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Section 239: Sections 239 to 266 [Repealed by the Indian Partnership Act, 1932]

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 1872
Section 75 All 266 Sections of Indian Contract Act Section 77

Legal Commentary & Landmark Judgments: Section 239

Section 239 originally codified the foundational definition of 'Partnership' and 'Firm' under Chapter XI of the Contract Act, 1872, until its repeal and reenactment in expanded, modernized form under Section 4 of the Indian Partnership Act, 1932.

  • Historical Statutory Definition: Section 239 defined partnership as 'the relation which subsists between persons who have agreed to combine their property, labour, or skill in some business, and to share the profits thereof between them.'
  • Codification of Mutual Agency Doctrine: The historical provision served as the statutory precursor to Section 4 of the 1932 Act, which crystallized the modern tripartite test: agreement, carrying on of business, and mutual agency ('carried on by all or any of them acting for all').
  • Surviving Relevance in Commercial Law: Though repealed by Act 9 of 1932, the statutory principles of Section 239 continue to govern historical trusts, unregistered associations, co-ownership distinctions, and joint venture characterization.
Key Landmark Precedents:
  • Addanki Narayanappa v. Bhaskara Krishtappa AIR 1966 SC 1300: A 5-Judge Constitution Bench traced the historical development of partnership law from Chapter XI of the Contract Act to the 1932 Act, ruling that partnership property is held in common subject to mutual agency and liquidation upon dissolution.
  • Cox v. Hickman (1860) 8 HLC 268: The landmark House of Lords precedent forming the doctrinal foundation of Section 239 and modern Section 4 of the 1932 Act, establishing that mutual agency, and not mere profit-sharing, is the true test of partnership.
  • Commissioner of Income Tax v. Bagyalakshmi & Co. AIR 1965 SC 1708: The Supreme Court affirmed that a firm is not a distinct legal person under general law, and its rights and obligations are governed by the law of partnership evolved from the Contract Act.
Courtroom Practice & Strategic Litigation Guidance:

When litigating whether an unregistered syndicate or joint venture constitutes a partnership, cite *Cox v. Hickman* and *Addanki Narayanappa* to demonstrate that the presence of mutual agency—where each participant can bind the other as principal and agent—is the definitive test under modern Section 4 of IPA 1932.

Section 75 All 266 Sections of Indian Contract Act Section 77