INDIAN PARTNERSHIP ACT

INDIAN PARTNERSHIP ACT, 1932

1) SHORT TITLE, EXTENT AND COMMENCEMENT

1.1 The Indian Partnership Act, 1932 (hereinafter referred to as the Act.) applies to the whole of India except the state of Jammu & Kashmir. The Act has come into force w.e.f. 1st day of October, 1932 with the assent of the Governor General of India on 8th April, 1932.

1.2 The total Act has been divided into Eight Chapters out of which there is only one Chapter; i.e,. Chapter VII comprising of sections ranging from 56 to 71 the application of which has been made optional to all the implementing States.

2) WHAT IS PARTNERSHIP

2.1 Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all.

2.2 Persons who have entered into partnership with one another are called individually "partner" and collectively "a firm".

2.3 When duration of partnership is not defined, the partnership is "partnership at will". When persons become partner for a particular venture or for a specified time, it is called a "particular partnership".

3) RELATIONSHIP BETWEEN THE PARTNERS

3.1 Relationship between the partners is defined through the partnership deed.

3.2 Partnership Deed is necessary under section 58(1) at the time of registration of any firm. Though, there is no requirement of having any instrument in writing at the time of admission and / or retirement or dissolution of firm, under Rule 16 of Indian Partnership Rules, 1989, the Registrar of Firms (who is a registering authority to register the firm) is empowered to take on record the evidence in support of registering any partnership. Therefore, the Deed is necessary to be executed to place on record the relationship of partners at the time of registration and at subsequent changes to register such changes.

3.3 Various forms as are required to be filled up and filed with the Registrar need certain information. Therefore, it is necessary to have that information incorporated in the deed which Registrar can verify while scrutinizing the forms and ultimately register the firm. Names and Addresses of Partners are to be mentioned in the beginning paras. Partnership Deed should, therefore, contain following clauses.

(i) Name of the firm

(ii) Date of commencement of Business of the firm

(iii) Address including address of the additional place/s of Business of the firm

(iv) Nature of Business

(v) Duration

(vi) Sharing of Profit & Loss between Partners

(vii) Capital of the firm

The above clauses are necessary in all deeds, since the entry on record which is furnished by the Registrar to the Firm gives the above information as recorded in the Register. If for any reason, any of the above clauses are missing from the deed, the registration procedure cannot be completed. As regards Point No. (vii) above, it should be noted that to be a valid document, partnership deed should necessarily be on a stamp paper of requisite value and this value is determined by the amount of capital.

3.4 Any additional clauses can be incorporated by the partners as required by them.

3.5 Hence, relationship between partners right from formation to dissolution is mentioned in the Deed of Partnership.

4) RELATIONS OF PARTNERS TO THIRD PARTIES

4.1 A partner is the agent of the firm for the purposes of the business of the firm.

4.2 The authority of a partner to bind the firm in ordinary course of business, conferred by section 19 is called "implied authority" of a partner.

4.3 The partners in a firm may, by contract between the partners, extend or restrict the implied authority of any partner. Every partner is liable jointly with other partners and also severally for all acts of the firm done while he is a partner.

5) REGISTRATION OF FIRMS

The provisions of Chapter VII have been given in a tabular manner separately as these deals with the practical aspects.

SUMMARY OF COMPLIANCE PROVISIONS UNDER THE INDIAN PARTNERSHIP ACT, 1932

(Applicable to the State of Maharashtra)

Sr.No. Subject Form No./ Application Time limit Section Fees +* Copying Chgs
(Rs.)
Remarks
PENALTY

Section Amount

1 Registration of firm A 1 year 58(1) 300 + 20 Application to be signed by
all partners. 59A-1 Rs.100 per year or part thereof

2 Appeal against refusal by the
Registrar to register the Firm to Dy. Law Secretary Govt. of
Maharashtra Plain Paper 30 days 58(4) 150 Refusal on grounds of similarity of firm name etc. — —

3 Change in Firm Name or
Principal Place or Nature of
Business B 90 days 60(1) 100 + 30 Application to be signed by all partners. 69A Not more than Rs.10/- per day

4 Closing and Opening of Branches C 90 days 61 100 + 30 Application to be signed by any partner. 69A Not more than Rs. 10/-
per day

5 Change in Name/Address of Partner D 90 days 62 100 + 30 Application to be signed by the partner concerned. 69A Not more than Rs.10/-
per day

6 Change in Constitution or Dissolution E 90 days 63(1) 100 + 30 All parties to the deed shall sign Form E. 69A Not more than Rs.10/-
per day

7 When a minor becomes major and elects to become or not to become a partner F 90 days 63(2) 100 + 30 Intimation by the Minor. 69A Not more than Rs.10/- per day

8 Rectification of Mistake Plain Paper - 64(2) 100 + 30 Application to be made by all the partners along with valid proof to support the application
for rectification. - -

9 Inspection of Register Plain Paper - 66(1) 20 By any person. N.A. N.A.

10 Inspection of Documents Plain Paper - 66(2) 20 By any person. N.A. N.A.

11 Certified Copy Plain Paper - 67 Rs. 5
Court Fee
Stamp+Rs.10
per 100 words By any person. N.A. N.A.

12 Intentional furnishing of false or inaccurate particulars - - - - - 70 Fine /Impri sonment
up to I year or both

13 Letter of Authority Plain Paper - - Rs.5
Court Fee
Stamp - - -

For true extract of the recording of registration or the change in constitution, a stamp paper of Rs. 10 shall be enclosed with the respective application and same shall be purchased in the name of firm or partner.

