PARTNERSHIP ACT, 1932

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THE PARTNERSHIP ACT, 1932 
(IX of 1932) 
CONTENTS 
CHAPTER I 
PRELIMINARY 
1. Short title, extent and commencement 
2. Definitions 
3. Application of Provisions of Act, IX of 1872 
CHAPTER II 
THE NATURE OF PARTNERSHIP 
4. Definition of “Partnership”, “Partner” Firm and “firm name” 
5. Partnership not created by status 
6. Mode of determining existence of partnership 
6A Act not to apply certain relationship 
7. Partnership-at-will 
8. Particular Partnership 
CHAPTER III 
RELATIONS OF PARTNERS TO ONE ANOTHER 
9. General duties of Partners 
10. Duty to indemnify for loss caused by Fraud 
11. Determination of rights and duties of Partner by contract between the 
Partners 
12. The conduct of the business 
13. Mutual rights and liabilities 
14. The property of the firm 
15. Application of the property of the firm 
16. Personal profits earned by Partners 
17. Rights and duties of Partners after a change in the firm, after the expiry 
of the term of the firm, and where additional undertakings are carried out 
CHAPTER IV 
RELATIONS OF PARTNERS TO THIRD PARTIES 
18. Partner to be agent of the firm 
19. Implied authority of Partner as agent of the firm 
20. Extension and restriction of Partner’s implied authority 
21. Partner authority in an emergency 
22. Mode of doing act to bind firm 
23. Effect of admissions by a partner 
24. Effect of notice to acting partner 
25. Liability of a partner for acts of the firm 
26. Liability of the firm for wrongful act of a partner 
27. Liability of a firm for misapplication by partner 
28. Holding out  
29. Right of transferee of a partner’s interest 
30. Minors admitted to the benefits of partnership 
CHAPTER V 
INCOMING AND OUTGOING PARTNERS 
31. Introduction of a partner 
32. Retirement of a partner 
33. Expulsion of a partner 
34. Insolvency of a partner 
35. Liability of estate of deceased partner 
36. Rights of outgoing partner to carry on competing business 
37. Rights of outgoing partner in certain cases to share subsequent profits 
38. Revocation of continue guarantee by change in firm 
CHAPTER VI 
DISSOLUTION OF A FIRM 
39. Dissolution of a firm 
40. Dissolution by agreement 
41. Compulsory dissolution 
42. Dissolution on the happening of certain contingencies 
43. Dissolution by notice of partnership-at-will 
44. Dissolution by the Court 
45. Liability for acts of partners done after dissolution 
46. Rights of partners to have business wound up after dissolution 
47. Continuing authority of partners for purpose of winding up 
48. Mode of settlement of accounts between partners 
49. Payment of firm’s debts and of separate debts 
50. Personal profits earned after dissolution 
51. Return of premium on premature dissolution 
52. Rights where partnership contract is rescinded for fraud or 
misrepresentation  
53. Rights to restrain from use of firm name or firm property  
54. Agreements in restraint of trade 
55. Sale of goodwill after dissolution  
Rights of buyer and seller of goodwill  
Agreement in restraint of trade 
CHAPTER VII 
REGISTRATION OF FIRMS 
56. Power to exempt from application of this Chapter 
57. Appointment of Registrars  
58. Application for registration 
59. Registration 
60. Recording of alterations in firm name and principal place of business 
61. Noting of closing and opening of branches 
62. Noting of changes in names and addresses of partners 
63. Recording of changes in and dissolution of a firm recording  of 
withdrawal of a minor 
64. Rectification of mistakes 
65. Amendment of Register by order of Court 
66. Inspection of Register and filed documents 
67. Grant of copies  
68. Rules of evidence  
69. Effect of non-registration  
70. Penalty for furnishing false particulars 
71. Power to make rules 
CHAPTER VIII 
SUPPLEMENTAL 
72. Mode of giving public notice 
73. Repeals  
74. Savings 
TEXT 
THE PARTNERSHIP ACT, 1932 
(IX of 1932) 
[8th April 1932] 
An 
Act 
to define and amend the law relating to partnership 
Whereas it is expedient to define and amend the law relating to partnership; 
It is hereby enacted as follows:– 
CHAPTER I 
PRELIMINARY 
1. Short title, extent and commencement .– (1) This Act may be calle d the 
Partnership Act, 1932. 
[(2)  It extends to the whole of Pakistan.] 
(3)  It shall come into force on the 1st day of October, 1932, except section 
69, which shall come into force on the 1st day of October, 1933. 
2.  Definitions.– In this Act, unles s there is anything repugnant in the subject or 
context,- 
(a)  an "act of a firm" means any act or omission by all the partners or by 
any partner or agent of the firm which gives rise to a right enforceable 
by or against the firm, 
(b)  "business" includes every trade, occupation and profession; 
(c)  "prescribed" means prescribed by rules made under this Act; 
(d)  "third party" used in relation to a firm or to a partner therein means any 
person who is not a partner in the firm; and 
(e)  expressions used but not defined in this Act and defined in the Contract 
Act (IX of 1872) shall have the meanings assigned to them in that Act. 
3.  Application of provisions of Act IX of 1872 .– The un repealed provisions of 
the Contract Act, 1872, saves  in so far as they are inconsistent with the express 
provisions of this Acts, shall continue to apply to firms. 
