Ans.
RIGHTS OF
PARTNERS (SECS. 9 TO 17)
The mutual rights & duties of the partners are
usually governed by the agreement between them. Where there is no specific
agreement, their relations to one another are governed by Secs. 9 to 17 of the
Partnership Act.
Rights of partners
Subject to contract between the partners, the Partnership
Act confers the following rights upon the partners of a firm:
1. Right to take part in
the conduct of the business [Sec. 12(a)]
Every partner has a right to take part in the conduct of
the business of the firm. The partners among themselves, may agree to entrust
the work of management to one or more of them and they may even agree to make
payment to such partners by way of an extra remuneration.
2. Right to be consulted
[Sec. 12(c)]
Every partner has a right to be consulted and heard
before any matter is decided. Ordinary matters may be decided by majority
opinion but matters of fundamental nature would require unanimity.
The matters which are to be decided by unanimous consent
of all the partners are discussed below:
(i) Nature of business [Sec.12]: No change can be made in
nature of the business without the consent of all the partners.
(ii) Admission of a partner [Sec. 31(1)]: A person can be
admitted as a partner, only with the consent of all the existing partners.
(iii) Transfer by a partner of his interest in the firm
(sec. 29): A partner can transfer his share in the firm to a third person with
the consent of all other partners.
(iv) Admission of a minor to the benefits of partnership
[Sec. 30(1)]: A minor is incompetent to contract and, therefore a contract of
partnership cannot be entered into with a minor. However, he can be admitted to
the benefits of an existing partnership firm provided all the partners consent
to it.
3. Right to access to
books [Sec. 12(d)]
Every partner has a right to have access, to inspect and
copy any of the records and books of the firm.
4. Right to share the
profits [Sec. 13(b)]
Every partner has right to share equally in the profits
earned and to contribute equally to the losses sustained by the firm. This
provision is irrespective of the amount of capital contribution made or
business expertise offered. However, they may agree to share the profits in
some other ratio.
5. Right to interest on
Capital [Sec. 13(c)]
Every partner has right to interest on capital, if so
agreed, out of profits only.
6. Right to interest on
advances Sec. 13(d)]
A Partner is entitled to receive interest at 6 % p.a. on
any advance, in excess of the agreed amount of capital, made for the purposes
of the business.
7. Right to indemnity
[Sec. 13(e)]
Every partner has a right to claim indemnity from the
firm in respect of payments made or liabilities incurred by him (a) in the
ordinary and proper conduct of the business, and (b) in doing such act, in an
emergency, for the purpose of protecting the firm from loss, as would be done
by a person of ordinary prudence, in his own case, under similar circumstances.
8. Right to prevent the
introduction of new partner [Sec. 31(1)]
Every partner is entitled to prevent the admission of a
new partner into the firm.
9. Right to retire [Sec.
32(1)]
A partner to retire from the firm (a) with the consent of
all other partners, or (b) in accordance with the terms of the deed, or (c) by
giving a notice to all other partners, of his intention to retire.
10. Right not to be
expelled [Sec. 33]
Every partner has right to continue in the partnership
and not to be expelled from the firm.
11. Right to carry on
competing business after retirement [sec. 36(1)
Every outgoing partner has a right to carry on a
competitive business under certain conditions.
12. Right to dissolve
the firm (sec. 43)
Where die partnership is at will, the firm may dissolve
by any partner giving notice in writing to all the other partners of his
intention to dissolve the firm.
