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Section 266: Sections 239 to 266 [Repealed by the Indian Partnership Act, 1932]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

Legal Commentary & Landmark Judgments: Section 266

Section 266 historically functioned as the statutory savings clause of Chapter XI, preserving all special laws relating to incorporated joint-stock companies, incorporated bodies, and special corporate enterprises, now superseded by the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

  • Preservation of Corporate Personality: Historically drew the statutory boundary between unincorporated partnerships governed by mutual agency and registered companies possessing independent corporate personality.
  • Inapplicability of Partnership Rules to Corporations: Ensured that the joint and several liability, mutual agency, and dissolution rules of Chapter XI did not apply to corporate entities formed under Royal Charter, special statute, or the Indian Companies Acts.
  • Evolution into Modern Corporate and LLP Law: Repealed by Act 9 of 1932; its underlying legislative objective now finds modern expression in Section 464 of the Companies Act, 2013 (prohibition of large unincorporated associations) and the Limited Liability Partnership Act, 2008.
Key Landmark Precedents:
  • Salomon v. Salomon & Co. Ltd. [1897] AC 22: The landmark House of Lords decision establishing the separate legal personality of a company, contrasting fundamentally with the aggregate concept of partnership historically recognized in Section 266.
  • Tata Engineering and Locomotive Co. Ltd. v. State of Bihar AIR 1965 SC 40: The Supreme Court reaffirmed that a registered company is a separate juristic entity and its shareholders are not partners, preserving the distinction rooted in Section 266.
  • Dulichand Laxminarayan v. CIT AIR 1956 SC 354: The Supreme Court examined the legal character of a firm in contrast to a corporation, holding that general partnership law does not recognize a firm as an incorporated body corporate.
Courtroom Practice & Strategic Litigation Guidance:

When resisting attempts by creditors to pierce the corporate veil or impose joint and several partnership liabilities on directors, shareholders, or partners of an LLP, cite the historic dichotomy in Section 266 and the statutory framework of the Companies Act, 2013 and LLP Act, 2008 to uphold corporate shield immunity.

Section 75 All 266 Sections of Indian Contract Act