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  "title": "PARTNERSHIP ACT, 1932",
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  "text": "THE PARTNERSHIP ACT, 1932 \r\n(IX of 1932) \r\nCONTENTS \r\nCHAPTER I \r\nPRELIMINARY \r\n1. Short title, extent and commencement \r\n2. Definitions \r\n3. Application of Provisions of Act, IX of 1872 \r\nCHAPTER II \r\nTHE NATURE OF PARTNERSHIP \r\n4. Definition of “Partnership”, “Partner” Firm and “firm name” \r\n5. Partnership not created by status \r\n6. Mode of determining existence of partnership \r\n6A Act not to apply certain relationship \r\n7. Partnership-at-will \r\n8. Particular Partnership \r\nCHAPTER III \r\nRELATIONS OF PARTNERS TO ONE ANOTHER \r\n9. General duties of Partners \r\n10. Duty to indemnify for loss caused by Fraud \r\n11. Determination of rights and duties of Partner by contract between the \r\nPartners \r\n12. The conduct of the business \r\n13. Mutual rights and liabilities \r\n14. The property of the firm \r\n15. Application of the property of the firm \r\n16. Personal profits earned by Partners \r\n17. Rights and duties of Partners after a change in the firm, after the expiry \r\nof the term of the firm, and where additional undertakings are carried out \r\nCHAPTER IV \r\nRELATIONS OF PARTNERS TO THIRD PARTIES \r\n18. Partner to be agent of the firm \r\n19. Implied authority of Partner as agent of the firm \r\n20. Extension and restriction of Partner’s implied authority \r\n21. Partner authority in an emergency \r\n22. Mode of doing act to bind firm \r\n23. Effect of admissions by a partner \r\n24. Effect of notice to acting partner \r\n25. Liability of a partner for acts of the firm \r\n26. Liability of the firm for wrongful act of a partner \r\n27. Liability of a firm for misapplication by partner \r\n28. Holding out  \r\n29. Right of transferee of a partner’s interest \r\n30. Minors admitted to the benefits of partnership \r\nCHAPTER V \r\nINCOMING AND OUTGOING PARTNERS \r\n31. Introduction of a partner \r\n32. Retirement of a partner \r\n33. Expulsion of a partner \r\n34. Insolvency of a partner \r\n35. Liability of estate of deceased partner \r\n36. Rights of outgoing partner to carry on competing business \r\n37. Rights of outgoing partner in certain cases to share subsequent profits \r\n38. Revocation of continue guarantee by change in firm \r\nCHAPTER VI \r\nDISSOLUTION OF A FIRM \r\n39. Dissolution of a firm \r\n40. Dissolution by agreement \r\n41. Compulsory dissolution \r\n42. Dissolution on the happening of certain contingencies \r\n43. Dissolution by notice of partnership-at-will \r\n44. Dissolution by the Court \r\n45. Liability for acts of partners done after dissolution \r\n46. Rights of partners to have business wound up after dissolution \r\n47. Continuing authority of partners for purpose of winding up \r\n48. Mode of settlement of accounts between partners \r\n49. Payment of firm’s debts and of separate debts \r\n50. Personal profits earned after dissolution \r\n51. Return of premium on premature dissolution \r\n52. Rights where partnership contract is rescinded for fraud or \r\nmisrepresentation  \r\n53. Rights to restrain from use of firm name or firm property  \r\n54. Agreements in restraint of trade \r\n55. Sale of goodwill after dissolution  \r\nRights of buyer and seller of goodwill  \r\nAgreement in restraint of trade \r\nCHAPTER VII \r\nREGISTRATION OF FIRMS \r\n56. Power to exempt from application of this Chapter \r\n57. Appointment of Registrars  \r\n58. Application for registration \r\n59. Registration \r\n60. Recording of alterations in firm name and principal place of business \r\n61. Noting of closing and opening of branches \r\n62. Noting of changes in names and addresses of partners \r\n63. Recording of changes in and dissolution of a firm recording  of \r\nwithdrawal of a minor \r\n64. Rectification of mistakes \r\n65. Amendment of Register by order of Court \r\n66. Inspection of Register and filed documents \r\n67. Grant of copies  \r\n68. Rules of evidence  \r\n69. Effect of non-registration  \r\n70. Penalty for furnishing false particulars \r\n71. Power to make rules \r\nCHAPTER VIII \r\nSUPPLEMENTAL \r\n72. Mode of giving public notice \r\n73. Repeals  \r\n74. Savings \r\nTEXT \r\nTHE PARTNERSHIP ACT, 1932 \r\n(IX of 1932) \r\n[8th April 1932] \r\nAn \r\nAct \r\nto define and amend the law relating to partnership \r\nWhereas it is expedient to define and amend the law relating to partnership; \r\nIt is hereby enacted as follows:– \r\nCHAPTER I \r\nPRELIMINARY \r\n1. Short title, extent and commencement .– (1) This Act may be calle d the \r\nPartnership Act, 1932. \r\n[(2)  It extends to the whole of Pakistan.] \r\n(3)  It shall come into force on the 1st day of October, 1932, except section \r\n69, which shall come into force on the 1st day of October, 1933. \r\n2.  Definitions.– In this Act, unles s there is anything repugnant in the subject or \r\ncontext,- \r\n(a)  an \"act of a firm\" means any act or omission by all the partners or by \r\nany partner or agent of the firm which gives rise to a right enforceable \r\nby or against the firm, \r\n(b)  \"business\" includes every trade, occupation and profession; \r\n(c)  \"prescribed\" means prescribed by rules made under this Act; \r\n(d)  \"third party\" used in relation to a firm or to a partner therein means any \r\nperson who is not a partner in the firm; and \r\n(e)  expressions used but not defined in this Act and defined in the Contract \r\nAct (IX of 1872) shall have the meanings assigned to them in that Act. \r\n3.  Application of provisions of Act IX of 1872 .– The un repealed provisions of \r\nthe Contract Act, 1872, saves  in so far as they are inconsistent with the express \r\nprovisions of this Acts, shall continue to apply to firms. \r\nCHAPTER II \r\nTHE NATURE OF PARTNERSHIP \r\n4.  Definition of \"partnership\", \"partner\", \"firm\" and \"firm name\" .– \r\n“Partnership\" is the relation between persons who have agreed to share the profits of \r\na business carried on by all or any of them acting for all. \r\nPersons who have entered into partnership with one another are called \r\nindividually \"partners\" and collectively \"a firm\" and the name under which  their \r\nbusiness is carried on is called the \"firm name\".  \r\n5.  Partnership not created by status .– The relation of partnership arises from \r\ncontract and not from status; \r\nAnd in particular the members of a Hindu undivided family carrying on a family \r\nbusiness as such, or a Burmese Buddhist husband and wife carrying on business as \r\nsuch are not partners in such business. \r\n6.  Mode of determining existence of partnership .