Partnership Deed - Template Form to Create Word and PDF Pro · IN-law
✓ Valid in India · drafted to comply with local law
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DEED OF PARTNERSHIP
(Executed under the Indian Partnership Act, 1932)
THIS DEED OF PARTNERSHIP is made and executed on this ________, at ________, ________.
BY AND BETWEEN:
(1) ________, son/daughter/wife of ________, aged about ________ years, holding PAN ________ and Aadhaar ________, residing at:
________
(hereinafter referred to as the "First Partner");
AND
(2) ________, son/daughter/wife of ________, aged about ________ years, holding PAN ________ and Aadhaar ________, residing at:
________
(hereinafter referred to as the "Second Partner".)
The First Partner and the Second Partner are hereinafter referred to collectively as the "Partners" and individually as a "Partner", which expression shall, unless repugnant to the context or meaning thereof, include their respective heirs, legal representatives, executors, administrators and permitted assigns.
WHEREAS:
A. The Partners are desirous of carrying on business together in partnership for their mutual benefit upon the terms and conditions hereinafter appearing.
B. The Partners intend to carry on the business of:
________
C. The Partners are desirous of reducing into writing the terms and conditions governing their partnership, in accordance with the provisions of the Indian Partnership Act, 1932.
NOW THIS DEED WITNESSETH and it is hereby mutually agreed by and between the Partners as follows:
§ 1. DEFINITIONS
In this Deed, unless the context otherwise requires, the following definitions apply:
§ 2. INTERPRETATION
In this Deed, unless the context otherwise requires:
(a) words importing one gender include every other gender;
(b) words in the singular include the plural and vice versa;
(c) words referring to a person include individuals, companies, firms, limited liability partnerships, corporations, associations and other entities, and vice versa;
(d) any obligation on a Partner not to do something includes an obligation not to allow that thing to be done;
(e) headings and titles are for convenience only and do not affect interpretation;
(f) each Partner shall, at its own expense, take all reasonable steps necessary to give full effect to this Deed;
(g) a reference to any legislation includes any subordinate, amended or substituted legislation thereunder; and
(h) a reference to any agreement or document is a reference to that document as amended, replaced, supplemented or novated from time to time.
§ 3. NAME OF THE FIRM
The business of the partnership shall be carried on under the name and style of ________ (the "Firm"), or under such other name as the Partners may mutually agree in writing from time to time.
§ 4. BUSINESS AND PURPOSE
The Firm has been constituted for the purpose of carrying on the business of:
________
The Firm may also carry on such other lawful business or businesses as may be determined by the Partners by mutual consent from time to time. The Firm shall have the power to do all acts and things which are lawful and which are not prohibited under the Act in furtherance of the aforesaid objects.
§ 5. PRINCIPAL PLACE OF BUSINESS
The principal place of business of the Firm shall be situated at ________, and at such other place or places as the Partners may mutually decide from time to time.
§ 6. COMMENCEMENT AND DURATION
(a) The partnership shall be deemed to have commenced with effect from ________.
(b) The partnership shall be a partnership at will and shall continue until determined by law or in accordance with the provisions of this Deed.
§ 7. CAPITAL CONTRIBUTIONS
(a) The initial capital of the Firm shall be contributed by the Partners, in cash, property, goods or services at agreed value, as follows (the "Capital Contribution"):
(I) ________ — Rs. ________ (Rupees ________)
(II) ________ — Rs. ________ (Rupees ________)
(b) Any further capital contributed to the Firm by a Partner shall be clearly recorded in the books of the Firm together with a record of the Partner who made each respective contribution.
(c) The capital of the Firm shall consist of all contributions of money or property which the Partners provide to the Firm from time to time and shall be credited to the respective Capital Accounts.
(d) All initial contributions shall be made fully and within time, and in any event not later than ________.
(e) No capital contribution shall be withdrawn save and except with the prior written consent of all the Partners.
§ 8. INTEREST ON CAPITAL
Interest shall be payable to each Partner on the balance standing to the credit of his/her Capital Account at the rate of ________% per annum, or at such rate as the Partners may mutually agree from time to time, provided that such rate shall not exceed the maximum rate permissible under Section 40(b) of the Income-tax Act, 1961. Such interest shall be treated as an expenditure of the Firm prior to ascertainment of net profit.
§ 9. CAPITAL WITHDRAWALS
Capital may be withdrawn from the Firm only:
(a) in accordance with this Deed;
(b) with the express written consent of all the Partners; or
(c) as otherwise required by law.
