Particular Partnership Under Section 8 of Indian Partnership Act, 1932

A particular partnership is a form of partnership created for a specific adventure, undertaking or business activity rather than for carrying on a general business indefinitely. Section 8 of the Indian Partnership Act, 1932 recognises this type of partnership and allows a person to become a partner with another person for a particular purpose. It is commonly used for joint ventures, specific contracts, trading activities or single business projects.

What Is Particular Partnership?

A particular partnership is a partnership formed between two or more persons for carrying out a specific adventure, undertaking or business activity. It is governed by Section 8 of the Indian Partnership Act, 1932, which provides:

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“A person may become a partner with another person in particular adventures or undertakings.”

Unlike an ordinary partnership, where partners generally agree to carry on a continuing business, a particular partnership is created with a limited purpose. The partnership comes into existence only for achieving a specific commercial objective, and it usually ends after the completion of that objective.

For example, if two persons enter into an agreement to purchase a piece of land, develop it and sell it for profit, they may constitute a particular partnership. Once the land is sold and profits are distributed, the purpose of the partnership is completed.

A particular partnership may relate to:

• A single commercial transaction
• A specific contract
• A particular project
• A defined business undertaking
• A limited business activity

The essential requirement is that there must be an intention to carry on business jointly for a particular purpose and share the resulting profits.

Purpose Behind Section 8 of Indian Partnership Act, 1932

Section 8 was introduced to recognise the practice of creating partnerships for limited commercial purposes. The provision acknowledges that business arrangements are not always created for permanent or continuous operations.

Many commercial activities involve temporary partnerships where persons combine their resources, skills and capital for completing a particular venture.

The provision is especially relevant in situations where:

• Two or more persons jointly undertake a business opportunity.
• The business activity has a defined objective.
• The partnership is limited to a particular adventure.
• The partners intend to share profits arising from that activity.

The Special Committee Report on the Indian Partnership Act noted that Section 8 was intended to recognise the common practice of establishing particular partnerships, especially among Indian firms having several branches and undertaking specific commercial activities.

Essential Elements Of Particular Partnership

For determining whether a partnership is a particular partnership, certain important elements must be present.

Agreement Between Persons

A particular partnership arises through an agreement between two or more persons. The relationship cannot be created merely because persons participate together in a transaction.

The agreement must show an intention to establish a partnership relationship.

Specific Adventure Or Undertaking

The partnership must be created for a particular adventure or undertaking. The purpose should be identifiable and limited.

Examples include:

• Construction of a specific project
• Purchase and resale of goods
• Development and sale of property
• Execution of a particular contract

Intention To Carry On Business

A single transaction does not automatically create a partnership. The activity must involve carrying on of business in a partnership manner.

Where the transaction requires continuous efforts, management, purchase, sale, supervision or other commercial activities, it may amount to a particular partnership.

Sharing Of Profits

Like every partnership, a particular partnership generally involves an agreement to share profits arising from the venture.

Profit sharing is an important indicator of partnership, although the existence of partnership depends on the overall relationship between parties.

Difference Between General Partnership And Particular Partnership

A particular partnership differs from an ordinary partnership mainly in terms of scope and duration.

When Does A Particular Partnership Come Into Existence?

A particular partnership comes into existence when parties agree to jointly undertake a specific business activity with the intention of sharing profits.

The agreement may relate to:

• Buying goods from a particular place and selling them elsewhere
• Executing a government or private contract
• Undertaking a construction project
• Conducting a specific commercial venture

The partnership does not necessarily require registration of a separate firm name. The important factor is the relationship between the parties and the nature of the undertaking.

Particular Partnership And Single Transaction

One important question regarding particular partnership is whether every single transaction between persons creates a partnership.

The answer is no. A single transaction may or may not create a particular partnership depending upon the nature of the activity.

If the transaction involves only a one-time purchase or sale without any business relationship, it may not amount to partnership.

However, where the transaction requires continuous commercial activity, management and sharing of profits, it can constitute a particular partnership.

For example:

• Purchase of goods by two persons and immediate division of goods may not amount to partnership.
• Purchase of goods, selling them in the market, collecting profits and distributing them may amount to particular partnership.

Therefore, the intention of parties and the nature of the activity are important factors.