CHAPTER II 
THE NATURE OF PARTNERSHIP 
4.  Definition of "partnership", "partner", "firm" and "firm name" .– 
“Partnership" is the relation between persons who have agreed to share the profits of 
a business carried on by all or any of them acting for all. 
Persons who have entered into partnership with one another are called 
individually "partners" and collectively "a firm" and the name under which  their 
business is carried on is called the "firm name".  
5.  Partnership not created by status .– The relation of partnership arises from 
contract and not from status; 
And in particular the members of a Hindu undivided family carrying on a family 
business as such, or a Burmese Buddhist husband and wife carrying on business as 
such are not partners in such business. 
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 1.– The sharing of profits or of gross returns arising from property by 
persons holding a joint or commo n interest in that property does not of itself make 
such persons partners.  
Explanation 2.– 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 of itself make him a partner with the persons carrying on the 
business; 
And in particular, the receipt of such share of 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. 
6A.  Act not apply to certain relationships .– Nothing contained in this act shall 
apply to a relationship created by any agreement between Banking company and a 
person or group of persons provi ding for sharing of profits and losses arising from or 
relating to the provision by the Banking company of finance to such person or group 
of persons. 
Explanation.– for the purpose of this section, “Banking Company” and finance “shall 
have the same meanings as in the Banking tribunals ordinance, 1981. 
7.  Partnership at will .– Where no provision is made by contract between the 
partners for the duration of their partnership, or for the determination of their 
partnership the partnership is "partnership at will". 
8.  Particular partnership .– A person may become a partner with another 
person in particular adventures or undertakings. 
CHAPTER III 
RELATIONS OF PARTNERS TO ONE ANOTHER 
9.  General duties of partners.– Partners are bound to carry on the business of 
the firm to the greatest common advantage, to be just and faithful  to each other, and 
to render true accounts and full information of all things affecting the firm to any 
partner or his legal representative. 
10.  Duty to indemnify for loss caused by fraud .– Every partner shall indemnify 
the firm for any loss caused  to it by his fraud in the conduct of the business of the 
firm. 
11.  Determination of rights and duties of partners by contract between the 
partners.– (1) Subject to the provisions of this Act, the mutual rights and duties of 
the partners of a firm may be determined by contract between the partners, and such 
contract may be expressed or may be implied by a course of dealing. 
Such contract may be varied by consent of all the partners, and such consent 
may be express or may be implied by a course of dealing. 
(2)  Agreements in restraint of trade. – Notwithstanding anything 
contained in section 27 of the Contract Act, 1872 such contracts may provide that a 
partner shall not carry on any business other than that of the firm while he is a 
partner. 
12.  The conduct of the business.– Subject to contract between the partners– 
(a)  every partner has a right to take part in the conduct of the business; 
(b)  every partner is bound to attend diligently to his duties in the conduct of 
the business; 
(c)  any difference arising as to ordinary matters connected with the 
business may be decided by a majority of the partners, and every 
partner shall have the right to express his opinion before the matter is 
decided, but no change may be made in the nature of the  business 
without the consent of all the partners; and 
(d)  every partner has a right to have access  and to inspect and copy any 
of the books of the firm. 
13.  Mutual rights and liabilities.– Subject to contract between the partners– 
(a)  a partner is not entitled to receive remuneration for taking part in the 
conduct of the business; 
(b)  the partners are entitled to share equally in the profits earned, and shall 
contribute equally to the losses sustained by the firm; 
(c)  where a partner is entitle d to interest on the capital subscribed by him, 
such interest shall be payable only out of profits; 
(d)  a partner making, for the purposes of the business, any payment or 
advance beyond the amount of capital he has agreed to subscribe, is 
entitled to interest thereon at the rate of six per cent per annum; 
(e)  the firm shall indemnify a partner in respect of payments made and 
liabilities incurred by him– 
(i)  in the ordinary and proper conduct of the business, and 
(ii)  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; and 
(f)  a partner shall indemnify the firm for a ny loss caused to it by his wil ful 
neglect in the conduct of the business of the firm. 
14.  The p roperty of the firm .– Subject to contract between the partners, the 
property of the firm includes all property and rights and interests in property originally 
brought into the stock of the firm, or acquired by purchase or otherwise, by, or for the 
firm or for the purposes and in the course of the business of the firm, and includes 
also the goodwill of the business. 
Unless the contrary intention appears, property, rights and interests in 
property acquired with money  belonging to the firm are deemed to have been 
acquired for the firm. 
15.  Application of the property of the firm .– Subject to contract between the 
partners the property of the firm shall be held and used by the partners exclusively 
for the purposes of the business. 
16.  Personal profits earned by partners .– Subject to contract between the 
partners– 
(a) if a partner derives any profit for himself from any transaction of the 
firm, or from the use of the property or business connection of the firm 
or the firm name he shall account for that profit and pay it to the firm; 
(b) if a partner carries on any busin ess of the same nature as and 
competing with that of the firm, he shall account for and pay to the firm 
all profits made by him in that business. 
