court. different HighCourt’s and also certain of the relevant English cases have been incorporated at the appropriate places. Further in the commentary the relevant portions of the Civil Procedure Code dealing with Law of Partnership and also the connected case law has been given. It is also pertinent to note that much care has been taken to incorporate the relevant law relating to stamp duty payable in different States and further the relevant partnership rules of all the States and also relevant acts are incorporated in Appendix which were essential and necessary to appreciate the subject.