Sleeping partner


We have sick of hearing the word "sleeping partner" when it comes to Indian Partnership Act, 1932. The Act itself does not mention this word anywhere. How has it become popular and common? It is an interpretation given for convenience. There is no legal sanctity for this word. It is a wrong perception. This word might have been much abused in courts also but as I said it is not a part of the Act. 


 Yes, you can call him as inactive partner also.


I dont think the terminology  "sleeping partner" used in dictionary and by public eversince created any problem or there may be likelihood of any problem. partnership is " ---a business carried on by all or any of them acting for all ".


practicing advocate

sleeping partner means, he who does not take active part in the partnership business, but he will get share and profit in the partnership firm.  When he is doing nothing there is no wrong to call him as sleeping partner.

Reply Mumbai : 9820174108

Dear All,

1.  Would it be proper to call an "investor" as a sleeping partner,  since in reality the "investor" may or may not be actively involved in business.

2. In the N.I.Act, u/s 141,  a term occurs which says  "a person who is in-charge off and / or responsible for the conduct of the business"    ...  Here  a "sleeping partner" cannot be held  "in-charge or responsible for the conduct of the business"

3.  In the Companies Act,  the  public share holders are the  "sleeping partners"  since they derive "dividends"  i.e. a part of the share of business profits.

4,  "sleeping partners"  or  say "investors"  would not be prosecutable under law, since they are not actively involved in any business.

By The Way,  if one is to be called a "sleeping partner",  then what about a term called as a "standing partner",   or  "sitting partner"  or  "running partner"  or  "sit-in partner"  or  "live-in partner" ,  besides being an "active partner"  or a "working partner"  or a "passive partner"  etc ...

Keep Smiling ... HemantAgarwal





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