– In determining whether a \r\ngroup of persons is or is not a firm, or whether a person is  or is not a partner in a \r\nfirm, regard shall be had to the real relation between the parties as shown by all \r\nrelevant facts taken together. \r\nExplanation 1.– The sharing of profits or of gross returns arising from property by \r\npersons holding a joint or commo n interest in that property does not of itself make \r\nsuch persons partners.  \r\nExplanation 2.– The receipt by a person of a share of the profits of a business or of \r\na payment contingent upon the earning of profits or varying with the profits earned by \r\na business, does not of itself make him a partner with the persons carrying on the \r\nbusiness; \r\nAnd in particular, the receipt of such share of payment– \r\n(a)  by a lender of money to persons engaged or about to engage in any \r\nbusiness, \r\n(b)  by a servant or agent as remuneration, \r\n(c)  by the widow or child of a deceased partner as annuity, or \r\n(d)  by a previous owner or part owner of the business, as consideration for \r\nthe sale of the goodwill or share thereof, does not of itself make the \r\nreceiver a partner with the persons carrying on the business. \r\n6A.  Act not apply to certain relationships .– Nothing contained in this act shall \r\napply to a relationship created by any agreement between Banking company and a \r\nperson or group of persons provi ding for sharing of profits and losses arising from or \r\nrelating to the provision by the Banking company of finance to such person or group \r\nof persons. \r\nExplanation.– for the purpose of this section, “Banking Company” and finance “shall \r\nhave the same meanings as in the Banking tribunals ordinance, 1981. \r\n7.  Partnership at will .– Where no provision is made by contract between the \r\npartners for the duration of their partnership, or for the determination of their \r\npartnership the partnership is \"partnership at will\". \r\n8.  Particular partnership .– A person may become a partner with another \r\nperson in particular adventures or undertakings. \r\nCHAPTER III \r\nRELATIONS OF PARTNERS TO ONE ANOTHER \r\n9.  General duties of partners.– Partners are bound to carry on the business of \r\nthe firm to the greatest common advantage, to be just and faithful  to each other, and \r\nto render true accounts and full information of all things affecting the firm to any \r\npartner or his legal representative. \r\n10.  Duty to indemnify for loss caused by fraud .– Every partner shall indemnify \r\nthe firm for any loss caused  to it by his fraud in the conduct of the business of the \r\nfirm. \r\n11.  Determination of rights and duties of partners by contract between the \r\npartners.– (1) Subject to the provisions of this Act, the mutual rights and duties of \r\nthe partners of a firm may be determined by contract between the partners, and such \r\ncontract may be expressed or may be implied by a course of dealing. \r\nSuch contract may be varied by consent of all the partners, and such consent \r\nmay be express or may be implied by a course of dealing. \r\n(2)  Agreements in restraint of trade. – Notwithstanding anything \r\ncontained in section 27 of the Contract Act, 1872 such contracts may provide that a \r\npartner shall not carry on any business other than that of the firm while he is a \r\npartner. \r\n12.  The conduct of the business.– Subject to contract between the partners– \r\n(a)  every partner has a right to take part in the conduct of the business; \r\n(b)  every partner is bound to attend diligently to his duties in the conduct of \r\nthe business; \r\n(c)  any difference arising as to ordinary matters connected with the \r\nbusiness may be decided by a majority of the partners, and every \r\npartner shall have the right to express his opinion before the matter is \r\ndecided, but no change may be made in the nature of the  business \r\nwithout the consent of all the partners; and \r\n(d)  every partner has a right to have access  and to inspect and copy any \r\nof the books of the firm. \r\n13.  Mutual rights and liabilities.– Subject to contract between the partners– \r\n(a)  a partner is not entitled to receive remuneration for taking part in the \r\nconduct of the business; \r\n(b)  the partners are entitled to share equally in the profits earned, and shall \r\ncontribute equally to the losses sustained by the firm; \r\n(c)  where a partner is entitle d to interest on the capital subscribed by him, \r\nsuch interest shall be payable only out of profits; \r\n(d)  a partner making, for the purposes of the business, any payment or \r\nadvance beyond the amount of capital he has agreed to subscribe, is \r\nentitled to interest thereon at the rate of six per cent per annum; \r\n(e)  the firm shall indemnify a partner in respect of payments made and \r\nliabilities incurred by him– \r\n(i)  in the ordinary and proper conduct of the business, and \r\n(ii)  in doing such act, in an emergency, for the purpose of protecting \r\nthe firm from loss, as would be done by a person of ordinary \r\nprudence, in his own case, under similar circumstances; and \r\n(f)  a partner shall indemnify the firm for a ny loss caused to it by his wil ful \r\nneglect in the conduct of the business of the firm. \r\n14.  The p roperty of the firm .– Subject to contract between the partners, the \r\nproperty of the firm includes all property and rights and interests in property originally \r\nbrought into the stock of the firm, or acquired by purchase or otherwise, by, or for the \r\nfirm or for the purposes and in the course of the business of the firm, and includes \r\nalso the goodwill of the business. \r\nUnless the contrary intention appears, property, rights and interests in \r\nproperty acquired with money  belonging to the firm are deemed to have been \r\nacquired for the firm. \r\n15.  Application of the property of the firm .– Subject to contract between the \r\npartners the property of the firm shall be held and used by the partners exclusively \r\nfor the purposes of the business. \r\n16.  Personal profits earned by partners .– Subject to contract between the \r\npartners– \r\n(a) if a partner derives any profit for himself from any transaction of the \r\nfirm, or from the use of the property or business connection of the firm \r\nor the firm name he shall account for that profit and pay it to the firm; \r\n(b) if a partner carries on any busin ess of the same nature as and \r\ncompeting with that of the firm, he shall account for and pay to the firm \r\nall profits made by him in that business. \r\n17.  