6) RELEVANT PROVISIONS OF THE BOMBAY STAMP ACT

Partnership Deed

For a capital contribution of Rs. 50,000/- or less

Rs. 500/-

For every additional capital of Rs. 50,000/- or part thereof

Rs. 500/-

Maximum stamp duty for any amount of capital

Rs. 5,000/-

For capital contributed in form of property

Same duty as on conveyance on market value of property

Dissolution Deed

Where property is transferred to a partner other than the one who brought it in.

Same duty as on conveyance on market value of property

In any other case

Rs. 200/-

7) CHECKLIST OF DOCUMENTS TO BE SUBMITTED FOR

Sr. No.

Registration of a firm

Admission and / or Retirement of a Partner and Dissolution of a Firm

1.

Application with Court Fee Stamp of Rs. 5

Application on Court Fee Stamp of Rs. 5

2.

Certified True Copy of Partnership Deed

Certified True Copy of the Deed

3.

Form A duly notarized

Form E duly notarized

4.

Certified True Copy of Marathi Translation

N. A.

5.

Stamp Paper of Rs. 10.

Stamp Paper of Rs. 10.

6.

Self Addressed Postage Paid Envelope
(Not Compulsory)

Self Addressed Postage Paid Envelope (Not Compulsory)

7.

Filing Fees Rs. 2200

Filing Fees Rs. 1200

Supplementary Deed is prepared where there is change in address of a firm or a change in share of profits among the partners, or change in remuneration to partners, interest on capital or opening and closing of branches etc. Supplementary Deeds are to be executed on a stamp paper of Rs. 200/-.
There is no need to submit the Deed of Partnership, if executed only for the purpose of change in Profit Sharing Ratio or Remuneration or Interest payable to partners, since these are not recorded by Registrar of Firms in the Entry on Record.
Any Supplementary Deed executed at the time of formation of partnership forms part of original deed and requires Marathi Translation as required in the case of main deed of partnership.
Marathi Translation of the partnership is required only at the time of registration.

TIPS FOR EFFICIENT REGISTERING OF DOCUMENTS

If one partner retires and a new partner is admitted on the same day, retirement cum admission deed can be prepared and registered with the Registrar of Firms with one & single ‘E’ form.
Partners’ signatures must be on solemn affirmation before a Magistrate or such other Officer empowered to administer oaths. Ensure that the name & address stamp of such authorised officer is affixed. In case of notarized forms, notary if appointed by the Government of Maharashtra, should use the red ink to stamp the document, while if appointed by the Government of India, can use the blue ink.
The documents shall be submitted within one month from the date of Notarization/Attestation.
The Bombay Stamp Act uses the word "share of contribution" instead of Capital of a Firm. It appears that additional stamp duty is payable on every increase in capital as long as it does not exceed Rs. 5 Lacs as per Article 47 of the said Act.
Even if there is a change in name due to marriage, Form ‘D’ along with the copy of Marriage Certificate has to be submitted.
In case of simultaneous changes in Principal Place of Business along with Change in Constitution and / or Change in Name of Partner and / or change in Address of Partner, then separate Forms B / E / D are required to be submitted as the case may be to intimate each such change.
Any changes that occur within a span of 90 days can be intimated together to the Registrar of Firms.
Common Form E can be used in case of Admission cum Retirement within 90 days.
Always write full particulars without using any short forms or abbreviations.
In case of Retirement cum Admission, if intimated, using the same Form E, always obtain signatures of all partners including Retiring, Continuing and Incoming on Form E.
There is no power of condonation of penalty or appeal to any higher authority other than as envisaged u/s. 58(4).
While drafting any partnership deed subsequent to the registration, at the time of any changes etc. always ensure that Name, Address and Object clause as well as spellings of Names of the Partners are identical as compared to the earlier submissions and as per Entry on record.
If for any reason you need registration of papers submitted by you urgently or early hearing in case of delay in submissions, then an Affidavit on a stamp paper of Rs. 200/- signed by all partners duly notarized, stating the reason for urgency be submitted to the Registrar. After accepting Affidavit, papers are processed with priority.

Registrar of Firms Address: New Adm. Bldg, 6th Floor, Near Chetana College, Bandra (E), Mumbai - 400 051. Tel: 2655 1944, 2655 1149. Cash Counter Timings: 10.30 A.M. to 3.30 P.M.

qq