17.  Rights and duties of partners after a change in the firm, after the expiry 
of the term of the firm and where additiona l undertakings are carried out. –
Subject to contract between the partners– 
(a)  where a change occurs in the constitutions of a firm, the mutual rights 
and duties of the partners in the reconstituted firm remain the same as 
they were immediately before the change as far as may be; 
(b)  where a firm constituted for a fixed term continues to carry on business 
after the expiry of that term, the mutual rights and duties of the partners 
remain the same as they were before the expiry, so far as they may be 
consistent with the incidents of partnership-at-will; and 
(c)  where a firm constituted to carry out one or more adventures or 
undertakings carries out other adventures or undertakings, the mutual 
rights and duties of the partners in respect of  the other adventures or 
undertakings are the same as those in respect of the original 
adventures or undertakings. 
CHAPTER IV 
RELATIONS OF PARTNERS TO THIRD PARTIES 
18.  Partner t o be agent of the firm .– Subject to the provisions of this Act a 
partner is the agent of the firm for the purposes of the business of the firm. 
19.  Implied authority of partner as agent of the firm .– (1) Subject to the 
provisions of section 22,³ the act of a partner which is done to carry on, in the usual 
way, business of the kind carried on by the firm, binds the firm. 
The authority of a partner to bind the firm conferred by this section is called 
his "implied authority". 
(2)  In the absence of any usage or custom of trade to the contrary, the 
implied authority of a partner does not empower him to– 
(a)  submit a dispute relating to the business of the firm to arbitration. 
(b)  Open a banking account on behalf of the firm in his own name, 
(c)  Compromise or relinquish any claim or portion of a claim by the firm, 
(d)  Withdraw a suit or proceeding filed on behalf of the firm, 
(e)  Admit any liability in a suit or proceeding against the firm, 
(f)  Acquire immovable property on behalf of the firm, 
(g)  Transfer immovable property belonging to the firm, or 
(h)  Enter into partnership on behalf of the firm. 
20.  Extension and restriction of partner's implied authority .– The partners in 
a firm may, by contract between the partners, extend or restrict the implied authority 
of any partner. Notwithstanding any s uch restriction, any act done by a partner on 
behalf of the firm which falls within his implied authority binds the firm, unless the 
person with whom he is, dealing knows of the restriction or does not know or believe 
that partner to be a partner. 
21.  Partner's authority in an emergency .– A partner has authority, in an 
emergency, to do all such acts for the purpose of protecting the firm from loss as 
would be done by a person of ordinary prudence, in his own case, acting under 
similar circumstances, and such acts bind the firm. 
22.  Mode of doing act to bind firm.– In order to bind a firm, an act or instrument 
done or executed by a partner or other person on behalf of the firm shall be done or 
executed in the firm name, or in any other manner ex pressing or implying an 
intention to bind the firm. 
23.  Effect of admissions by a partner .– An admission or representation made 
by a partner concerning the affairs of the firm is evidence against the firm, if it is 
made in the ordinary course of business. 
24. Effect of notice to acting partner.– Notice to a partner who habitually acts in 
the business of the firm or any matter relating to the affairs of the firm operates as 
notice to the firm, except in the case of a fraud on the firm committed by or with the 
consent of that partner. 
25.  Liability of a partner for acts of the firm.– Every partner is liable, jointly with 
all the other partners and also severally, for all acts of the firm done while he is a 
partner. 
26.  Liability of the firm for wrongful acts of a partner .– Where by the wrongful 
act or omission of a partner acting in the ordinary course of the business of a firm or 
with the authority of his partners, loss or injury is caused to any third party, or any 
penalty is incurred, the firm is liable therefore to the same extent as the partner. 
27.  Liability of firm for misapplication by partners.– Where 
(a)  A partner acting within his apparent authority receives money or 
property from a third party and misapplies it, or 
(b)  A firm in the course of its business receives money or property from a 
third party, and the money or property is misapplied by any of the 
partners while it is in the custody of the firm, the firm is liable to make 
good the loss. 
28.  Holding out .– (1) Any one who by words spoken or written or by conduct 
represents himself, or knowingly permits himself to be represented, to be a partner in 
a firm, is liable as a partner in that firm to any one who has on the faith of any such 
representation given credit to the firm, whether the person representing himself or 
represented to be a partner does or does not know that the representation has 
reached the person so giving credit. 
(2)  Where after a partner's death the business is continued in the old firm 
name, the continued use of that name or of the deceased partner's name as a part 
thereof shall not of itself make his legal representative or his estate liable for any act 
of the firm done after his death. 
29.  Rights of transferee of a partner's inte rest.– (1) A transfer by a partner of 
his interest in the firm, either absolute or by mortgage, or by the creation by him of a 
charge on such interest, does not entitle the transferee, during the continuance of 
the firm, to interfere in the conduct of the business, or to require accounts, or to 
inspect the books of the firm, but entitles the transferee only to receive the share of 
profits of the transferring partner, and the transferee shall accept the account of 
profits agreed to by the partners. 
(2)  If t he firm is dissolved or if the transferring partner ceases to be a 
partner, the transferee is entitled as against the remaining partners to receive the 
share of the assets of the firm to which the transferring partner is entitled, and, for 
the purpose of a scertaining that share, to an account as from the date of the 
dissolution. 
30. Minors admitted to the benefits of partnership .– (1) a person who is a 
minor according to the law to which he is subject may not be a partner in a firm but 
with the consen t of all the partners for the time being, he may be admitted to the 
benefits of partnership. 
(2)  Such minor has a right to such share of the property and of the profits 
of the firm as may be agreed upon, and he may have access to  inspect and copy 
any of the accounts of the firm. 