Rights and duties of partners after a change in the firm, after the expiry \r\nof the term of the firm and where additiona l undertakings are carried out. –\r\nSubject to contract between the partners– \r\n(a)  where a change occurs in the constitutions of a firm, the mutual rights \r\nand duties of the partners in the reconstituted firm remain the same as \r\nthey were immediately before the change as far as may be; \r\n(b)  where a firm constituted for a fixed term continues to carry on business \r\nafter the expiry of that term, the mutual rights and duties of the partners \r\nremain the same as they were before the expiry, so far as they may be \r\nconsistent with the incidents of partnership-at-will; and \r\n(c)  where a firm constituted to carry out one or more adventures or \r\nundertakings carries out other adventures or undertakings, the mutual \r\nrights and duties of the partners in respect of  the other adventures or \r\nundertakings are the same as those in respect of the original \r\nadventures or undertakings. \r\nCHAPTER IV \r\nRELATIONS OF PARTNERS TO THIRD PARTIES \r\n18.  Partner t o be agent of the firm .– Subject to the provisions of this Act a \r\npartner is the agent of the firm for the purposes of the business of the firm. \r\n19.  Implied authority of partner as agent of the firm .– (1) Subject to the \r\nprovisions of section 22,³ the act of a partner which is done to carry on, in the usual \r\nway, business of the kind carried on by the firm, binds the firm. \r\nThe authority of a partner to bind the firm conferred by this section is called \r\nhis \"implied authority\". \r\n(2)  In the absence of any usage or custom of trade to the contrary, the \r\nimplied authority of a partner does not empower him to– \r\n(a)  submit a dispute relating to the business of the firm to arbitration. \r\n(b)  Open a banking account on behalf of the firm in his own name, \r\n(c)  Compromise or relinquish any claim or portion of a claim by the firm, \r\n(d)  Withdraw a suit or proceeding filed on behalf of the firm, \r\n(e)  Admit any liability in a suit or proceeding against the firm, \r\n(f)  Acquire immovable property on behalf of the firm, \r\n(g)  Transfer immovable property belonging to the firm, or \r\n(h)  Enter into partnership on behalf of the firm. \r\n20.  Extension and restriction of partner's implied authority .– The partners in \r\na firm may, by contract between the partners, extend or restrict the implied authority \r\nof any partner. Notwithstanding any s uch restriction, any act done by a partner on \r\nbehalf of the firm which falls within his implied authority binds the firm, unless the \r\nperson with whom he is, dealing knows of the restriction or does not know or believe \r\nthat partner to be a partner. \r\n21.  Partner's authority in an emergency .– A partner has authority, in an \r\nemergency, to do all such acts for the purpose of protecting the firm from loss as \r\nwould be done by a person of ordinary prudence, in his own case, acting under \r\nsimilar circumstances, and such acts bind the firm. \r\n22.  Mode of doing act to bind firm.– In order to bind a firm, an act or instrument \r\ndone or executed by a partner or other person on behalf of the firm shall be done or \r\nexecuted in the firm name, or in any other manner ex pressing or implying an \r\nintention to bind the firm. \r\n23.  Effect of admissions by a partner .– An admission or representation made \r\nby a partner concerning the affairs of the firm is evidence against the firm, if it is \r\nmade in the ordinary course of business. \r\n24. Effect of notice to acting partner.– Notice to a partner who habitually acts in \r\nthe business of the firm or any matter relating to the affairs of the firm operates as \r\nnotice to the firm, except in the case of a fraud on the firm committed by or with the \r\nconsent of that partner. \r\n25.  Liability of a partner for acts of the firm.– Every partner is liable, jointly with \r\nall the other partners and also severally, for all acts of the firm done while he is a \r\npartner. \r\n26.  Liability of the firm for wrongful acts of a partner .– Where by the wrongful \r\nact or omission of a partner acting in the ordinary course of the business of a firm or \r\nwith the authority of his partners, loss or injury is caused to any third party, or any \r\npenalty is incurred, the firm is liable therefore to the same extent as the partner. \r\n27.  Liability of firm for misapplication by partners.– Where \r\n(a)  A partner acting within his apparent authority receives money or \r\nproperty from a third party and misapplies it, or \r\n(b)  A firm in the course of its business receives money or property from a \r\nthird party, and the money or property is misapplied by any of the \r\npartners while it is in the custody of the firm, the firm is liable to make \r\ngood the loss. \r\n28.  Holding out .– (1) Any one who by words spoken or written or by conduct \r\nrepresents himself, or knowingly permits himself to be represented, to be a partner in \r\na firm, is liable as a partner in that firm to any one who has on the faith of any such \r\nrepresentation given credit to the firm, whether the person representing himself or \r\nrepresented to be a partner does or does not know that the representation has \r\nreached the person so giving credit. \r\n(2)  Where after a partner's death the business is continued in the old firm \r\nname, the continued use of that name or of the deceased partner's name as a part \r\nthereof shall not of itself make his legal representative or his estate liable for any act \r\nof the firm done after his death. \r\n29.  Rights of transferee of a partner's inte rest.– (1) A transfer by a partner of \r\nhis interest in the firm, either absolute or by mortgage, or by the creation by him of a \r\ncharge on such interest, does not entitle the transferee, during the continuance of \r\nthe firm, to interfere in the conduct of the business, or to require accounts, or to \r\ninspect the books of the firm, but entitles the transferee only to receive the share of \r\nprofits of the transferring partner, and the transferee shall accept the account of \r\nprofits agreed to by the partners. \r\n(2)  If t he firm is dissolved or if the transferring partner ceases to be a \r\npartner, the transferee is entitled as against the remaining partners to receive the \r\nshare of the assets of the firm to which the transferring partner is entitled, and, for \r\nthe purpose of a scertaining that share, to an account as from the date of the \r\ndissolution. \r\n30. Minors admitted to the benefits of partnership .