Under the Indian Partnership Act, 1932
I. Rights of Partners
These are the rights available to all partners unless otherwise agreed in the partnership deed:
1. Right to Participate in Business (Section 12(a))
Every partner has a right to take part in the conduct of the business.
2. Right to be Consulted (Section 12(c))
All partners must be consulted before making important decisions. In case of disagreement, the decision of the majority prevails, except for change in nature of business which requires unanimous consent.
3. Right to Access Books and Records (Section 12(d))
Partners have the right to inspect and copy any of the firm’s books of account.
4. Right to Share Profits (Section 13(b))
Unless agreed otherwise, partners share profits equally.
5. Right to Interest on Capital (Section 13(c))
A partner is entitled to interest on capital only when there is an express agreement.
6. Right to Indemnity (Section 13(e))
A partner is entitled to be indemnified for expenses incurred or liabilities undertaken in the ordinary course of business.
7. Right to Interest on Advance (Section 13(d))
If a partner advances money beyond agreed capital, they are entitled to 6% p.a. interest on such advances.
8. Right to Use Partnership Property
Partners have the right to use the firm’s property exclusively for business purposes.
9. Right to Retire
Subject to agreement, a partner can retire with consent of others or as per the terms of the deed.
II. Duties of Partners
These are statutory obligations that ensure smooth functioning and trust within the firm:
1. Duty of Good Faith
Partners must act honestly and in the interest of the firm and fellow partners.
2. Duty to Render True Accounts (Section 9)
A partner must provide true and full information of all things affecting the firm.
3. Duty to Work Diligently (Section 12(b))
Every partner must attend diligently to the business.
4. Duty Not to Make Secret Profits (Section 16(a))
No partner should derive personal profit from the firm’s dealings.
5. Duty Not to Compete (Section 16(b))
Partners should not engage in competing business. If they do, profits must be handed over to the firm.
6. Duty to Share Losses (Section 13(b))
Partners must equally bear losses unless agreed otherwise.
7. Duty to Act Within Authority
A partner should not act beyond their authority. If they do, they are personally liable.
8. Duty to Use Firm’s Property Only for Firm
Partners must not use firm’s property for personal gain or unauthorized purposes.
Summary Table
| Rights | Duties |
|---|---|
| Participate in business | Act in good faith |
| Be consulted | Render true accounts |
| Access firm records | Work diligently |
| Share profits | Avoid secret profits |
| Interest on capital/advances | Avoid competing business |
| Be indemnified | Share losses equally |
| Use firm property | Use firm’s property for business only |
| Retire (with consent) | Act within authority |