(3)  Such minor's share is liable for the acts of the firm, but the minor is not 
personally liable for any such act. 
(4)  Such minor may not sue the partners for an account or payment of his 
share of the property or profits of the  firm, save when severing his connection with 
the firm, and in such case the amount of his share shall be determined by a valuation 
made as far as possible in accordance with the rules contained in section 48: 
Provided that all the partners acting together  or any partner entitled to 
dissolve the firm upon notice to other partners may elect in such suit to dissolve the 
firm and thereupon the court shall proceed with the suit as one for dissolution and for 
settling accounts between the partners, and the amoun t of the share of the minor 
shall be determined along with the shares of the partners. 
(5) At any time within six months of his attaining majority, or of his 
obtaining knowledge that he had been admitted to the benefits of partnership, 
whichever date is later, such person may give public notice that he has elected to 
become or that he has elected not to become a partner in the firm, and such notice 
shall determine his position as regards the firm: 
Provided that, if he fails to give such notice, he shall become a partner in the 
firm, on the expiry of the said six months. 
(6) where any person has been admitted as a minor to the benefits of 
partnership in a firm, the b urden of proving the fact that such person had no 
knowledge of such admission until a particular date after the expiry of six months of 
his attaining majority shall lie on the persons asserting that fact. 
(7)  where such person becomes a partner,– 
(a)  his rights and liabilities as a minor continue up to the date on which he 
becomes a partner, but he also becomes personally liable to third 
parties for all acts of the firm done since he was admitted to the 
benefits of partnership, and  
(b)  his share in the property and profits of the firm shall be the share to 
which he was entitled as a minor. 
(8)  Where such person elects not to become a partner,– 
(a)  his rights and liabilities as a miner continue up to the date on which he 
becomes a partner but he also be comes personally liable to third 
parties for all acts of the firm done since he was admitted to the 
benefits of Partnership, and  
(b)  his share shall not be liable for any acts of the firm done after the date 
of the notice, and  
(c)  he shall be entitled to sue the partners for his share of the property and 
profits in accordance with subsection (4). 
(9)  Nothing in subsections (7) and (8) shall affect the provisions of section 
28. 
CHAPTER V 
INCOMING AND OUTGOING PARTNERS 
31.  Introduction of a partne r.– (1) Subject to contract between the partners and 
to the provisions of section 30, no person shall be introduced as a partner into a firm 
without the consent of all the existing partners. 
(2)  Subject to the provisions of section 30, a person who is introduced as a 
partner into a firm does not thereby become liable for any act of the firm done before 
he became a partner. 
32.  Retirement of a partner.– (1) A partner may retire– 
(a)  with the consent of all the other partners, 
(b) in accordance with an express agreement by the partners, or 
(c)  where the partnership is at will, by giving notice in writing to all the 
other partners of his intention to retire. 
(2)  A retiring partner may be discharged from any liability to any third party 
for acts of the firm done before his retirement by an agreement made by him with 
such third party and partners of the reconstituted firm, and such agreement may be 
implied by a cour se of dealing between such third party and the reconstituted firm 
after he had knowledge of the retirement. 
(3)  Notwithstanding the retirement of a partner from a firm, he and the 
partners continue to be liable as partners to third parties of any act done  by any of 
them which would have been an act of the firm if done before the retirement, until 
public notice is given of the retirement: 
Provided that a retired partner is not liable to any third party who deals with 
the firm without knowing that he was a partner. 
(4)  Notices under subsections (3) may be given by the retired partner or by 
any partner of the reconstituted firm. 
33.  Exclusion of a partner .– (1) A partner may not be expelled from a firm by 
any majority of the partners, saves in the exer cise in good faith of powers conferred 
by contract between the partners. 
(2)  The provisions of subsections (2), (3) and (4) of section 32 shall apply 
to an expelled partner as if he were a retired partner. 
34.  Insolvency of a partner .– (1) Where a partner in a f irm is adjudicated an 
insolvent he ceases to be a partner on the date on which the order of adjudication is 
made, whether or not the firm is thereby dissolved. 
(2)  Where under a contract between the partners the firm is not dissolved 
by the adjudication of a partner as an insolvent the estate of a partner so adjudicated 
is not liable for any act of the firm and the firm is not liable for any act of the 
insolvent, done after the date on which the order of adjudication is made. 
35.  Liability of estate of deceased partner .– Where under a contract between 
the partners the firm is not dissolved by the death of a partner, the estate of a 
deceased partner is not liable for any act of the firm done after his death. 
36.  Rights of outgoing  partner to carry on competing business .– (1) An 
outgoing partner may carry on a business competing with that of the firm and he may 
advertise such business, but, subject to contract to the contrary, he may not– 
(a)  use the firm name, 
(b)  represent himself as carrying on the business of the firm, or 
(c)  solicit the custom of persons who were  dealing with the firm before th e 
ceased to be a partner. 
(2)  Agreements in restraint of trade– a partner may make an agreement 
with his partners that on ceasing to be a partner he will not carry on any business 
similar to that of the firm within a specified period or within specified local limits; and, 
notwithstanding anything contained in section 27, of the Contract Act 1872, such 
agreement shall be valid if the restrictions imposed are reasonable. 