– (1) a person who is a \r\nminor according to the law to which he is subject may not be a partner in a firm but \r\nwith the consen t of all the partners for the time being, he may be admitted to the \r\nbenefits of partnership. \r\n(2)  Such minor has a right to such share of the property and of the profits \r\nof the firm as may be agreed upon, and he may have access to  inspect and copy \r\nany of the accounts of the firm. \r\n(3)  Such minor's share is liable for the acts of the firm, but the minor is not \r\npersonally liable for any such act. \r\n(4)  Such minor may not sue the partners for an account or payment of his \r\nshare of the property or profits of the  firm, save when severing his connection with \r\nthe firm, and in such case the amount of his share shall be determined by a valuation \r\nmade as far as possible in accordance with the rules contained in section 48: \r\nProvided that all the partners acting together  or any partner entitled to \r\ndissolve the firm upon notice to other partners may elect in such suit to dissolve the \r\nfirm and thereupon the court shall proceed with the suit as one for dissolution and for \r\nsettling accounts between the partners, and the amoun t of the share of the minor \r\nshall be determined along with the shares of the partners. \r\n(5) At any time within six months of his attaining majority, or of his \r\nobtaining knowledge that he had been admitted to the benefits of partnership, \r\nwhichever date is later, such person may give public notice that he has elected to \r\nbecome or that he has elected not to become a partner in the firm, and such notice \r\nshall determine his position as regards the firm: \r\nProvided that, if he fails to give such notice, he shall become a partner in the \r\nfirm, on the expiry of the said six months. \r\n(6) where any person has been admitted as a minor to the benefits of \r\npartnership in a firm, the b urden of proving the fact that such person had no \r\nknowledge of such admission until a particular date after the expiry of six months of \r\nhis attaining majority shall lie on the persons asserting that fact. \r\n(7)  where such person becomes a partner,– \r\n(a)  his rights and liabilities as a minor continue up to the date on which he \r\nbecomes a partner, but he also becomes personally liable to third \r\nparties for all acts of the firm done since he was admitted to the \r\nbenefits of partnership, and  \r\n(b)  his share in the property and profits of the firm shall be the share to \r\nwhich he was entitled as a minor. \r\n(8)  Where such person elects not to become a partner,– \r\n(a)  his rights and liabilities as a miner continue up to the date on which he \r\nbecomes a partner but he also be comes personally liable to third \r\nparties for all acts of the firm done since he was admitted to the \r\nbenefits of Partnership, and  \r\n(b)  his share shall not be liable for any acts of the firm done after the date \r\nof the notice, and  \r\n(c)  he shall be entitled to sue the partners for his share of the property and \r\nprofits in accordance with subsection (4). \r\n(9)  Nothing in subsections (7) and (8) shall affect the provisions of section \r\n28. \r\nCHAPTER V \r\nINCOMING AND OUTGOING PARTNERS \r\n31.  Introduction of a partne r.– (1) Subject to contract between the partners and \r\nto the provisions of section 30, no person shall be introduced as a partner into a firm \r\nwithout the consent of all the existing partners. \r\n(2)  Subject to the provisions of section 30, a person who is introduced as a \r\npartner into a firm does not thereby become liable for any act of the firm done before \r\nhe became a partner. \r\n32.  Retirement of a partner.– (1) A partner may retire– \r\n(a)  with the consent of all the other partners, \r\n(b) in accordance with an express agreement by the partners, or \r\n(c)  where the partnership is at will, by giving notice in writing to all the \r\nother partners of his intention to retire. \r\n(2)  A retiring partner may be discharged from any liability to any third party \r\nfor acts of the firm done before his retirement by an agreement made by him with \r\nsuch third party and partners of the reconstituted firm, and such agreement may be \r\nimplied by a cour se of dealing between such third party and the reconstituted firm \r\nafter he had knowledge of the retirement. \r\n(3)  Notwithstanding the retirement of a partner from a firm, he and the \r\npartners continue to be liable as partners to third parties of any act done  by any of \r\nthem which would have been an act of the firm if done before the retirement, until \r\npublic notice is given of the retirement: \r\nProvided that a retired partner is not liable to any third party who deals with \r\nthe firm without knowing that he was a partner. \r\n(4)  Notices under subsections (3) may be given by the retired partner or by \r\nany partner of the reconstituted firm. \r\n33.  Exclusion of a partner .– (1) A partner may not be expelled from a firm by \r\nany majority of the partners, saves in the exer cise in good faith of powers conferred \r\nby contract between the partners. \r\n(2)  The provisions of subsections (2), (3) and (4) of section 32 shall apply \r\nto an expelled partner as if he were a retired partner. \r\n34.  Insolvency of a partner .– (1) Where a partner in a f irm is adjudicated an \r\ninsolvent he ceases to be a partner on the date on which the order of adjudication is \r\nmade, whether or not the firm is thereby dissolved. \r\n(2)  Where under a contract between the partners the firm is not dissolved \r\nby the adjudication of a partner as an insolvent the estate of a partner so adjudicated \r\nis not liable for any act of the firm and the firm is not liable for any act of the \r\ninsolvent, done after the date on which the order of adjudication is made. \r\n35.  Liability of estate of deceased partner .– Where under a contract between \r\nthe partners the firm is not dissolved by the death of a partner, the estate of a \r\ndeceased partner is not liable for any act of the firm done after his death. \r\n36.  Rights of outgoing  partner to carry on competing business .– (1) An \r\noutgoing partner may carry on a business competing with that of the firm and he may \r\nadvertise such business, but, subject to contract to the contrary, he may not– \r\n(a)  use the firm name, \r\n(b)  represent himself as carrying on the business of the firm, or \r\n(c)  solicit the custom of persons who were  dealing with the firm before th e \r\nceased to be a partner. \r\n(2)  Agreements in restraint of trade– a partner may make an agreement \r\nwith his partners that on ceasing to be a partner he will not carry on any business \r\nsimilar to that of the firm within a specified period or within specified local limits; and, \r\nnotwithstanding anything contained in section 27, of the Contract Act 1872, such \r\nagreement shall be valid if the restrictions imposed are reasonable. \r\n37.  