Partnership Deed - India

Partnership Deed for use in India.

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This kit includes tools and guidelines to assist you in drafting a Partnership Deed.

A partnership is the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. In India, this type of relationship governed by the Indian Partnership Act, 1932, which extends to the whole of India except the State of Jammu and Kashmir.

A partnership deed can be entered into between persons who have attained the age of majority according to law, competent to contract and are of sound mind and health. The number of partners in a firm shall not exceed 20; a partnership having more than 20 persons is prohibited.

Among others, this form includes the following key provisions:
  • Name and Style
  • Place of business
  • Initial Capital, Further infusion and Contribution of Parties
  • Net Profits, Losses and Expenses
  • Managing Director and Obligation of Parties
  • Induction of new Partner, Death of a Partner and Retirement or Insolvency
This attorney-prepared Partnership Deed:
  1. Description and Instructions for Partnership Deed
  2. Partnership Deed for use in India
Law Compliance: This form is designed for use in India.
Number of Pages10
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#33482
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Partnership Deed
(India)

 

This Deed of Partnership (hereinafter referred to as “Deed”) is made at______ on this _____ day of _______ by and between: Shri ___________ aged about _______ years, son of Shri ___________resident of _____________________________ (Hereinafter to be called the First Party); Shri ___________ aged about _______ years, son of Shri ___________resident of _____________________________ (Hereinafter to be called the Second Party); Shri ___________ aged about _______ years, son of Shri ___________resident of _____________________________ (Hereinafter to be called the Third Party); Shri ___________ aged about _______ years, son of Shri ___________resident of _____________________________ (Hereinafter to be called the Fourth Party); [Remove/ Add extra names]
WHEREAS the parties hereto desire to enter into the business of  _____________________________ [specify],
WHEREAS in order to accomplish their aforesaid desires, the parties hereto desire to join together in a partnership under and pursuant to the Indian Partnership Act, 1932, amended from time to time (the "Act").
WHEREAS Parties hereby agree (hereinafter together called the Partners) shall become partners in the partnership firm (Partnership) of ______ for the term of ____ years with effect from _____ upon the terms and conditions hereinafter contained namely:
(1) Name and Style
The Partnership shall be carried on in the name and style of M/s._____________________
(2) Place of business; Business
A) The principal office and place of business of the Partnership (the "Office") shall be located at _____________________. The Partnership shall have such other or additional offices as the Partners may determine from time to time.
B) The Partnership may also do and engage in [other ancillary business which can be conducted under this trade name/Partnership].
C)  All transactions of the firm shall be done in the name of the Partnership and all goods shall be purchased or sold in the firm name. All the bills, vouchers, delivery notes, receipts, etc. shall be issued in the name of the firm.
 (3) Initial Capital; Further infusion
A) The initial capital of the Partnership shall be Rs. ____________ which shall be contributed by each of Partners in the following proportions.
 
