Mode of determining existence of partnership
Commencement. 1932-10-01 (except section 69) 1933-10-01
Section 6 of the Indian Partnership Act, 1932 deals with mode of determining existence of partnership. In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together. The Act was enacted on 08 Apr 1932.
In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together.
Explanation 1.--The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners.
Explanation 2.--The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not of itself make him a partner with the persons carrying on the business;
and, in particular, the receipt of such share or payment--
(a) by a lender of money to persons engaged or about to engage in any business,
(b) by a servant or agent as remuneration,
(c) by the widow or child of a deceased partner, as annuity, or
(d) by a previous owner or part owner of the business, as consideration for the sale of the goodwill or share thereof,
does not of itself make the receiver a partner with the persons carrying on the business.
Section 6, The Indian Partnership Act, 1932 (Act 9 of 1932).
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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Indian Oil Corporation Ltd. v. Shriji Enterprises
Court's Decision & Legal Precedent
Final Order order-11.pdf 2014-01-29 DATE VERIFIED. CRA 165/2013. Bombay HC Aurangabad, A.I.S. Cheema J. (reserved 24 Jan 2014, pronounced 29 Jan 2014). Isolate: Partnership Act s.4 three essential ingredients (agreement; share profits of a business; agency) plus s.6 real-relation test — nomenclature as ‘partners’ does not decide; Expl. I to s.6: sharing profits or gross returns from jointly held property does not of itself make the holders partners. s.69 already filled — do not pad 69. Leading HC.
On this section: Partnership Act 6: existence of a firm turns on the real relation from all facts; Expl. I — sharing profits of jointly held property does not of itself make the holders partners (IOC / Shriji). Do not pad 69.
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 6
What have the courts held on Section 6 of the Indian Partnership Act?
Indian Oil Corporation Ltd. v. Shriji Enterprises (29 Jan 2014) is the leading judgment on this section among those set out below: Partnership Act 6: existence of a firm turns on the real relation from all facts; Expl. I — sharing profits of jointly held property does not of itself make the holders partners (IOC / Shriji). Do not pad 69.
How do I find court cases under Section 6 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 6, section 6 Partnership Act, section 6 of the Indian Partnership Act. People searching for it also type indian partnership act 1932 section 6. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Indian Oil Corporation Ltd. v. Shriji Enterprises (29 Jan 2014).
When was Section 6 of the Indian Partnership Act enacted?
Section 6 of the Indian Partnership Act, cited as Partnership Act 6, 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.