§ 10. ADDITIONAL CAPITAL
(a) Where additional capital is required for the business of the Firm, the same shall be contributed by the Partners on mutually agreed terms. No Partner shall be obliged to contribute additional capital. Where a Partner is unwilling or unable to meet a required additional contribution within a reasonable period, the remaining Partners may contribute the same in proportion to their existing Capital Contributions, and the allocation of profits and losses shall be adjusted accordingly to reflect the aggregate change in Capital Contributions.
(b) Any advance of monies to the Firm by a Partner in excess of the agreed Capital Contribution shall be deemed a loan to the Firm and not an increase in that Partner's Capital Contribution. Such loan shall carry interest at such rate as may be agreed by the Partners, not exceeding the maximum rate permissible under Section 40(b) of the Income-tax Act, 1961, and shall not entitle the lending Partner to any increased share of profits or voting power. Such interest shall be treated as a business expenditure of the Firm.
§ 11. FINANCIAL DECISIONS
Decisions regarding the distribution of profits, allocation of losses, requirement for additional capital contributions and all other material financial matters shall be decided by the unanimous consent of the Partners.
§ 12. PROFIT/LOSS SHARING RATIO AND AUTHORITY
The Partners shall share the profits and bear the losses of the Firm in the following ratio:
(I) ________ — ________%
(II) ________ — ________%
§ 13. PROFITS AND LOSSES
(a) The net profits and losses of the Firm, as per the accounts maintained by the Firm and ascertained after deduction of all direct and indirect expenses (including rent, salaries, remuneration to Partners, interest on capital and loans, and all other establishment expenses), shall accrue to and be borne by the Partners in the ratio set out in § 12 above (the "Profit and Loss Distribution").
(b) The accounts of the Firm shall be prepared by an accountant determined by the Partners.
(c) Profits ascertained shall be distributed at such intervals as the Partners may mutually agree, and in any event after the close of each financial year.
(d) Each Partner shall be responsible for the payment of income-tax and all other taxes payable in respect of his/her share of profits.
§ 14. REMUNERATION TO PARTNERS
The working Partner(s) shall be entitled to such monthly/annual remuneration as may be mutually agreed by the Partners, provided that the aggregate remuneration payable to all the Partners in any financial year shall not exceed the maximum amount permissible under Section 40(b) of the Income-tax Act, 1961. The Partners may, by mutual agreement in writing, revise such remuneration from time to time within the said statutory limits.
§ 15. ACCOUNTS AND BOOKS OF THE FIRM
(a) Proper, true and complete books of account of all transactions of the Firm shall be maintained on a mercantile (accrual) basis in accordance with generally accepted accounting principles in India and the applicable Accounting Standards, and shall at all reasonable times be open to inspection and examination by each Partner.
(b) The books and records of the Firm shall be kept at the principal place of business of the Firm and shall reflect all transactions of the Firm.
§ 16. PARTNERSHIP ANNUAL REPORT
(a) The Partners shall ensure that, as soon as reasonably practicable after the close of each financial year, the Firm prepares an annual report (the "Annual Report"), which may include:
(I) a statement of all information necessary for the preparation of each Partner's income-tax returns;
(II) a copy of any tax returns filed on behalf of the Firm for that financial year;
(III) supporting income statements;
(IV) a balance sheet;
(V) a cash flow statement;
(VI) a breakdown of the profit and loss attributable to each Partner;
(VII) any additional information that one or more Partners may reasonably require; and
(VIII) such other contents as the Partners may mutually agree.
(b) A copy of the Annual Report shall be provided to each Partner.
§ 17. BANKING AND FIRM FUNDS
The funds of the Firm shall be deposited in such bank account(s) in the name of the Firm as may be designated by the Partners with such bank(s) as may be mutually agreed. Such account(s) shall be operated in the manner mutually agreed by the Partners. The funds of the Firm shall not be commingled with the personal funds of any Partner or with the funds of any other person or entity.
§ 18. FINANCIAL YEAR
The financial year of the Firm shall commence on the 1st day of April and end on the 31st day of March of each year, in conformity with the Income-tax Act, 1961.
§ 19. VOTING
In any matter requiring a vote of the Partners, each Partner shall be entitled to one vote of equal weight, save where this Deed expressly requires unanimous consent.
§ 20. MANAGEMENT
(a) All Partners shall be consulted and their advice and opinions obtained to the extent practicable. However, the Managing Partner shall have the management and control of the day-to-day business of the Firm. All matters outside the day-to-day business of the Firm shall be decided by the unanimous consent of the Partners.