First Party:             _____%               Rs.___
Second Party:         _____%               Rs.___
Third Party:            _____%               Rs.___
Fourth Party:            _____%               Rs.___
B) All the tangible and intangible assets of the firm including the goodwill, stock in-trade, benefit of business licenses and permits, benefits of contracts entered etc. in relation to the said business of the Partnership will belong to the Parties in equal shares and the property of the Firm shall be used by the Parties exclusively for the business of the firm.
C)  Any further capital or infusion of funds if any required by the Partnership shall be brought by the Partners and such additional capital brought by the Partners shall be treated as loan to the firm and shall be paid interest @ ______ % p.a. out of the gross profits of the firm. [OR The Partners will contribute such further amounts towards the capital of the firm in equal_____ _shares as may be required from time to time. If any partner shall contribute more amount than its share in the capital it will be treated as a loan by it to the Partnership carrying interest at the maximum rate allowable as deduction under the Income Tax Act.]
 (4) Bank
The Partners shall open one or more accounts either current, saving or overdraft or cash credit with _______________Bank ________________ or any other bank as may be agreed upon by the Parties and the account or accounts will be operated by the Managing Director or other authorised representative of each of the Partners hereto.
(5) Net Profits and Losses; Expenses
 A) The net profits of the business shall be divided between the Partners in the proportion of the capital and they shall bear all losses including loss of capital in the same proportion. Net profit will mean gross profit earned in each year less the expenses of the management of the business including the rent of the premises of the Office including outgoings in respect of the salaries and wages of the staff, commission paid to others, and all other expenses incurred in connection with the business of the Partnership and all other expenses as may be allowable as deduction under the Income Tax Ac (7). The Partnership shall maintain usual account and other books at the Office and they shall be kept properly posted up to date and shall not be removed from the Office without the consent of all the Partners. Each partner shall have free access to the books of account of the Partnership at all times and shall be entitled to make such copies or extract therefrom as he may think fit.
B) All outgoings and expenses of the Partnership and all losses or damages incurred, interest payable for any loans received and taxes, etc. shall be paid first out of the profits, subsequently out of capital and in the case of further deficiency, by the Partners in the shares in which they are entitled to the net profits of the Partnership business.
C)  All Partnership moneys, bills, notes, cheques and other instruments received by the Partnership shall as and when received be paid and deposited in the bank to the credit of the firms' account, except such sums as are immediately required to meet the current expenses of the Partnership firm.
(6) Contribution of Parties
The First and the Second Party shall contribute their whole time, expertise and attention to the interests of the business, as mentioned in the Schedule attached hereto, and shall be the working Partners [If all Partners are Working Partners, please mention how each Partner shall contribute]. They shall be entitled to equal remuneration for their working out of the amount computed in the manner laid down under section 40(b) of the Income-tax Act, 1961. The remuneration so computed shall be worked out and credited in the books of account, at the close of the accounting year period.
(7) Managing Director
Partners hereby shall unanimously appoint ___________________ as the Managing Director who will represent the Partnership
(8) Obligation of Parties
A) Each Partner covenants that Partner shall -
(i)  Be just and faithful to other Partners in the transactions relating to Partnership business;
(ii) Pay his separate debts and indemnify the other Partners or the Partnership and assets of the Partnership against the same and all other proceedings, costs, claims or demands in respect thereof;
(iii) Indemnify the other Partners or the Partnership for any loss caused to it by wilful negligence or fraud in the conduct of the business.
(iii) Give full information, disclosure and truthful explanations of all matters relating to the affairs of the Partnership to all the Partners at all times.
 (iv) Attend to the business of the Partnership diligently and actively.
(v) Not withdraw any amount for its own profit, benefit or use as remuneration or otherwise without the consent of the other
B) No partner shall without the consent of the other Partners-
(i) Engage in any other business directly or indirectly.
(ii) Lend money or give credit of the goods of the Partnership to whom the other Partners have previously forbidden him to trust.
(iii) Mortgage, charge or assign his share in the assets or profits of the firm.
(iv) Draw, accept or indorse any bill of exchange or promissory note on account of the firm.
(v) Engage, remove or dismiss any apprentice, employee or agent of the firm.
(vi) Give any security or promise for the payment of money on account of the firm except in the ordinary course of business.
(vii) Give bail, bond or guarantee or become surety for any person or do or knowingly suffer any thing to be done where the Partnership property may be endangered.
(viii) Buy, order or contract any property or goods for the firm exceeding Rs.___
(ix) Sign any cheque on behalf of the firm to, a sum exceeding Rs.____
(x) Compromise or compound or, release or, discharge any debt due to the Partnership.
(xi) Submit any dispute with any other person to arbitration or compromise or relinquish any claim,
(xii) Withdraw any suit or legal proceedings filed by the firm.
(xiii) Borrow any moneys for or in the name of the firm, or create any security or charge on the assets of the firm.
[Additional provisions may be added on mutual consent]
(9) Books and Accounts
A) The accounting year of the Firm will be from 1st April to 31st March of each Christian calendar year.
B) A general account shall be taken of all the capital assets and liabilities to, the time being of the Partnership as on _____________ in each year.
C) Partners hereby agree that a balance sheet and profit and loss account shall be prepared by M/s. ....................... Chartered Accountants or any other Chartered Accountants to be agreed upon by the Partners and a copy thereof shall be furnished to each of the Partners, who shall be bound thereby, unless some manifest error shall be discovered within six months, in which case such error, shall be rectified. Immediately after the preparation of the said balance sheet and profit and loss account, the net profits less sums drawn by the Partners shall be divided to the Partners.
(10) Induction of new Partner
A new Partner, may be introduced or inducted with the consent of all the Partners on such terms and conditions as the Partners agree with the Person to be introduced as a partner, in the firm.
(11) Benefits
A) Each Partner, shall be entitled to______ weeks holiday in each year and all the Partners shall make choice of the holiday alternatively.
B) Each Partner shall also be entitled to be indemnified by the Partnership in respect of payment made and liabilities incurred by him in the usual and proper course of business of the Partnership and in doing any act for protecting the Partnership from loss in emergency.
(12) Death of a Partner