37.  Right of outgoing partner in certain cases to share subsequent profits .– 
Where any member of a firm has died or otherwise ceased to be a partner, and the 
surviving or continuing partners carry on the business of  the firm with the property of 
the firm without any final settlement of accounts as between them and the outgoing 
partner of his estate, then, in the absence of a contract to the contrary, the outgoing 
partner or his estate is entitled at the option of him self or his representatives to such 
share of the profits made since he ceased to be a partner as may be attributable to 
the use of his share of the property of the firm or to interest at the rate of six per cent 
per annum on the amount of his share in the property of the firm: 
Provided that where by contract between the partners an option is given to 
surviving or continuing partners to purchase the interest of a deceased or outgoing 
partner, and that option is duly exercised, the estate of the deceased part ner, or the 
outgoing partner or  his estate, as the case may be, is not entitled to any further or 
other share of profits; but if any partner assuming to act in exercise of the option 
does not in all material respects comply with the terms thereof, he is liable to account 
under the foregoing provisions of this section. 
38.  Revocation of continuing guarantee by change in firm .– A continuing 
guarantee given to a firm, or to a third party in respect of the transaction of a firm, is 
in the absence of agre ement to the contrary, revoked as to future transactions from 
the date of any change in the constitution of the firm. 
CHAPTER VI 
DISSOLUTION OF A FIRM 
39.  Dissolution of a firm .– The dissolution of partnership between all the 
partners of a firm is called the "dissolution of the firm". 
40.  Dissolution by agreement.– A firm may be dissolved with the consent of all 
the partners or in accordance with a contract between the partners. 
41.  Compulsory dissolution.– A firm is dissolved– 
(a)  by the adjudication of all the partners or of all the partners but one as 
insolvent or 
(b)  by the happening of any event which makes it unlawful for the business 
of the firm to be carried on  or for the partners to carry it on in 
partnership: 
Provided that, where more than one separate adventure or undertaking is 
carried on by the firm, the illegality of one or more shall not of itself cause the 
dissolution of the firm in respect of its lawful adventures and undertakings. 
42.  Dissolution on the happening of certain contingencies .– Subject to 
contract between the partners a firm is dissolved– 
(a) if constituted for a fixed term, by the expiry of that term; 
(b)  if constituted to carry out  one or more adventures or undertakings, by 
the completion thereof; 
(c)  by the death of a partner; and 
(d)  by the adjudication of a partner as an insolvent. 
43.  Dissolution by notice of partnership -at-will.– (1) Where the partnership is 
at will, t he firm may be dissolved by any partner giving notice in writing to all the 
other partners of his intention to dissolve the firm. 
(2)  The firm is dissolved as from the date mentioned in the notice as the 
date of dissolution or, if no date is so mentioned,  as from the date of the 
communication of the notice. 
44.  Dissolution by the Court.– At the suit of a partner, the Court may dissolve a 
firm on any of the following grounds, namely:– 
(a)  that a partner has become of unsound mind, in which case the suit may 
be brought as well by the next friend of the partner who has become of 
unsound mind as by any other partner; 
(b)  that a partner, other than the partner suing, has become in any way 
permanently incapable of performing his duties as partner; 
(c) that a partner, other than the partner suing, is guilty of conduct which is 
likely to affect prejudicially the carrying on of the business, regard 
being had to the nature of the business; 
(d)  that a partner, other than the partner suing, willfully, or per sistently, 
commits breach of agreements relating to the management of the 
affairs of the firm or the conduct of its business, or otherwise so 
conducts himself in matters relating to the business that it is not 
reasonably practicable for the other partners to carry on the business in 
partnership with him; 
(e)  that a partner, other than the partner suing, has in any way transferred 
the whole of his interest in the firm to a third party, or has allowed his 
share to be charged under the provisions of rule 49 o f Order XXI of the 
First Schedule to the Code of Civil Procedure, 1908, or has allowed it 
to be sold in the recovery of arrears of land -revenue or of any dues 
recoverable as arrears of land-revenue due by the partner; 
(f)  That the business of the firm cannot be carried on save at a loss; or 
(g)  On any other ground which renders it just and equitable that the firm 
should be dissolved. 
45.  Liability for acts of partners done after dissolution .– (1) Notwithstanding 
the dissolution of a firm, the partn ers continue to be liable as such to third parties for 
any act done by any of them which would have been an act of the firm if done before 
the dissolution, until public notice is given of the dissolution: 
Provided that the estate of a partner who dies, or who if  adjudicated an 
insolvent, or of a partner who, not having been known to the person dealing with the 
firm to be a partner, retires from the firm, is not liable under this section for acts done 
after the date on which he ceases to be a partner.  
(2)  Notices under subsection (1) may be given by any partner. 
46.  Right of p artners to have business wound up after dissolution .– On the 
dissolution of a firm every partner or his representative is entitled, as against all the 
other partners or their representatives, to have the property of the firm applied in 
payment of the debts and liabilities of the firm, and to have the surplus  distributed 
among the partners or their representatives according to their rights. 
47.  Continuing authority of partners for purposes of winding up .– After the 
dissolution of a firm the authority of each partner to bind the firm, and the other 
mutual rights and obligations of the partners, continue notwithstanding the 
dissolution, so far as may be necessary to wind up the affairs of the firm and to 
complete transactions begun unfinished at the time of the dissolution, but not 
otherwise: 
Provided that the firm is in no case bound by the acts of a partner who has 
been adjudicated insolvent; but this proviso does not affect the liability of any person 
who has after the adjudication represented himself or knowingly permitted himself to 
be represented as a partner of the insolvent. 