(b) ________ shall serve as the Managing Partner. The expression "Managing Partner" shall include any person subsequently appointed to that role.
(c) In addition to day-to-day management, the Managing Partner shall keep, or cause to be kept, full and accurate books of account in accordance with applicable Accounting Standards and shall oversee the preparation of such reports as may be necessary to keep the Partners informed of the business of the Firm.
(d) The Managing Partner may voluntarily withdraw from such position or may be removed by the unanimous decision of the remaining Partners. Upon such withdrawal or removal, the remaining Partners shall have equal rights of management until a successor Managing Partner is appointed.
(e) The Managing Partner shall not be liable to the remaining Partners for any act or omission done in good faith, except in cases of gross negligence, fraud or wilful misconduct.
(f) The Managing Partner is authorised to engage and enter into contracts with such persons or firms as may be required for the management of the Firm's business, including lawyers, chartered accountants, brokers, advertisers and insurers.
§ 21. MEETINGS
(a) Meetings of the Partners shall be held at such intervals as the Partners may mutually agree.
(b) Any Partner may call a special meeting by giving reasonable notice to all other Partners, and such meeting shall be confined to the specific purpose for which it is convened.
(c) All meetings shall be held at a time and place reasonable and convenient to the Partners.
§ 22. ADMISSION OF A NEW PARTNER
(a) A new Partner may be admitted to the Firm only with the unanimous consent of the existing Partners.
(b) Every new Partner shall agree to be bound by all the covenants, terms and conditions of this Deed (including all amendments) and shall execute such documents as may be necessary to give effect to such admission. The share of a new Partner shall be determined by the unanimous decision of the existing Partners.
§ 23. VOLUNTARY RETIREMENT OF A PARTNER
(a) Any Partner may retire from the Firm by giving not less than 90 (ninety) calendar days' prior written notice to the remaining Partners.
(b) The retiring Partner shall be entitled to receive the value of his/her interest in the Firm as determined under the "Valuation of Interest" clause, together with any amounts standing to the credit of his/her Capital Account and undrawn profits.
(c) Upon the retirement of a Partner where the Firm is reconstituted, public notice shall be given as required under Section 32 of the Act, and the retiring Partner shall continue to be liable as provided therein until such notice is given.
§ 24. EXPULSION / INVOLUNTARY WITHDRAWAL OF A PARTNER
(a) A Partner may be expelled or be deemed to have withdrawn involuntarily upon the occurrence of any of the following: death; insolvency or adjudication as an insolvent; permanent mental or physical incapacity preventing participation in the business; conviction for any offence involving moral turpitude; breach of fiduciary duty or of this Deed; or any act or omission which can reasonably be expected to bring the business or reputation of the Firm into disrepute. No power of expulsion shall be exercised save in good faith and in accordance with Section 33 of the Act.
(b) The legal representative, trustee in insolvency or other successor in interest of an expelled or insolvent Partner shall acquire only the economic interest of that Partner and shall not be admitted as a Partner nor exercise any management or voting rights.
§ 25. RECONSTITUTION OR DISSOLUTION ON DISSOCIATION
(a) Notwithstanding the retirement, expulsion, insolvency or death of a Partner, the surviving/continuing Partners may, by mutual agreement, continue the business of the Firm as a reconstituted firm upon settling the dues of the outgoing Partner or his/her legal representatives, failing which the Firm shall be dissolved and its affairs wound up in accordance with this Deed and the Act, all debts being discharged prior to any distribution.
(b) The continuing Partners shall be entitled to recover damages from a dissociating Partner where the dissociation arises out of any fraudulent, malicious or criminal act, breach of fiduciary duty or breach of this Deed by such Partner.
§ 26. DISSOLUTION
(a) Save as otherwise provided in this Deed and the Act, the Firm may be dissolved only with the unanimous consent of all the Partners.
(b) Upon dissolution and liquidation of the assets of the Firm, and after payment of all costs and expenses of liquidation, the assets shall be applied and distributed in the following order of priority, in accordance with Section 48 of the Act:
(I) in paying the debts and liabilities of the Firm to third parties;
(II) in repaying to each Partner rateably any advances made by him/her (as distinct from capital);
(III) in repaying to each Partner rateably the capital contributed by him/her; and
(IV) the residue, if any, shall be divided among the Partners in the profit-sharing ratio set out in § 12.
