Briefly state rights and duties of the Partner inter se, under the Indian Partnership Act.
Rights of Partners Inter Se
Right to take part in management: Section 12(a) gives every partner, subject to contract, the right to take part in the conduct of the business, a right that cannot be removed except by agreement.
Right to be consulted: under Section 12(c), ordinary matters may be decided by majority, but every partner has the right to express his opinion first, and no change may be made in the nature of the business without unanimous consent.
Right to inspect accounts: Section 12(d) entitles every partner to inspect and copy the firm's books.
Right to share profits: partners share profits in the agreed proportion, or equally if the deed is silent, as illustrated in Raghunandan Nanu v. Hormasjee Benzoojee, where a partner entitled only to a fixed monthly sum, bearing no losses, was still held a genuine salaried partner since partners may agree to share profits in any manner they like.
Right to indemnity: a partner is entitled to be indemnified by the firm for payments made and liabilities incurred in the ordinary and proper conduct of the business, or in a bona fide emergency.
Right to restrain misuse of firm property: under Section 15, property must be used exclusively for firm purposes, and a mortgage of firm property by a partner for personal benefit has been held invalid, entitling co-partners to object.
Right to an account of secret profits: Section 16 entitles partners to call a co-partner to account for any personal profit derived from firm transactions, property, or name, and for profits made in a competing business. The Act's illustrations show this concretely — where C secretly secures a lease of the firm's business premises for himself, A and B may claim a share in that benefit, and where C secretly receives commission from a merchant for directing consignments his way, he must account for it to the firm.
Right to continuity of terms: Section 17(a) preserves a partner's rights unchanged upon reconstitution of the firm, as where a deceased partner's son stepped into his place and was held entitled to the same share without a fresh agreement.
Right to restrain competing business: Section 11(2) allows partners to validly agree that a partner shall not carry on any business other than that of the firm while he remains a partner, overriding the ordinary rule against restraint of trade in Section 27 of the Contract Act.
Duties of Partners Inter Se
General duty of good faith: Section 9 binds partners to carry on the business to the greatest common advantage, to be just and faithful to each other, and to render true accounts and full information to any partner or his legal representative — a standard demanding uberrimae fidei among partners.
Duty to attend diligently: Section 12(b) requires every partner to attend diligently to his duties, and neglect of this duty entitles the other partners to compensation.
Duty to indemnify for fraud: Section 10 makes every partner liable to indemnify the firm for loss caused by his fraud in conducting the business, and this duty is mandatory, incapable of exclusion by contract, unlike the duty regarding mere wilful neglect.
Duty to use firm property properly: under Section 15, a partner must use firm property exclusively for the firm's business, failing which he must account for any profit made from its misuse.
Duty not to make secret profits: Section 16(a) obliges a partner to account for and pay to the firm any profit he derives personally from a firm transaction, or from the firm's property, business connection, or name. This was applied in Gordon v. Holland, where a partner who covertly repurchased firm property sold to a third party, concealing this from his co-partners, was made to account for his profit, and in Kuhlirz v. Lambert Bros Ltd, where a partner who sold his own goods to the firm at an inflated price without disclosing his prior cheap purchase was similarly liable.
Duty not to compete: Section 16(b) requires a partner who carries on a business of the same nature as, and competing with, the firm's business to account for and pay over all profits made in it, subject to the limitation recognised in Aas v. Benham, where a partner's involvement in an entirely non-competing shipbuilding venture was held to fall outside this duty, since the test is not merely the source of information used but whether the business itself competes with that of the firm.
Duty of full disclosure: this duty, part of being "just and faithful" under Section 9, was illustrated in Law v. Law, where a partner better acquainted with the firm's accounts than his co-partner was held bound to disclose all material facts in a transaction for sale and purchase of a share in the business.
Illustration Tying Rights and Duties Together
Suppose A, B and C are partners in a hardware trading firm sharing profits equally. C, using knowledge gained as a partner, secretly earns a commission from a supplier for routing the firm's orders through him — this breaches his duty under Section 16(a), and A and B have the corresponding right to compel him to account for that commission. If C also mortgages a firm-owned warehouse to secure a personal loan without his co-partners' knowledge, he breaches his duty under Section 15, and A and B are entitled to have that dealing set aside and to claim any profit C made from it. Conversely, if A neglects his duty to attend diligently under Section 12(b), leaving B and C to run the business alone, they acquire a right to compensation for the extra burden thrown upon them.
Concluding Observation
The rights and duties of partners inter se are thus mirror images of one another: every right one partner enjoys — to profits, to information, to indemnity, to firm property being properly used — corresponds to a duty owed by every other partner, and this reciprocal structure, built on the mutual agency principle under Section 18 and the good-faith standard under Section 9, is what makes partnership, as courts have often observed, one of the most deeply fiduciary relationships known to law.
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