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Section 6 – The Partnership Act, 1932

The Partnership Act, 1932

 

6. MODE OF DETERMINING EXISTENCE OF PARTNERSHIP.

 

In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together.

Explanation I : The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners.

 

Explanation II : The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not itself make him a partner with the persons carrying on the business; and, in particular, the receipt of such share or payment –

 

(a) by a lender of money to persons engaged or about to engage in any business

 

(b) by a servant or agent as remuneration,

 

(c) by the widow or child of a deceased partner, as annuity, or

 

(d) by a previous owner or part-owner of the business, as consideration for the sale of the goodwill or share thereof, does not of itself make the receiver a partner with the persons carrying on the business.

 

 

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The Partnership Act, 1932

 

Indian Laws – Bare Acts

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