(c) The claims of each priority group shall be satisfied in full before any claim of a lower priority group is satisfied. Any deficiency in assets shall be borne by the Partners in their profit-sharing ratio.
§ 27. VALUATION OF INTEREST
(a) In the absence of a written agreement fixing the value, the value of the interest of an outgoing Partner shall be determined on the basis of the fair market value of all assets of the Firm (less liabilities) in accordance with generally accepted accounting principles, as ascertained by an independent chartered accountant or registered valuer jointly appointed by the Partners. If the Partners fail to agree on the appointment of a valuer, each side shall appoint one valuer, and the valuers so appointed shall jointly appoint a third independent valuer whose valuation shall prevail.
(b) The valuation so determined shall be final and binding on all the Partners. Where a valuation is required upon the dissociation of a Partner, the cost of such valuation shall be borne by the Firm.
§ 28. DEATH OF A PARTNER
Upon the death of a Partner, the legal heirs or representatives of the deceased Partner shall be entitled to receive the value of the deceased Partner's interest in the Firm, as determined under the "Valuation of Interest" clause, together with the balance in his/her Capital Account and undrawn profits up to the date of death. The surviving Partners shall be entitled to continue the business of the Firm subject to settlement of the deceased Partner's dues. The legal heirs or representatives shall not acquire any management or voting rights and shall be entitled only to the economic interest of the deceased Partner.
§ 29. BORROWINGS
Loans or credit facilities from any bank, financial institution or third party, in excess of the Capital Contributions of the Partners, shall be obtained only with the prior written approval of all the Partners.
§ 30. REGISTRATION AND THE ACT
In respect of matters not specifically provided for in this Deed, the Partners agree to be governed by the provisions of the Indian Partnership Act, 1932. The Partners shall cause the Firm to be registered with the Registrar of Firms under Section 58 of the Act, and shall obtain a Permanent Account Number (PAN) and registration under the GST Law and all other applicable statutes and shall make all filings required thereunder.
§ 31. TITLE TO FIRM PROPERTY
Title to all property of the Firm shall vest in the name of the Firm. No Partner shall have any individual ownership interest in such property, whether in whole or in part, otherwise than as a Partner.
§ 32. FORCE MAJEURE
No Partner shall be liable to the Firm where prevented from performing his/her obligations, in whole or in part, by reason of any event beyond his/her reasonable control, including earthquake, flood, fire, epidemic, pandemic, war, civil commotion, governmental action or any other act of God, provided that such Partner has communicated the occurrence to the other Partners and has taken all reasonable steps to mitigate the effects thereof.
§ 33. DUTIES OF PARTNERS
(a) No Partner shall, directly or indirectly, engage in any business, venture or transaction competitive with or in conflict of interest with the business of the Firm without the unanimous written consent of the remaining Partners.
(b) Each Partner shall fully disclose to the other Partners any transaction having an appearance of conflict of interest.
(c) Any breach of this clause shall be deemed an involuntary withdrawal of the offending Partner and may be dealt with accordingly.
(d) Each Partner shall be just and faithful to the other Partners and shall furnish full information affecting the Firm.
(e) Each Partner shall render all reasonable assistance in carrying on the business of the Firm for the common benefit.
(f) Each Partner shall account to the Firm for any benefit derived without consent from any transaction concerning the Firm or any use of the Firm's property, name or business connection, in accordance with Sections 9 to 13 of the Act, and this duty shall survive dissolution until the affairs of the Firm are wholly wound up.
(g) Each Partner shall devote such time and attention to the business of the Firm as the Partners may reasonably determine.
(h) Each Partner shall punctually pay and discharge his/her own private debts.
(i) A Partner receiving any money on behalf of the Firm shall forthwith deposit the same into the nominated account of the Firm.
(j) Each Partner shall indemnify and keep indemnified the other Partners against all losses, damages, costs, expenses and liabilities arising from any breach of this clause.
§ 34. PROHIBITED ACTS
§ 35. INDEMNIFICATION
Each Partner shall be indemnified and held harmless by the Firm against all claims, liabilities and expenses arising out of his/her bona fide participation in the affairs of the Firm, in accordance with Section 13(e) of the Act, save that no Partner shall be entitled to such indemnity in respect of any liability arising out of his/her own gross negligence, fraud, wilful misconduct or breach of this Deed.
§ 36. LIABILITY OF PARTNERS
No Partner shall be liable to the Firm or to any other Partner for any error of judgment or for any act or omission done in good faith and believed to be within the scope of the authority conferred by this Deed. The liability of the Partners to third parties shall be joint and several, in accordance with Section 25 of the Act.