A) On the death of any Partner, during the continuance of the Partnership, the firm shall not be dissolved, the surviving Partners shall have the option to purchase the share/proportion of the contribution made by the deceased Partner, in the Partnership business and the property and [OR goodwill] thereof. If the surviving Partner elects to purchase the deceased's interest, he shall serve notice in writing of such election, within three months after the death of the deceased, upon the executor or administrator of the deceased, or, if at the time of such election no legal representative has been appointed, upon any one of the known legal heirs of the deceased at the last-known address of such heir. If the surviving Partner elects to purchase the interest of the deceased in the Partnership, the purchase price shall be equal to the deceased's capital account as at the date of his death plus the deceased's income account as at the end of the prior financial year, increased by his share of Partnership profits or decreased by his share of Partnership losses for the period from the beginning of the financial year in which his death occurred until the end of the calendar month in which his death occurred, and decreased by withdrawals charged to his income account during such period.
B) The Partner, purchasing the share of the deceased Partner, shall also enter, into a covenant to indemnify the personal representatives of the deceased Partner from the existing and future debts, obligations and liabilities of the Partnership.
C) Partners agree that no goodwill shall be payable on the death or retirement of any of the Partner/s.
(13) Retirement or Insolvency
If a Partner retires or becomes insolvent, then the Partnership will not be dissolved, and the remaining partner, shall have the option to purchase the share of such partner and the purchase price shall be calculated as given in the preceding clause. Partners agree that no goodwill shall be payable on the death or retirement of any of the Partner/s.
(14) Encumbrance; Bankruptcy; Permanent Incapacity
If any partner shall assign, charge or encumber his share in the Partnership or shall become bankrupt or a lunatic or otherwise permanently incapable of attending to the Partnership business or shall absent himself from the Partnership business for more than ____ days, in any period of the twelve months except during his annual holiday without the consent of the other Partners, or commit any breach of any of the provisions of this Deed or commits any criminal offence or do or suffer any act which would be a ground for the dissolution of the Partnership by the court and in any such case it shall be lawful for the other partners by notice in writing to the offending or incapacitated partner or his trustee or official assignee to determine the Partnership whereupon the Partnership so far as concerns such Partner shall determine and the other Partner shall have the option to purchase his share and pay the purchase price to the offending Partner or his trustee or official assignee in accordance with Clause 12 hereof.
(15) Voluntary Retirement
If any Partner is desirous of retiring from the said Partnership he shall be entitled to do so by giving _____ months notice in writing to the other Partners of his intention to retire and on expiration of _____ months from the date of such notice, he shall cease to be a Partner and his interest in the Partnership shall cease on and from that date. Immediately on receipt of the aforesaid notice his accounts [including goodwill] shall be drawn upon and settled forthwith or be purchased by the other Partners in accordance with the Clause 12 hereof.
 (16) Death, Retirement, Bankruptcy [Applicable to Partnership with only two (2) partners; delete Clauses 12-15 if this Clause I added]
If any Partner does not desire to continue the Partnership, becomes bankrupt, or if any Partner goes into winding up voluntarily or through Court, or in the event of the death of one Partner,  the other Party hereto will determine the Partnership and shall have the option to take over the entire business together with all assets and subject to all liabilities at a valuation to be made through the Chartered Accountants of the Firm and the share of the former Partner will be paid to the said departing Partner or in case of death to his legal heirs or representatives, by installments as may be agreed upon or decided by such a valuation.
(17) Determination
A) Upon the determination of the Partnership by efflux of time or in the case of death, retirement or expulsion of a partner from the Partnership, the surviving or other partner shall not exercise the option of purchasing the share and interest of the deceased, retired or expelled Partner or when the Partnership is determined by any other event not herein otherwise provided, a full and general account of the assets, credits, debts, liabilities of the Partnership shall be taken and the assets and credits shall be sold, realised and the proceeds shall be applied in paying and discharging debts, liabilities and expenses of and incidental to the Partnership business and the winding up affairs of the Partnership affairs and subject thereto in paying to each Partner any unpaid profits which may be due to him and his share of the capital and the balance of such proceeds shall be divided between the Partners in the shares in which they are entitled to the net profits of the Partnership and the Partners shall execute, do or cooperate in all necessary or proper instruments, acts, matters and things for effecting or facilitating the sale, realisation and getting in of the Partnership assets and credits and the application and division of the proceeds thereof and for their mutual release or indemnity or otherwise.
B) Upon the determination of the Partnership, each Partner shall have the option to purchase the goodwill of the Partnership on a price as agreed to by the Partners, and if no Partner exercises the option to purchase the goodwill, the same shall be sold to a willing purchaser, provided that it upon any such determination as aforesaid of the Partnership, the business thereof shall be sold as a going concern, the goodwill shall be sold along with the business. No Partner (unless he is the purchaser of such business) shall directly or indirectly carry on or be concerned or interested in a similar business in his own name in the locality of the firm within a period of ________ years from the completion of sale of goodwill. The value of the goodwill shall be considered as an asset of the firm and will be added to and form part of the sum payable to all the Partners on the dissolution of the Partnership.
(18) Arbitration
 If any dispute or difference shall arise between the parties hereto affecting the business of the Partnership or interpretation of any provision hereof, or otherwise however relating to the firm and its business, the same shall be referred to arbitration of a common arbitrator if agreed upon. Failing which to two arbitrators one to be appointed by each party to the arbitration and the arbitration shall be governed by the Arbitration & Conciliation Act, 1996.
(19) Miscellaneous
A) All the other matters for which no provision is made in this Deed, shall be decided by the majority of the Partners for the time being of the Partnership.
B) Amendments to this Deed, shall be only made by writing and duly signed by all Partners.
IN WITNESS WHEREOF, the parties hereto have hereunto set and subscribed their respective hands the day and year first hereinabove written.
Signed and delivered by the within named First Party:
__________________________________________
 Signed and delivered by the within named Second Party:
__________________________________________
 Signed and delivered by the within named Third Party:
__________________________________________
Signed and delivered by the within named Forth Party:
__________________________________________
 
WITNESSES;1.  __________________________________________
2.  __________________________________________
 

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