48.  Mode of settlement of accounts between partners .– In settling the 
accounts of a firm after dissolution, the following rules shall, subject to agreement by 
the partners, be observed:– 
(a)  Losses, including deficiencies of capital, shall be paid first out of profits, 
next out of capital, and, lastly, if necessary, by the partners individually 
in the proportions in which they were entitled to share profits. 
(b)  The assets of the firm, including any sums contributed by th e partners 
to make up deficiencies of capital, shall be applied in  the following 
manner and order– 
(i) in paying the debts of the firm to third parties; 
(ii)  in paying to each partner ratably what is due to him from the firm 
for advances as distinguished from capital; 
(iii)  in paying to each partner ratably what is due to him on account 
of capital; and 
(iv)  the residue, if any, shall be divided among the partners in the 
proportions in which they were entitled to share profits. 
49.  Payment of firm's debts and of separate debts .– Where there are joint 
debts due from the firm, and also separate debts due from any partner, the property 
of the firm shall be applied in the first instance in payment of the debts of the firm, 
and, if there is an y surplus, then the share of each partner shall be applied in 
payment of his separate debts or paid to him. The separate property of any partner 
shall be applied first in the payment of his separate debts, and the surplus (if any) in 
the payment of the debts of the firm. 
50.  Personal profits earned after dissolution.– Subject to contract between the 
partners the provisions of clause (a) of section 16³ shall apply to transactions by any 
surviving partner or by the representatives of a deceased partner , undertaken after 
the firm is dissolved on account of the death of a partner and before its affairs have 
been completely wound up: 
Provided that where any partner or his representative has brought the 
goodwill of the firm, nothing in this section shall affect his right to use the firm name. 
51.  Return of premium on premature dissolution.– Where a partner has paid a 
premium on entering into partnership for a fixed term, and the firm is dissolved 
before the expiration of that term otherwise than by th e death of a partner, he shall 
be entitled to repayment of the premium or of such part thereof as may be 
reasonable, regard being had to the terms upon which he became a partner and to 
the length of time during which he was a partner, unless– 
(a)  the dissolution is mainly due to his own mis-conduct, or 
(b) the dissolution is in pursuance of an agreement containing no provision 
for the return of the premium or any part of it. 
52.  Rights where partnership contract is rescinded for fraud or 
misrepresentation.– Where a contract creating partnership is rescinded on the 
ground of the fraud or misrepresentation of any of the parties thereto, the party 
entitled to rescind is, without prejudice to any other right, entitled– 
(a)  to a lien on, or a right of re tention of, the surplus or the assets of the 
firm remaining after the debts of the firm have been paid, for any sum 
paid by him for the purchase of a share in the firm and for any capital 
contributed by him; 
(b)  to rank as a creditor of the firm in respec t of any payment made by him 
towards the debts of the firm; and 
(c)  to be indemnified by the partner or partners guilty of the fraud or 
misrepresentation against all the debts of the firm. 
53.  Right to restrain from use of firm name or firm propert y.– After a firm is 
dissolved, every partner or his representative may, in the absence of a contract 
between the partners to the contrary, restrain any other partner or his representative 
from carrying on a similar business in the firm name or from using a ny of the 
property of the firm for his own benefit, until the affairs of the firm have been 
completely wound up: 
Provided that where any partner or his representative has brought the 
goodwill of the firm, nothing in this section shall affect his right to use the firm name. 
54. Agreements in restraint of trade .– Partners may, upon or in anticipation of 
the dissolution of the firm, make an agreement that some or all of them will not carry 
on a business similar to that of the firm within a specified peri od or within specified 
local limits: and notwithstanding anything contained in section 27 of the Contract Act, 
1872, such agreement shall be valid if the restrictions imposed are reasonable. 
55.  Sale of goodwill after dissolution.– (1) in settling the accounts of a firm after 
dissolution, the goodwill shall, subject to contract between the partners, be included 
in the assets, and it may be sold either separately or along with other property of the 
firm. 
(2)  Rights of buyer and seller of goodwill .– Where the goodwill of a firm 
is sold after dissolution, a partner may carry on a business competing with that of the 
buyer and he may advertise such business, but, subject to agreement betwee n him 
and the buyer he may not– 
(a)  use the firm name, 
(b)  represent himself as carrying on the business of the firm or 
(c)  solicit the custom of persons who were dealing with the firm before its 
dissolution.  
(3)  Agreements in restraint of trade.– Any partner may, upon the sale of 
the goodwill of a firm make an agreement with the buyer that such partner will not 
carry on any business similar to that of the firm within a specified period or within 
specified local limits, and, notwithstanding anything  contained in section 27 of the 
Contract Act, 1872, such agreement shall be valid if the restrictions imposed are 
reasonable. 
CHAPTER VII 
REGISTRATION OF FIRMS 
56.  Power to exempt from application of this Chapter .– The [Provincial 
Government of any Province may, by notification in the [official Gazette], direct that 
the provisions of this Chapter shall not apply to [that Province] or to any part thereof 
specified in the notification. 
57.  Appointment of Registrars .– (1) The [Provincial Governme nt] may appoint 
Registrars of Firms for the purposes of this Act, and may define the areas within 
which they shall exercise their powers and perform their duties. 