§ 37. INSURANCE
The Firm may obtain such insurance on behalf of any Partner, employee or agent against liabilities incurred while acting in good faith on behalf of the Firm, including professional liability insurance, public liability insurance and workmen's/employees' compensation insurance.
§ 38. WAIVER
(a) No waiver by any Partner of any breach or default shall be construed as a waiver of any subsequent breach of the same or any other provision of this Deed.
(b) No failure or delay in exercising any right or remedy shall constitute a waiver thereof.
(c) All rights and remedies are cumulative and in addition to those provided by law.
§ 39. CURRENCY
All amounts referred to in this Deed are in Indian Rupees unless otherwise expressly stated.
§ 40. GOODS AND SERVICES TAX
Unless otherwise expressly stated, all amounts referred to in this Deed are inclusive of Goods and Services Tax (if applicable) leviable under the GST Law.
§ 41. ENTIRE AGREEMENT AND MISCELLANEOUS
(a) This Deed may be executed in counterparts, each of which shall constitute an original.
(b) This Deed contains the entire agreement between the Partners and supersedes all prior negotiations, representations and understandings, whether oral or written.
(c) This Deed shall bind and enure to the benefit of the Partners and their respective heirs, legal representatives, executors, administrators and permitted assigns.
(d) This Deed may be amended only by an instrument in writing executed by all the Partners.
(e) All rights, remedies and benefits provided herein are cumulative and not exclusive of any other rights, remedies or benefits allowed by law.
§ 42. SEVERABILITY
If any provision of this Deed is held to be invalid, illegal or unenforceable in any respect, such invalidity shall not affect the remaining provisions, which shall continue in full force and effect, and the invalid provision shall be deemed replaced by a valid and enforceable provision that most nearly gives effect to the original intent of the Partners.
§ 43. AMENDMENTS
Any change, alteration, amendment or modification to this Deed shall be valid only if made in writing and signed by all the Partners, and a supplementary deed shall be executed and filed with the Registrar of Firms where required.
§ 44. DISPUTE RESOLUTION AND ARBITRATION
Any dispute or difference arising out of or in connection with this Deed shall, as far as possible, be settled amicably between the Partners, failing which:
(a) the dispute shall be referred to and finally resolved by arbitration by a sole arbitrator to be appointed by mutual consent of the Partners;
(b) the arbitration shall be conducted in accordance with the Arbitration and Conciliation Act, 1996 (including any statutory modification or re-enactment thereof), and the seat and venue of arbitration shall be at ________, ________;
(c) the language of arbitration shall be English, and the arbitral award shall be final and binding upon the Partners and enforceable as a decree;
(d) subject to the above, the courts at ________, ________ shall have exclusive jurisdiction; and
(e) the Partners shall keep the arbitration proceedings and the award confidential.
§ 45. CONFIDENTIALITY AND ANNOUNCEMENTS
No Partner shall make any press release, public announcement, advertisement or other publicity in connection with this Deed or its contents or any confidential information relating to the Firm without the prior written consent of the other Partners, save as may be required by law.
§ 46. NOTICES
(a) All notices and communications under this Deed shall be in writing and shall be deemed duly given if delivered by hand, sent by registered post with acknowledgement due, by courier, or by electronic mail to the address of the relevant Partner set out at the head of this Deed. Notices sent by registered post shall be deemed received on the expiry of 3 (three) working days from the date of posting.
(b) Any Partner may change its address for service of notice by giving the other Partners not less than 10 (ten) days' prior written notice.
§ 47. STAMP DUTY
This Deed has been executed on stamp paper of value Rs. ________ as required under the Indian Stamp Act, 1899, as applicable in the State of execution, and the stamp duty payable hereon shall be borne by the Firm.
§ 48. GOVERNING LAW
This Deed and all matters arising out of or in connection with it shall be governed by and construed in accordance with the laws of India.
IN WITNESS WHEREOF the Partners have set their respective hands to this Deed of Partnership on the day, month and year first hereinabove written, in the presence of the witnesses named below.
SIGNED AND DELIVERED by the within-named First Partner:
_____________________________
________
In the presence of:
_____________________________
Witness Signature
_____________________________
Witness Name: ________
_____________________________
Witness Address: ________
SIGNED AND DELIVERED by the within-named Second Partner:
_____________________________
________
In the presence of:
_____________________________
Witness Signature
_____________________________
Witness Name: ________
_____________________________
Witness Address: ________
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