Right of outgoing partner in certain cases to share subsequent profits .– \r\nWhere any member of a firm has died or otherwise ceased to be a partner, and the \r\nsurviving or continuing partners carry on the business of  the firm with the property of \r\nthe firm without any final settlement of accounts as between them and the outgoing \r\npartner of his estate, then, in the absence of a contract to the contrary, the outgoing \r\npartner or his estate is entitled at the option of him self or his representatives to such \r\nshare of the profits made since he ceased to be a partner as may be attributable to \r\nthe use of his share of the property of the firm or to interest at the rate of six per cent \r\nper annum on the amount of his share in the property of the firm: \r\nProvided that where by contract between the partners an option is given to \r\nsurviving or continuing partners to purchase the interest of a deceased or outgoing \r\npartner, and that option is duly exercised, the estate of the deceased part ner, or the \r\noutgoing partner or  his estate, as the case may be, is not entitled to any further or \r\nother share of profits; but if any partner assuming to act in exercise of the option \r\ndoes not in all material respects comply with the terms thereof, he is liable to account \r\nunder the foregoing provisions of this section. \r\n38.  Revocation of continuing guarantee by change in firm .– A continuing \r\nguarantee given to a firm, or to a third party in respect of the transaction of a firm, is \r\nin the absence of agre ement to the contrary, revoked as to future transactions from \r\nthe date of any change in the constitution of the firm. \r\nCHAPTER VI \r\nDISSOLUTION OF A FIRM \r\n39.  Dissolution of a firm .– The dissolution of partnership between all the \r\npartners of a firm is called the \"dissolution of the firm\". \r\n40.  Dissolution by agreement.– A firm may be dissolved with the consent of all \r\nthe partners or in accordance with a contract between the partners. \r\n41.  Compulsory dissolution.– A firm is dissolved– \r\n(a)  by the adjudication of all the partners or of all the partners but one as \r\ninsolvent or \r\n(b)  by the happening of any event which makes it unlawful for the business \r\nof the firm to be carried on  or for the partners to carry it on in \r\npartnership: \r\nProvided that, where more than one separate adventure or undertaking is \r\ncarried on by the firm, the illegality of one or more shall not of itself cause the \r\ndissolution of the firm in respect of its lawful adventures and undertakings. \r\n42.  Dissolution on the happening of certain contingencies .– Subject to \r\ncontract between the partners a firm is dissolved– \r\n(a) if constituted for a fixed term, by the expiry of that term; \r\n(b)  if constituted to carry out  one or more adventures or undertakings, by \r\nthe completion thereof; \r\n(c)  by the death of a partner; and \r\n(d)  by the adjudication of a partner as an insolvent. \r\n43.  Dissolution by notice of partnership -at-will.– (1) Where the partnership is \r\nat will, t he firm may be dissolved by any partner giving notice in writing to all the \r\nother partners of his intention to dissolve the firm. \r\n(2)  The firm is dissolved as from the date mentioned in the notice as the \r\ndate of dissolution or, if no date is so mentioned,  as from the date of the \r\ncommunication of the notice. \r\n44.  Dissolution by the Court.– At the suit of a partner, the Court may dissolve a \r\nfirm on any of the following grounds, namely:– \r\n(a)  that a partner has become of unsound mind, in which case the suit may \r\nbe brought as well by the next friend of the partner who has become of \r\nunsound mind as by any other partner; \r\n(b)  that a partner, other than the partner suing, has become in any way \r\npermanently incapable of performing his duties as partner; \r\n(c) that a partner, other than the partner suing, is guilty of conduct which is \r\nlikely to affect prejudicially the carrying on of the business, regard \r\nbeing had to the nature of the business; \r\n(d)  that a partner, other than the partner suing, willfully, or per sistently, \r\ncommits breach of agreements relating to the management of the \r\naffairs of the firm or the conduct of its business, or otherwise so \r\nconducts himself in matters relating to the business that it is not \r\nreasonably practicable for the other partners to carry on the business in \r\npartnership with him; \r\n(e)  that a partner, other than the partner suing, has in any way transferred \r\nthe whole of his interest in the firm to a third party, or has allowed his \r\nshare to be charged under the provisions of rule 49 o f Order XXI of the \r\nFirst Schedule to the Code of Civil Procedure, 1908, or has allowed it \r\nto be sold in the recovery of arrears of land -revenue or of any dues \r\nrecoverable as arrears of land-revenue due by the partner; \r\n(f)  That the business of the firm cannot be carried on save at a loss; or \r\n(g)  On any other ground which renders it just and equitable that the firm \r\nshould be dissolved. \r\n45.  Liability for acts of partners done after dissolution .– (1) Notwithstanding \r\nthe dissolution of a firm, the partn ers continue to be liable as such to third parties for \r\nany act done by any of them which would have been an act of the firm if done before \r\nthe dissolution, until public notice is given of the dissolution: \r\nProvided that the estate of a partner who dies, or who if  adjudicated an \r\ninsolvent, or of a partner who, not having been known to the person dealing with the \r\nfirm to be a partner, retires from the firm, is not liable under this section for acts done \r\nafter the date on which he ceases to be a partner.  \r\n(2)  Notices under subsection (1) may be given by any partner. \r\n46.  Right of p artners to have business wound up after dissolution .– On the \r\ndissolution of a firm every partner or his representative is entitled, as against all the \r\nother partners or their representatives, to have the property of the firm applied in \r\npayment of the debts and liabilities of the firm, and to have the surplus  distributed \r\namong the partners or their representatives according to their rights. \r\n47.  Continuing authority of partners for purposes of winding up .