Mode of settlement of accounts between partners
Commencement. 1932-10-01 (except section 69) 1933-10-01
Section 48 of the Indian Partnership Act, 1932 deals with mode of settlement of accounts between partners. In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed: -- (a) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and, lastly, if necessary, by the partners individually in th The Act was enacted on 08 Apr 1932.
In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed: --
(a) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits.
(b) The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:--
(i) in paying the debts of the firm to third parties;
(ii) in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital;
(iii) in paying to each partner rateably what is due to him on account of capital; and
(iv) the residue, if any, shall be divided among the partners in the proportions in which they were entitled to share profits.
Section 48, The Indian Partnership Act, 1932 (Act 9 of 1932).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Referred to by 1
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Ravi Prakash Goel vs Chanra Prakash Goel
Court's Decision & Legal Precedent
Where an arbitration agreement is contained in a partnership deed and a dispute touching the affairs of the partnership firm has arisen during the lifetime of a partner, the legal representative of that deceased partner is entitled to invoke and enforce the arbitration clause, notwithstanding the death of the original partner. This right flows from Section 40 of the Arbitration and Conciliation Act, 1996, which mandates that arbitration agreements do not discharge upon death and remain enforceable by legal representatives, read harmoniously with Sections 46, 47, and 48 of the Indian Partnership Act, which preserve and enforce the rights of representatives to claim accounts and have the firm wound up. The arbitration clause survives the dissolution of the partnership and the death of a partner, and it is not necessary for the partnership deed to explicitly include heirs and legal representatives for this succession to apply, as such rights are governed by statute.
On this section: Mode of settlement of accounts between partners; lays down the procedure for determining each partner's share in surplus; supports that representatives can enforce account settlement
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Pamuru Vishnu Vinodh Reddy vs Chillakuru Chandrasekhara Reddy
Court's Decision & Legal Precedent
Where a partner retires from a partnership firm with the consent of all other partners and agrees to sell his share, the relevant date for ascertaining the value of the retiring partner's share is the date on which he ceased to be a partner (the retirement date), not the date on which a court-appointed Commissioner subsequently values the share. The unpaid value of the share constitutes a debt due from the continuing partners to the retiring partner, and the retiring partner is entitled to interest at six per cent per annum on the unpaid amount from the date of retirement as per Section 37 of the Indian Partnership Act. Non-payment of the agreed consideration does not negate the legal effect of retirement but merely creates a debt obligation.
On this section: Prescribes the mode of settlement of accounts between partners after dissolution. The Court referenced this section in the context of determining how the retiring partner's share should be valued and settled, establishing that the valuation should be as on the date of retirement.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 48
What have the courts held on Section 48 of the Indian Partnership Act?
Ravi Prakash Goel vs Chanra Prakash Goel (21 Mar 2007) is the leading judgment on this section among those set out below: Mode of settlement of accounts between partners; lays down the procedure for determining each partner's share in surplus; supports that representatives can enforce account settlement. Another 1 judgment on this section is set out below, all of them from the Supreme Court. They run from 2003 to 2007.
How do I find court cases under Section 48 of the Indian Partnership Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Partnership Act 48, section 48 Partnership Act, section 48 of the Indian Partnership Act. People searching for it also type indian partnership act 1932 section 48 and section 48 of indian partnership act 1932 class 12. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Ravi Prakash Goel vs Chanra Prakash Goel (21 Mar 2007).
What should I read with Section 48 of the Indian Partnership Act, and has it changed?
1 other provision in this corpus refers back to it.
When was Section 48 of the Indian Partnership Act enacted?
Section 48 of the Indian Partnership Act, cited as Partnership Act 48, was enacted on 08 Apr 1932 as Act 9 of 1932. It is in force as at the date shown on this page.
Other sections of this Act
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.