The Indian Partnership Act, 1932 defined partnership as :
"The relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all".
Indian Partnership Act, 1932 Definition of Partnership
The question asks for the definition of partnership as provided by the Indian Partnership Act, 1932. This Act is the governing law for partnerships in India, and it gives a specific definition of what constitutes a partnership.
Let's examine the options based on the definition provided in Section 4 of the Indian Partnership Act, 1932.
The Act defines partnership as:
"The relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."
Let's evaluate each option:
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Option 1: "A partnership is a form of business organization in which two or more persons up to a maximum of twenty join together to undertake some form of business activity".
This definition mentions the number of persons, which is related to other laws (like company rules for banking/non-banking business), but it is not the fundamental definition of partnership itself given in the Indian Partnership Act, 1932. The core definition doesn't include the maximum number limit.
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Option 2: "The relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all".
This statement exactly matches the definition provided in Section 4 of the Indian Partnership Act, 1932. It covers the essential elements: a relation between persons, an agreement to share profits, and the business being carried on by all partners or by one or more partners acting on behalf of all (mutual agency).
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Option 3: "As an association of two or more persons to carry on as co-owners a business for profit".
While this describes some characteristics of a partnership, it uses terms like "co-owners" and "association" but misses the crucial element of "mutual agency" ("carried on by all or any of them acting for all") which is a key feature of the definition in the Indian Partnership Act, 1932. It's not the exact legal definition from the Act.
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Option 4: "A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests".
This is a very general description of cooperation and mutual interests, which might apply to various relationships, not just partnerships. It lacks the specific legal requirements mentioned in the Indian Partnership Act, 1932, such as carrying on a business and sharing profits with mutual agency.
Based on the analysis of the options and the definition provided in Section 4 of the Indian Partnership Act, 1932, Option 2 is the correct definition.
Key elements of the partnership definition under the Indian Partnership Act, 1932 include:
- A relation between persons.
- An agreement between them.
- The agreement is to share the profits of a business.
- The business is carried on by all or any of them acting for all (mutual agency).
Option 2 accurately captures all these essential elements as defined in the Indian Partnership Act, 1932.
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