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Section 253: Sections 239 to 266 [Repealed by the Indian Partnership Act, 1932]

Indian Contract Act • Official Statutory Text & Practice Guide

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

Legal Commentary & Landmark Judgments: Section 253

Section 253 historically enacted the default statutory rules governing partners' mutual relations in the absence of a contract to the contrary, including equality of capital and profits, right to management, indemnification, and prohibition against introducing new partners, now reenacted across Sections 12 to 15 and 31 of the Indian Partnership Act, 1932.

  • Default Presumption of Equality: In the absence of express agreement, all partners are presumed to be entitled to share equally in the profits earned and must contribute equally to the losses sustained.
  • Core Management and Proprietary Rights: Every partner has a statutory right to participate in business management, access books, and be indemnified for payments made and liabilities incurred in the ordinary conduct of business.
  • Modern Decentralization in IPA 1932: Repealed by Act 9 of 1932 and distributed into comprehensive separate provisions: Section 12 (conduct of business), Section 13 (mutual rights/liabilities), Section 14 (property of the firm), and Section 31 (introduction of partners).
Key Landmark Precedents:
  • Addanki Narayanappa v. Bhaskara Krishtappa AIR 1966 SC 1300: A Constitution Bench analyzed the statutory scheme of partners' mutual property and rights under Section 253 and the 1932 Act, ruling that a partner's interest during the firm's subsistence is merely his proportion of profits and surplus.
  • Sharad Vasant Kotak v. Ramniklal Mohanlal Gokuldas (1998) 2 SCC 171: The Supreme Court analyzed the statutory rules governing the introduction and retirement of partners, reaffirming that unanimous consent is required unless the agreement stipulates otherwise.
  • Robinson v. Ashton (1875) LR 20 Eq 25: Affirmed in Indian law: property brought into the common stock by a partner becomes partnership property under the default statutory rules governing firm assets.
Courtroom Practice & Strategic Litigation Guidance:

When drafting partnership agreements, actively contract out of unfavorable default rules under Section 13 of IPA 1932 (e.g., explicitly disclaim interest on capital, provide for unequal profit shares, or authorize majority decisions for specified operational matters).

Section 75 All 266 Sections of Indian Contract Act Section 77