(2)  Every Registrar shall be deemed to be a public servant within the 
meaning of section 21 of the Pakistan Penal code. 
58.  Application for Registration.– (1) The registration of a firm may be effected 
at any time by sending by post or delivering to the Registrar of area in which any 
place of business of the firm is situated or proposed to  be situated, a statement in 
the prescribed form and accompanied by the prescribed fee, stating– 
(a) the firm name, 
(b)  the place or principal place of business of the firm, 
(c)  the names of any other places where the firm carries on business, 
(d)  the date when each partner joined the firm, 
(e) the names in full and permanent addresses of the partners, and, 
(f)  duration of the firm. 
The statement shall be signed by all the partners, or by their agents specially 
authorized in this behalf. 
(2)  Each perso n signing the statement shall also verify it in the manner 
prescribed. 
(3)  A firm name shall not contain any of the following words, namely:– 
Government "Jinnah", "Quaid -e-Azam", or words expressing or implying the 
sanction, approval or patronage of t he "Federal" Government or any Provincial 
Government or of the "Quaid -e-Azam", except when the Provincial Government 
signifies its consent to the use of such words as part of the firm name by order in 
writing. 
(3A) A firm name shall not contain the name of  the "United Nations" or its 
abbreviations through the use of its initial letters or of any subsidiary body set up by 
that body unless it has obtained the previous authorization of the Secretary General 
of the United Nations in writing. 
(3B)  A firm name s hall not contain the name of the "World Health 
Organization" or its abbreviations through the use of its initial letters unless it has 
obtained the previous authorization of the Director-General in writing. 
(3C)  A firm name shall not contain any word whic h may be declared by the 
Provincial Government, by notification in the official Gazette to be undesirable: 
Provided that a firm which has as part of its name any word declared by the 
Provincial Government to be undesirable shall, within one month of such d eclaration, 
alter its name and send a statement to this effect to the Registrar.  
59.  Registration.– when the Registrar is satisfied that the provisions of section 
58 have been duly complied with, he shall record an entry of the statement in a 
register called Register of Firms and shall file the statement. 
60.  Recording of alterations in firm name and principal place of business .– 
(1) When an alteration is made in the firm name or in the location of the principal 
place of business of registere d firm a statement may be sent to the Registrar 
accompanied by the prescribed fee, specifying the alteration and signed and verified 
in the manner required under section 58. 
(2)  When the Registrar is satisfied that the provisions of subsection (1) 
have be en duly complied with he shall amend the entry relating to the firm in the 
Register of Firms in accordance with the statement, and shall file it along with the 
statement relating to the firm filed under section 59. 
61.  Noting of closing and opening of branches .– When a registered firm 
discontinues business at any place or begins to carry on business at any place, such 
place not being its principal place of business, any partner or agent of the firm may 
send intimation thereof to the Registrar, who sh all make a note of such intimation in 
the entry relating to the firm in the Register of Firms, and shall file the intimation 
along with the statement relating to the firm filed under section 59. 
62.  Noting of change in names and addresses of partner s.– When any 
partner in a registered firm alters his name or permanent address, an intimation of 
the alteration may be sent by any partner or agent of the firm to the Registrar, who 
shall deal with it in the manner provided in section 61. 
63.  Recording of changes in and dissolution of a firm .– (1) When a change 
occurs in the constitution of a registered firm any incoming, continuing or outgoing 
partner, and when a registered firm is dissolved any person who was a partner 
immediately before the dissol ution, or the agent of any such partner or person 
specially authorized in this behalf, may give notice to the Registrar of such change or 
dissolution, specifying the date thereof; and the Registrar shall, make a record of the 
notice in the entry relating to the firm in the Register of Firms, and shall file the notice 
along with the statement relating to the firm filed under section 59. 
(2)  Recording of withdrawal of a minor .– When a minor who has been 
admitted to the benefits of partnership in a firm attai ns majority and elects to become 
or not to become a partner, and the firm is then a registered firm, he, or his agent 
specially authorized in this behalf, may give notice to the Registrar that he has or has 
not become a partner, and the Registrar shall dea l with the notice in the manner 
provided in subsection (1). 
64.  Rectification of mistake .– (1) The Registrar shall have power at all times to 
rectify any mistake in order to bring the entry in the Register of Firms relating to any 
firm into conformity with the documents relating to that firm filed under this chapter. 
(2)  On application made by all the parties who have signed any document 
relating to the firm filed under this chapter, the Registrar may rectify any mistake in 
such document or in the record or note thereof made in the Register of Firms. 
65.  Amendment of Register by order of Court .– A court deciding any matter 
relating to a registered firm may direct that the Registrar shall make any amendment 
in the entry in the Register of Firms  relating to such firm which is consequential upon 
its decision, and the Registrar shall amend the entry accordingly. 
66.  Inspection of Register and filed documents .– (1) The Register of Firms 
shall be open to inspection by any person on payment of such fee as may be 
prescribed. 
(2)  All statements, notices and intimations filed under this Chapter shall be 
open to inspection, subject to such conditions and on payment of such fee as may 
be prescribed. 
67.  Grant of copies.– The Registrar shall on application furnish to any person on 
payment of such fee as may be prescribed, a copy, certified under his hand, of any 
entry or portion thereof in the Register of Firms. 