– After the \r\ndissolution of a firm the authority of each partner to bind the firm, and the other \r\nmutual rights and obligations of the partners, continue notwithstanding the \r\ndissolution, so far as may be necessary to wind up the affairs of the firm and to \r\ncomplete transactions begun unfinished at the time of the dissolution, but not \r\notherwise: \r\nProvided that the firm is in no case bound by the acts of a partner who has \r\nbeen adjudicated insolvent; but this proviso does not affect the liability of any person \r\nwho has after the adjudication represented himself or knowingly permitted himself to \r\nbe represented as a partner of the insolvent. \r\n48.  Mode of settlement of accounts between partners .– In settling the \r\naccounts of a firm after dissolution, the following rules shall, subject to agreement by \r\nthe partners, be observed:– \r\n(a)  Losses, including deficiencies of capital, shall be paid first out of profits, \r\nnext out of capital, and, lastly, if necessary, by the partners individually \r\nin the proportions in which they were entitled to share profits. \r\n(b)  The assets of the firm, including any sums contributed by th e partners \r\nto make up deficiencies of capital, shall be applied in  the following \r\nmanner and order– \r\n(i) in paying the debts of the firm to third parties; \r\n(ii)  in paying to each partner ratably what is due to him from the firm \r\nfor advances as distinguished from capital; \r\n(iii)  in paying to each partner ratably what is due to him on account \r\nof capital; and \r\n(iv)  the residue, if any, shall be divided among the partners in the \r\nproportions in which they were entitled to share profits. \r\n49.  Payment of firm's debts and of separate debts .– Where there are joint \r\ndebts due from the firm, and also separate debts due from any partner, the property \r\nof the firm shall be applied in the first instance in payment of the debts of the firm, \r\nand, if there is an y surplus, then the share of each partner shall be applied in \r\npayment of his separate debts or paid to him. The separate property of any partner \r\nshall be applied first in the payment of his separate debts, and the surplus (if any) in \r\nthe payment of the debts of the firm. \r\n50.  Personal profits earned after dissolution.– Subject to contract between the \r\npartners the provisions of clause (a) of section 16³ shall apply to transactions by any \r\nsurviving partner or by the representatives of a deceased partner , undertaken after \r\nthe firm is dissolved on account of the death of a partner and before its affairs have \r\nbeen completely wound up: \r\nProvided that where any partner or his representative has brought the \r\ngoodwill of the firm, nothing in this section shall affect his right to use the firm name. \r\n51.  Return of premium on premature dissolution.– Where a partner has paid a \r\npremium on entering into partnership for a fixed term, and the firm is dissolved \r\nbefore the expiration of that term otherwise than by th e death of a partner, he shall \r\nbe entitled to repayment of the premium or of such part thereof as may be \r\nreasonable, regard being had to the terms upon which he became a partner and to \r\nthe length of time during which he was a partner, unless– \r\n(a)  the dissolution is mainly due to his own mis-conduct, or \r\n(b) the dissolution is in pursuance of an agreement containing no provision \r\nfor the return of the premium or any part of it. \r\n52.  Rights where partnership contract is rescinded for fraud or \r\nmisrepresentation.– Where a contract creating partnership is rescinded on the \r\nground of the fraud or misrepresentation of any of the parties thereto, the party \r\nentitled to rescind is, without prejudice to any other right, entitled– \r\n(a)  to a lien on, or a right of re tention of, the surplus or the assets of the \r\nfirm remaining after the debts of the firm have been paid, for any sum \r\npaid by him for the purchase of a share in the firm and for any capital \r\ncontributed by him; \r\n(b)  to rank as a creditor of the firm in respec t of any payment made by him \r\ntowards the debts of the firm; and \r\n(c)  to be indemnified by the partner or partners guilty of the fraud or \r\nmisrepresentation against all the debts of the firm. \r\n53.  Right to restrain from use of firm name or firm propert y.– After a firm is \r\ndissolved, every partner or his representative may, in the absence of a contract \r\nbetween the partners to the contrary, restrain any other partner or his representative \r\nfrom carrying on a similar business in the firm name or from using a ny of the \r\nproperty of the firm for his own benefit, until the affairs of the firm have been \r\ncompletely wound up: \r\nProvided that where any partner or his representative has brought the \r\ngoodwill of the firm, nothing in this section shall affect his right to use the firm name. \r\n54. Agreements in restraint of trade .– Partners may, upon or in anticipation of \r\nthe dissolution of the firm, make an agreement that some or all of them will not carry \r\non a business similar to that of the firm within a specified peri od or within specified \r\nlocal limits: and notwithstanding anything contained in section 27 of the Contract Act, \r\n1872, such agreement shall be valid if the restrictions imposed are reasonable. \r\n55.  Sale of goodwill after dissolution.– (1) in settling the accounts of a firm after \r\ndissolution, the goodwill shall, subject to contract between the partners, be included \r\nin the assets, and it may be sold either separately or along with other property of the \r\nfirm. \r\n(2)  Rights of buyer and seller of goodwill .– Where the goodwill of a firm \r\nis sold after dissolution, a partner may carry on a business competing with that of the \r\nbuyer and he may advertise such business, but, subject to agreement betwee n him \r\nand the buyer he may not– \r\n(a)  use the firm name, \r\n(b)  represent himself as carrying on the business of the firm or \r\n(c)  solicit the custom of persons who were dealing with the firm before its \r\ndissolution.  \r\n(3)  Agreements in restraint of trade.– Any partner may, upon the sale of \r\nthe goodwill of a firm make an agreement with the buyer that such partner will not \r\ncarry on any business similar to that of the firm within a specified period or within \r\nspecified local limits, and, notwithstanding anything  contained in section 27 of the \r\nContract Act, 1872, such agreement shall be valid if the restrictions imposed are \r\nreasonable. \r\nCHAPTER VII \r\nREGISTRATION OF FIRMS \r\n56.  Power to exempt from application of this Chapter .– The [Provincial \r\nGovernment of any Province may, by notification in the [official Gazette], direct that \r\nthe provisions of this Chapter shall not apply to [that Province] or to any part thereof \r\nspecified in the notification. \r\n57.  