Rights of Partners under Indian Partnership Act 1932

1. Right to Participate in the Conduct of Business: All partners in a partnership have the right to participate in the firm’s operations because the partnership business is the partners’ business, and their management abilities co-exist in most cases. If the management authority of a specific partner interferes and the individual is unfairly barred from participation, the court may intervene in such instances. The court may prevent the other partner from doing so by prohibition.

2. Right to Have Access to Books of Accounts: Each partner in the organization, whether active or slumber, gets access to the partner company’s books. The partner reserves the right to review and request a copy if required. However, this power must be utilized by Bona fide.

3. Right to be Consulted: When any kind of difference arises between the partners of the company with respect to the business of the firm, it is determined by the majority views of the partners. Every partner in the organization can express opinion before making a decision. Furthermore, it is to be noted that there can be no change in the business without taking any consent from partners involved, and it can be said that opinion of partners in a must. However it may be noted that the rule of majority does not apply in case of change as an organization.

4. Right to Compensation: No partner is allowed to earn any payment in addition to his partner’s share of the company’s profits for participating in its operations. However, this rule will always exist. Express may vary by agreement or transaction, in which case the partner is entitled for a reward. As a result, the partner might be compensated even in the absence of a contract; such a reward is given for the continuous usage of the firm. In other words, if it is common for a partner to pay a wage for operating a company’s operations, he may claim it even if there is no agreement for the same payment.

5. Right to Share Earnings: Partners are entitled to an equal share of any firm earnings. Similarly, the risks to the partner firm make an equal contribution. The partner must confirm the amount of the share by enquiring whether the partners have agreed on it. If there is no agreement, the responsibility of showing that the profit shares are equal and unequal may be placed on the party making the same charges. There is no relationship between the partners’ profit-sharing ratio and the proportion they contribute to the partner company’s capital.

6. Right to Receive Interest on Capital: In general, a partner cannot claim interest on capital. He/she is entitled to interest on money (capital) only if the following requirements are met:

• Express agreement or special partnership
• Commercial practice to this effect
• Consider a legal provision that qualifies for such interest.

It is important to note that there may be instances where interest on capital is implied or required by law even if not explicitly stated in the deed.

7. Right for Indemnification: Partners have the right to demand reimbursement from the company. This entitlement applies to business management and payments made in an emergency to safeguard the firm from loss. A partner can be paid for payments made in regular and proper business behavior for actions that a normal and wise person would take in an emergency.

Partnership is one of the most famous business arrangements among entrepreneurs and businessmen. Individuals, corporations, interest-based groups, schools, governments, and combinations can all form partnerships. An agreement between the business’s partners creates mutual interactions. This establishes joint rights and obligations for all partners participating in the firm’s business. Sections 9 to 17 of the Indian Partnership Act 1932 provide the laws controlling the reciprocal interactions of all partners. These ties are controlled by an existing contract, which may be implicit or explicit during trading. The agreement may change based on the approval of all parties.

Geeky Takeaways:

• Partnership is one of the most famous business arrangements among entrepreneurs and businessmen.
• A partnership is a structure in which participants, known as business partners, agree to work together to further their shared interests.
• In India, provisions related to partnership are covered in the Indian Partnership Act 1932.
• Joint rights and obligations exist for all partners participating in the firm’s business—sections 9 to 17 of the Indian Partnership Act 1932.
• A mutual agency should be present between the partners to create a partnership.