68.  Rules of evidence .– (1) Any statement, intimation or notice recorded or 
noted in the Register of Firms shall, as against any person by whom or on whose 
behalf such statement, intimation or notice was signed, be conclusive proof of any 
fact therein stated. 
(2)  A certified copy of an entry relating to a firm in the Register of Firms 
may be produced in proof of the fact of the registration of such firm, and of the 
contents of any statement, intimation or notice recorded or noted therein. 
69.  Effect of non -registration.– (1) No suit to enforce a right arisin g from a 
contract or conferred by this Act shall be instituted in any Court by or on behalf of 
any person suing as a partner in a firm against the firm or any person alleged to be 
or to have been a partner in the firm unless the firm is registered and the person 
suing is or has been shown in the Register of Firms as a partner in the firm. 
(2)  No suit to enforce a right arising from a contract shall be instituted in 
any Court by or on behalf of a firm against any third party unless the firm is 
registered and the persons suing are or have been shown in the Register of Firms as 
partners in the firm. 
(3)  The provisions of subsections (1) and (2) shall apply also to a claim of 
set-off or other proceeding to enforce a right arising from a contract, but shall not  
affect– 
(a) the enforcement of any right to use for the dissolution of a firm or for 
accounts of a dissolved firm, or any right or power to realise the 
property of a dissolved firm, or  
(b) the powers of an official assignee, receiver or court under the 
1[Insolvency  (Karachi Division  2 * *Act,] or the Provincial Insolvency 
Act, 1920 to realize the property of an insolvent partner.  
(4) This section shall not apply– 
(a)  to firms or to partners in firms which have no place of business in 
[Pakistan] or who se places for business in [Pakistan] are situated in 
areas to which by notification under [section 56] this Chapter does not 
apply or 
(b)  to any suit or claim of set -off not exceeding one hundred rupees in 
value which, ³*** is not of a kind specified in t he Second Schedule to 
the Provincial Small Cause Courts Act, 1887 or to any proceeding in 
execution or other proceeding incidental to or arising from any such 
suit or claim.  
70. Penalty for furnishing false particulars .– Any person who signs any 
statement, amending statement, notice or intimation under this Chapter containing 
any particular which he knows to be false or does not believe to be true, or 
containing particulars which he knows to be incomplete or does not believe to be 
complete, shall be punishable with imprisonment which may extend to three months, 
or with fine, or with both. 
71. Power to make rules .– (1) [Provincial Government] may make rules 
prescribing the fees which shall accompany documents sent to the Registrar of 
Firms, or wh ich shall be payable for the inspection of documents in the custody of 
the Registrar of Firms, or which shall be payable for the inspection of documents in 
the custody of the Registrar of Firms or for copies from the Register of Firms: 
Provided that such f ees shall not exceed the maximum fees specified in 
Schedule. 
Provided further that the fees payable for any service desired on the same 
way on which an application for the same is made may be double the aforesaid 
maximum fees. 
(2)  The [Provincial Government] may [also] make rules– 
(a)  prescribing the form of statement submitted under section 58, and of 
the verification thereof; 
(b)  requiring statements, intimations and notices under sections 60,61,62 
and 63 to be in prescribed form, and prescribing the form, thereof; 
(c) prescribing the form of the Register of Firms and the mode in which 
entries relating to firms are to be made therein, and the mode in which 
such entries are to be amended or notes made therein; 
(d) regulating the procedure of the Registrar when disputes arise; 
(e)  regulating the filing of documents received by the Registrar; 
(f)  prescribing conditions for the inspection of original documents; 
(g)  regulating the grant of copies; 
(h)  regulating the elimination of registers and documents; 
(i)  providing for the maintenance and form of an index to the Register of 
Firms; and 
(j)  generally, to carry out the purposes of this Chapter. 
(3)  All rules made under this section shall be subject to the condition of 
previous publication. 
CHAPTER VIII 
SUPPLEMENTAL 
72.  Mode of giving public notice.– A public notice under this Act is given– 
(a)  where it relates to the retirement or expulsion of a partner from a 
registered firm, or to the dissolution of a registered firm, or to the 
election to become or not to become a partner in a registered firm by a 
person attaining majority who was admitted as a minor to the benefits 
of partnership, by notice to the Registrar of Firms under section 63, and 
by publication in the  local [official Gazette] and in a t least one 
vernacular newspaper circulating in the district where the firm to which 
it relates has its place or principal place of business, and 
(b)  in any other case, by publication in the  local [official Gazette] and in at 
least one vernacular newspaper circulating in the district where the firm 
to which it relates has its place or principal place of business. 
73.  [Repeals].– Rep. by the Repealing Act, 1938 (I of 1938), S.2 and Schedule. 
74.  Savings.– Nothing in this Act or any repeal effected thereby shal l affect or be 
deemed to affect– 
(a) any right, title, interest, obligation or liability already acquired, accrued 
or incurred before the commencement of this Act, or 
(b)  any legal proceeding or reme dy in respect of any such right, title, 
interest, obligation or liability, or anything done or suffered before the 
commencement of this Act, or 
(c)  anything done or suffered before the commencement of this Act, or 
(d) any enactment relating to partnership  not expressly repealed by this 
Act, or 
(e)  any rule of insolvency relating to partnership, or 
(f)  any rule of law not inconsistent with this Act.