Appointment of Registrars .– (1) The [Provincial Governme nt] may appoint \r\nRegistrars of Firms for the purposes of this Act, and may define the areas within \r\nwhich they shall exercise their powers and perform their duties. \r\n(2)  Every Registrar shall be deemed to be a public servant within the \r\nmeaning of section 21 of the Pakistan Penal code. \r\n58.  Application for Registration.– (1) The registration of a firm may be effected \r\nat any time by sending by post or delivering to the Registrar of area in which any \r\nplace of business of the firm is situated or proposed to  be situated, a statement in \r\nthe prescribed form and accompanied by the prescribed fee, stating– \r\n(a) the firm name, \r\n(b)  the place or principal place of business of the firm, \r\n(c)  the names of any other places where the firm carries on business, \r\n(d)  the date when each partner joined the firm, \r\n(e) the names in full and permanent addresses of the partners, and, \r\n(f)  duration of the firm. \r\nThe statement shall be signed by all the partners, or by their agents specially \r\nauthorized in this behalf. \r\n(2)  Each perso n signing the statement shall also verify it in the manner \r\nprescribed. \r\n(3)  A firm name shall not contain any of the following words, namely:– \r\nGovernment \"Jinnah\", \"Quaid -e-Azam\", or words expressing or implying the \r\nsanction, approval or patronage of t he \"Federal\" Government or any Provincial \r\nGovernment or of the \"Quaid -e-Azam\", except when the Provincial Government \r\nsignifies its consent to the use of such words as part of the firm name by order in \r\nwriting. \r\n(3A) A firm name shall not contain the name of  the \"United Nations\" or its \r\nabbreviations through the use of its initial letters or of any subsidiary body set up by \r\nthat body unless it has obtained the previous authorization of the Secretary General \r\nof the United Nations in writing. \r\n(3B)  A firm name s hall not contain the name of the \"World Health \r\nOrganization\" or its abbreviations through the use of its initial letters unless it has \r\nobtained the previous authorization of the Director-General in writing. \r\n(3C)  A firm name shall not contain any word whic h may be declared by the \r\nProvincial Government, by notification in the official Gazette to be undesirable: \r\nProvided that a firm which has as part of its name any word declared by the \r\nProvincial Government to be undesirable shall, within one month of such d eclaration, \r\nalter its name and send a statement to this effect to the Registrar.  \r\n59.  Registration.– when the Registrar is satisfied that the provisions of section \r\n58 have been duly complied with, he shall record an entry of the statement in a \r\nregister called Register of Firms and shall file the statement. \r\n60.  Recording of alterations in firm name and principal place of business .– \r\n(1) When an alteration is made in the firm name or in the location of the principal \r\nplace of business of registere d firm a statement may be sent to the Registrar \r\naccompanied by the prescribed fee, specifying the alteration and signed and verified \r\nin the manner required under section 58. \r\n(2)  When the Registrar is satisfied that the provisions of subsection (1) \r\nhave be en duly complied with he shall amend the entry relating to the firm in the \r\nRegister of Firms in accordance with the statement, and shall file it along with the \r\nstatement relating to the firm filed under section 59. \r\n61.  Noting of closing and opening of branches .– When a registered firm \r\ndiscontinues business at any place or begins to carry on business at any place, such \r\nplace not being its principal place of business, any partner or agent of the firm may \r\nsend intimation thereof to the Registrar, who sh all make a note of such intimation in \r\nthe entry relating to the firm in the Register of Firms, and shall file the intimation \r\nalong with the statement relating to the firm filed under section 59. \r\n62.  Noting of change in names and addresses of partner s.– When any \r\npartner in a registered firm alters his name or permanent address, an intimation of \r\nthe alteration may be sent by any partner or agent of the firm to the Registrar, who \r\nshall deal with it in the manner provided in section 61. \r\n63.  Recording of changes in and dissolution of a firm .– (1) When a change \r\noccurs in the constitution of a registered firm any incoming, continuing or outgoing \r\npartner, and when a registered firm is dissolved any person who was a partner \r\nimmediately before the dissol ution, or the agent of any such partner or person \r\nspecially authorized in this behalf, may give notice to the Registrar of such change or \r\ndissolution, specifying the date thereof; and the Registrar shall, make a record of the \r\nnotice in the entry relating to the firm in the Register of Firms, and shall file the notice \r\nalong with the statement relating to the firm filed under section 59. \r\n(2)  Recording of withdrawal of a minor .– When a minor who has been \r\nadmitted to the benefits of partnership in a firm attai ns majority and elects to become \r\nor not to become a partner, and the firm is then a registered firm, he, or his agent \r\nspecially authorized in this behalf, may give notice to the Registrar that he has or has \r\nnot become a partner, and the Registrar shall dea l with the notice in the manner \r\nprovided in subsection (1). \r\n64.  Rectification of mistake .– (1) The Registrar shall have power at all times to \r\nrectify any mistake in order to bring the entry in the Register of Firms relating to any \r\nfirm into conformity with the documents relating to that firm filed under this chapter. \r\n(2)  On application made by all the parties who have signed any document \r\nrelating to the firm filed under this chapter, the Registrar may rectify any mistake in \r\nsuch document or in the record or note thereof made in the Register of Firms. \r\n65.  Amendment of Register by order of Court .– A court deciding any matter \r\nrelating to a registered firm may direct that the Registrar shall make any amendment \r\nin the entry in the Register of Firms  relating to such firm which is consequential upon \r\nits decision, and the Registrar shall amend the entry accordingly. \r\n66.  Inspection of Register and filed documents .– (1) The Register of Firms \r\nshall be open to inspection by any person on payment of such fee as may be \r\nprescribed. \r\n(2)  All statements, notices and intimations filed under this Chapter shall be \r\nopen to inspection, subject to such conditions and on payment of such fee as may \r\nbe prescribed. \r\n67.  