Assertion (A) : When something of valuable nature is acquired by a partner in breach of his duty in good faith, it is taken to be acquired for the benefit of all the partners and has to be accounted for to the firm.
Reason (R) : Partnership is a trust.
Codes :
Partnership Duty and Accountability
Assertion (A) Analysis:
- Assertion (A) states that if a partner acquires something valuable in breach of their duty of good faith, they must account for it to the firm.
- This aligns with the fundamental principles of partnership law. Partners are considered fiduciaries to one another.
- This fiduciary duty requires partners to act honestly and in the best interest of the firm, avoiding secret profits or conflicts of interest.
- Acquiring assets for personal benefit in violation of this duty constitutes a breach, making the asset accountable to the partnership. Therefore, Assertion (A) is true.
Reason (R) Analysis:
- Reason (R) states that partnership is a trust.
- While partnership is fundamentally built on mutual trust and confidence, this statement is considered too general in the context of explaining the specific legal rule in Assertion (A).
- The legal obligation described in (A) stems from codified fiduciary duties and specific partnership rules regarding loyalty and good faith, not solely from the abstract concept of "trust".
- Because the provided correct answer indicates (R) is false, it implies that the general statement "Partnership is a trust" is not considered the direct or legally precise reason for the accountability rule stated in (A). Therefore, Reason (R) is deemed false in this specific context.
Conclusion:
Based on the analysis, Assertion (A) is true as it reflects established partnership law regarding fiduciary duties and accountability. Reason (R) is considered false as it is an overly general statement and not the specific legal basis for the rule in (A) according to the question's premise.
Thus, the correct option is that (A) is true, but (R) is false.
Important Questions from Partnership Act, 1932
- Which of the following provision of the Partnership Act explains the evidentiary value of entries in the Register of Firms?
- Which of the following is correct?
The important provision affecting partnership accounting, in the absence of a partnership deed is: - Atul, Bharat, and Chetan enter into a partnership. Atul invests $₹25,000$ for 6 months, Bharat invests $₹30,000$ for 8 months, and Chetan invests $₹40,000$ for 9 months. If the total profit is $₹37,000$, what is Chetan's share of the profit?
As per Section 45 of the Indian Partnership Act, 1932, notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until:
As per Section 6 of the Indian Partnership Act, 1932, in determining whether a group of persons is or is not a firm, regard shall be had to which of the following?
