Can a Company be a partner under Indian Partnership Act,1932

Company Secretary

Can a public limited company be a partner???

Any case laws in support of the same???

 
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A partnership between companies is termed as 'Joint Venture'. 

 
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Company Secretary

Thank u, Mr. Subramanium, for your prompt reply.

But, in case two or more individuals and a Company want to enter into partnership....

 
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As per Partnership Act's definition 'A partnership is the relation between persons who has agreed to share the profits of business carried on by all or any of them acting for all'.  Though, a company is an artificial person, as per Partnership act's Section 9 (General duties of a partner), 'partnerers  must be faithful to each other', as such a company being run by multiple persons cannot fulfill this criteria. 

An interesting question.  more views from  experts are requested.

 

 
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For your second querry :-  It can be done in the form of 'MOU (Memorandum of Understanding).  

 

 
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Kindly read 'partnerers'  as 'partners' (speed caused typing/spelling mistake).

 
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Corporate Laws and Indirect Taxation Laws Practitioner.

 Whether a company can enter into a partnership or not is no longer open to doubt. The Deptt. of Company Affairs has in its Circular No. 1-81 (20-1-81-CL-V),

dated 14-9-1981 expressed the following view: "A question has been raised whether an incorporated company can enter into a partnership with some other

person or some other company. The matter has been examined by this department in consultation with the Department of Legal Affairs and I am directed to say

that prima facie a company entering into a partnership with some other person or some other company would be ultra vires and will be against the principle that

a particular company or an incorporated body cannot lawfully employ funds for purposes not authorised by its constitution which would normally be the

memorandum and the articles of association. However, a company or an incorporated body, if so authorised by its constitution, can enter into partnership with an

individual person or with another company irrespective of nationality and residence. This would, however, require the company to adopt very special articles

since many of the provisions of the Partnership Act would be difficult to apply to such a partnership. In view of this, while considering applications for

registration of firms with bodies corporate as partners under the Indian Partnership Act, 1932, the State Governments should examine the applications before

them and find out whether the memorandum and articles of association of the applicant incorporated companies contain any special articles which authorise the

incorporated companies to enter into partnerships and the articles also take care of the possible anomalies which have been pointed out in the Calcutta High

Court's ruling in the case of Ganga Metal Refining Company P. Ltd. v. Income-tax Commissioner West Bengal, (1968) 38 Com Cases 117 : AIR 1967 Cal 429."

 
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Corporate Laws and Indirect Taxation Laws Practitioner.

 this should suffice to ur query........Regards,


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Chartered accountant

A limited company whether public or private is a legal person capable of entering into valid contracts including partnership agreements. Thus there is no legal bar. The company can authorise a person to attend the meetings of the partners and to generally represent the company in other matters relating to the management and administration of the firm.

 
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Chartered accountant

A limited company whether public or private is a legal person capable of entering into valid contracts including partnership agreements. Thus there is no legal bar. The company can authorise a person to attend the meetings of the partners and to generally represent the company in other matters relating to the management and administration of the firm.

sivadas chettoor B.COM FCA LL.M

siva208@yahoo.com

 
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