Grant of copies.– The Registrar shall on application furnish to any person on \r\npayment of such fee as may be prescribed, a copy, certified under his hand, of any \r\nentry or portion thereof in the Register of Firms. \r\n68.  Rules of evidence .– (1) Any statement, intimation or notice recorded or \r\nnoted in the Register of Firms shall, as against any person by whom or on whose \r\nbehalf such statement, intimation or notice was signed, be conclusive proof of any \r\nfact therein stated. \r\n(2)  A certified copy of an entry relating to a firm in the Register of Firms \r\nmay be produced in proof of the fact of the registration of such firm, and of the \r\ncontents of any statement, intimation or notice recorded or noted therein. \r\n69.  Effect of non -registration.– (1) No suit to enforce a right arisin g from a \r\ncontract or conferred by this Act shall be instituted in any Court by or on behalf of \r\nany person suing as a partner in a firm against the firm or any person alleged to be \r\nor to have been a partner in the firm unless the firm is registered and the person \r\nsuing is or has been shown in the Register of Firms as a partner in the firm. \r\n(2)  No suit to enforce a right arising from a contract shall be instituted in \r\nany Court by or on behalf of a firm against any third party unless the firm is \r\nregistered and the persons suing are or have been shown in the Register of Firms as \r\npartners in the firm. \r\n(3)  The provisions of subsections (1) and (2) shall apply also to a claim of \r\nset-off or other proceeding to enforce a right arising from a contract, but shall not  \r\naffect– \r\n(a) the enforcement of any right to use for the dissolution of a firm or for \r\naccounts of a dissolved firm, or any right or power to realise the \r\nproperty of a dissolved firm, or  \r\n(b) the powers of an official assignee, receiver or court under the \r\n1[Insolvency  (Karachi Division  2 * *Act,] or the Provincial Insolvency \r\nAct, 1920 to realize the property of an insolvent partner.  \r\n(4) This section shall not apply– \r\n(a)  to firms or to partners in firms which have no place of business in \r\n[Pakistan] or who se places for business in [Pakistan] are situated in \r\nareas to which by notification under [section 56] this Chapter does not \r\napply or \r\n(b)  to any suit or claim of set -off not exceeding one hundred rupees in \r\nvalue which, ³*** is not of a kind specified in t he Second Schedule to \r\nthe Provincial Small Cause Courts Act, 1887 or to any proceeding in \r\nexecution or other proceeding incidental to or arising from any such \r\nsuit or claim.  \r\n70. Penalty for furnishing false particulars .– Any person who signs any \r\nstatement, amending statement, notice or intimation under this Chapter containing \r\nany particular which he knows to be false or does not believe to be true, or \r\ncontaining particulars which he knows to be incomplete or does not believe to be \r\ncomplete, shall be punishable with imprisonment which may extend to three months, \r\nor with fine, or with both. \r\n71. Power to make rules .– (1) [Provincial Government] may make rules \r\nprescribing the fees which shall accompany documents sent to the Registrar of \r\nFirms, or wh ich shall be payable for the inspection of documents in the custody of \r\nthe Registrar of Firms, or which shall be payable for the inspection of documents in \r\nthe custody of the Registrar of Firms or for copies from the Register of Firms: \r\nProvided that such f ees shall not exceed the maximum fees specified in \r\nSchedule. \r\nProvided further that the fees payable for any service desired on the same \r\nway on which an application for the same is made may be double the aforesaid \r\nmaximum fees. \r\n(2)  The [Provincial Government] may [also] make rules– \r\n(a)  prescribing the form of statement submitted under section 58, and of \r\nthe verification thereof; \r\n(b)  requiring statements, intimations and notices under sections 60,61,62 \r\nand 63 to be in prescribed form, and prescribing the form, thereof; \r\n(c) prescribing the form of the Register of Firms and the mode in which \r\nentries relating to firms are to be made therein, and the mode in which \r\nsuch entries are to be amended or notes made therein; \r\n(d) regulating the procedure of the Registrar when disputes arise; \r\n(e)  regulating the filing of documents received by the Registrar; \r\n(f)  prescribing conditions for the inspection of original documents; \r\n(g)  regulating the grant of copies; \r\n(h)  regulating the elimination of registers and documents; \r\n(i)  providing for the maintenance and form of an index to the Register of \r\nFirms; and \r\n(j)  generally, to carry out the purposes of this Chapter. \r\n(3)  All rules made under this section shall be subject to the condition of \r\nprevious publication. \r\nCHAPTER VIII \r\nSUPPLEMENTAL \r\n72.  Mode of giving public notice.– A public notice under this Act is given– \r\n(a)  where it relates to the retirement or expulsion of a partner from a \r\nregistered firm, or to the dissolution of a registered firm, or to the \r\nelection to become or not to become a partner in a registered firm by a \r\nperson attaining majority who was admitted as a minor to the benefits \r\nof partnership, by notice to the Registrar of Firms under section 63, and \r\nby publication in the  local [official Gazette] and in a t least one \r\nvernacular newspaper circulating in the district where the firm to which \r\nit relates has its place or principal place of business, and \r\n(b)  in any other case, by publication in the  local [official Gazette] and in at \r\nleast one vernacular newspaper circulating in the district where the firm \r\nto which it relates has its place or principal place of business. \r\n73.  [Repeals].– Rep. by the Repealing Act, 1938 (I of 1938), S.2 and Schedule. \r\n74.  Savings.– Nothing in this Act or any repeal effected thereby shal l affect or be \r\ndeemed to affect– \r\n(a) any right, title, interest, obligation or liability already acquired, accrued \r\nor incurred before the commencement of this Act, or \r\n(b)  any legal proceeding or reme dy in respect of any such right, title, \r\ninterest, obligation or liability, or anything done or suffered before the \r\ncommencement of this Act, or \r\n(c)  anything done or suffered before the commencement of this Act, or \r\n(d) any enactment relating to partnership  not expressly repealed by this \r\nAct, or \r\n(e)  any rule of insolvency relating to partnership, or \r\n(f)  any rule of law not inconsistent with this Act.",
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