Judicial Decisions On Particular Partnership

Gherulal Parakh v. Mahadeodas Maiya (1959)

In Gherulal Parakh v. Mahadeodas Maiya, the Supreme Court considered the concept of particular partnership.

The case involved an agreement between parties to enter into forward contracts with a particular person. The Court recognised that where persons agree to carry on such activity jointly for a specific purpose, the arrangement may constitute a particular partnership.

The decision highlighted that partnership may exist even when the business activity is restricted to a particular undertaking.

Karmali Abdulla v. Vara Karimji Jiwani

In this case, two merchants entered into an agreement to conduct business in sugar imported from Mauritius to Hong Kong. The purchases were to be made jointly, and the agreement clearly indicated an intention to conduct business in partnership.

The first consignment resulted in heavy losses, and a dispute arose regarding liability.

The court held that the arrangement was a particular partnership because:

• The partnership was created for a limited business purpose.
• The parties intended to conduct business jointly.
• The activity involved commercial transactions and profit sharing.

The decision established that a partnership may be limited in scope but still create legal obligations between partners.

Mann v. D’Arcy

In Mann v. D’Arcy, the defendants were partners in a potato trading business. One partner entered into an agreement with the plaintiff for purchasing a shipload of potatoes and sharing profits from resale.

The venture resulted in losses, and the other partner denied responsibility for the transaction.

The court held that the transaction constituted a particular partnership because it was a partnership relating to a single business venture.

The case shows that even a single commercial venture can create a partnership if the parties intend to jointly carry on business and share profits.

Kottapalli Jaggaiah v. Kokumanu Venkatasatyanarayana

In this case, the parties jointly obtained a contract for maintenance of a road.

The question was whether such activity constituted partnership since it arose from a single contract.

The court held that there was a partnership because the activity involved several business operations, including:

• Employing workers
• Supervising work
• Preparing bills
• Completing the project
• Obtaining approval
• Receiving payment

Although the partnership was based on one contract, the activity involved carrying on of business over a period of time.

Rasdas v. Mukut Dhari

In Rasdas v. Mukut Dhari, persons agreed to work a coal mine and share profits.

The court recognised that even though mining may relate to a single adventure, it involves continuous activities and business operations.

The decision established that a single adventure can still amount to partnership when it requires a series of transactions and ongoing business relationships.

Senaji Kapurchand v. Pannaji Devichand

In this case, persons purchased yarn together with the intention of selling it over time and distributing profits.

The Privy Council held that the arrangement amounted to carrying on business because the activity involved:

• Sale of goods
• Realisation of profits
• Distribution among participants

The case illustrates that a transaction involving several stages of commercial activity may constitute a particular partnership.

Nathilal v. Srimal

In Nathilal v. Srimal, the court also recognised that where parties undertake commercial activities involving continuous dealings and profit sharing, the relationship may amount to partnership even if the purpose is limited.

Is Particular Partnership Limited To One Transaction?

A particular partnership is not necessarily restricted to only one isolated transaction.

Although Section 8 refers to a “particular adventure or undertaking”, the undertaking may involve multiple transactions.

For example, a partnership formed for a mining operation may involve:

• Extraction of minerals
• Employment of workers
• Sale of products
• Management of accounts

Similarly, a partnership formed for purchasing and selling goods may involve repeated sales before completion of the venture.

Therefore, the deciding factor is not the number of transactions but whether the activities are connected with a specific business purpose.

Liability Of Partners In Particular Partnership

Partners in a particular partnership have similar liabilities as partners in an ordinary partnership.

The limited nature of the partnership does not restrict liability arising from partnership activities.

Partners may be liable for:

• Contracts entered into for the partnership purpose
• Obligations arising during the venture
• Debts incurred for carrying out the undertaking

For example, if one partner enters into a valid contract within the scope of the particular partnership, other partners may also become liable depending upon the circumstances.

Conclusion

Particular partnership under Section 8 of the Indian Partnership Act, 1932 refers to a partnership created for a specific adventure or undertaking. It provides legal recognition to limited-purpose business relationships where persons jointly carry out a particular commercial activity and share profits. 

A partnership need not always exist for a permanent business; even a single venture involving continuous business operations can create a particular partnership. Judicial decisions have consistently recognised the importance of intention, business activity and profit sharing in determining the existence of such partnerships.