Law: Partnership Act, 1932

Section: 32

(a) Partnership Act (IX of 1932)--Ss. 32, 33, 39, 40, 41, 42, 43 & 44----Retirement of a partner---Modes, conditions and effect---Where the partnership provides the mode of retirement, such mode has to be adopted for retirement alone which would fall within the ambit of S.32(1)(b), Partnership Act, 1932---Principles. A perusal of Partnership Act reveals that there are three ways of retirement of partner: (1) dissolution of partnership as provided under sections 39 to 44; (2) one or more partners' retirement as provided under section 32; and (3) expulsion of partner as provided under section 33. It will be noticed that the word "dissolution" is defined whereas "retirement" is not defined in the Partnership Act. The retirement of a partner from the firm is somewhat different from the dissolution of the firm. According to section 39 which defines the dissolution, "dissolution" means dissolution of the partnership as between all the partners. What happens on the retirement, on the other hand, is that the partnership is not dissolved. It remains what it has been, but only a member or two leave it. This can happen clearly because the very scheme of the Partnership Act is such that ingress and egress of members can be regulated without affecting the continuity of the firm. The retirement of a partner has the effect of dissolving the jural relations of partnership inter se amongst all the partners. A partner can retire in the cases set out in section 32 and when he does so, he is said to have retired from the firm. From the bare reading of S.32, Partnership Act, 1932 it is clear that a partner may retire; (a) with the consent of all other partners. This will result in amicable retirement of a partner. (b) in accordance with an express agreement by the partners. This will result in a case where the partnership agreement itself provides for the retirement of a partner or partners under certain conditions. (c) in case a partnership is at will a partner may retire by giving notice in writing to all other partners of his intention to retire. It appears that all the three clauses of S.32, Partnership Act, 1932 cover different situations as clause (a) deals with the…

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