Thursday, 23 April 2020

Preamble: Indian Partnership Act, 1932


PREAMBLE
[IX OF 1932]
(IN ITS APPLICATION TO THE STATE OF MAHARASHTRA) (Received the assent of the Governor-General on 8th April, 1932) AMENDED BY MAH. 29 OF 1984 (1-1-1985) 1
AN ACT TO DEFINE AND AMEND THE LAW RELATING TO PARTNERSHIP. WHEREAS it is expedient to define and amend the law relating to partnership; It is hereby enacted as follows:

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Explanation of Preamble of Indian Partnership Act, 1932:
This is the IX i.e. Ninth Act of year 1932.
It had received assent of the Governor General on Dt. 8-4-1932.
The Act was enacted by Parliament of India.
In its application in State of Maharashtra it was amended by 29th Act of Maharashtra on Dt. 1-1-1985.
The present Act superseded the earlier law relating to Partnership, which was contained in Chapter XI of the Indian Contract Act, 1872.
Nature of Partnership:
Partnership is a form of business organization, where two or more persons join together for jointly carrying on some business. It is an improvement over the ‘Sole –trade business ’, where one single individual with his own resources, skill and effort carries on his own business. Due to the limitation of resources of only a single person being involved in the sole-trade business , a larger business requiring more investments and resources than available to a sole-trader, cannot be thought of in such a form of business organisation. In partnership, on the other hand , a number of persons could pool their resources and efforts and could start a much larger business, than could be afforded by any of these partners individually . In case of loss the burden gets divided amongst various partners in a Partnership.
Scope:
There is no restriction on the exercise of such powers as partnership chooses at any time to exercise, except such prohibitions on illegal, immoral or fraudulent conduct as apply equally to individuals.
1- A partnership may itself be a member of another firm if the partners of the constituent firm consent thereto.
2- If it appears that all the partners have either authorized or ratified the contract, no further question as to its validity ordinarily remains. The cases where the question of the validity of partnership contract arises is where one partner has made the contract without specific authority from his co-partners. As to their implied scope partnerships may be divided into the classes of the non-trading and the trading. Some powers can be exercised by partners in partnership of either type. Thus a partner may retain an attorney protect the interests of the firm.
Case Laws:
1) Poppatlal Shah vs. State Of Madras AIR 1953 SC 274: It was held that, “The preamble is an admissible aid to construction . It throws light on the intent and design of the legislature and indicates the scope and purpose of the legislation itself.”
2) Tribhuban Parkash Nayyar Vs. Union Of India (1969) 3 SCC 99.: It was held that, “Preamble cannot be used to control or qualify precise and unambiguous language of the enactment . It is only when there is a doubt as to the meaning of a provision, that recourse may be had to the preamble to ascertain the reasons for the enactment and hence, the intention of Parliament.”
(Note: Paragraph in Red are taken as it is from the original Act while Paragraphs in Black are the Explanations of the same)
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