Chapter 5.20 - Laws Relating to Joint Commercial Undertaking

[Full title: Laws Relating to Joint Commercial Undertaking or Trading by Partnership]

Sambhūyasamutthāna is the seventeenth title of law dealt with in the Yājñavalkyasmṛti. The laws coming under the head sambhūyasamutthāna exhibit the concept of partnership. Both the nature of partnership and the principle of sharing of profits in partnership are clearly expressed by Yājñavalkya. According to him, a number of traders carrying on business together with the object of making profit and the rule to share the profit or loss may be either by respective contribution of each to the stock or by means of the special agreement made between them.^[1] The definition given by Nārada about sambhūyasamutthāna is Yājñavalkya’s concept of partnership. Nārada defines that when traders or the like carry on business jointly, it is called sambhūyasamutthāna, which is a title of law.^[2]

The rules laid down by Yājñavalkya for governing partnership are given below:—

(i) Each member of the association should be efficient, active and cautious while dealing with the matter related to partnership business so that it can prosper. Therefore, Yājñavalkya lays down the obligations on the part of each member that if any loss is caused to the business run by partnership or joint undertaking, because of any member does an act, which is forbidden or without permission of other members, or done carelessly, then, that member is responsible to make good of the same. On the other hand, the member who safeguards or protects the interests of partnership business at the time of imminent danger should be given a share of one-tenth as his reward.^[3]

(ii) The partners enjoy the right to expel or drive away a deceitful or crooked partner without giving him any profit. If a partner is unable to do partnership work personally, may appoint another person on behalf of him to conduct the business.^[4]

(iii) Yājñavalkya expounds special rule of inheritance connecting to partnership. When one of those, who are in partnership, goes to a foreign country and dies, then according to the law, his share shall be taken by his heirs such as sons, or by agnates or cognates or by his other partners, who have come and in default of them, the king is entitled to take it.^[5]

(iv) These general laws relating to partnership of traders have been declared by the author to be applicable to priests, cultivators and artisans also.^[6]

The fundamental aspects of partnership propounded in the Yājñavalkyasmṛti are found relevant under the provisions of Indian Partnership Act, 1932. Section 4 of the Partnership Act states that partnership is the relation between persons, who have agreed to share profits of a business carried on by all or any one of them acting for all.^[7] It appears that the essential elements of partnership mentioned in the Partnership Act are same with the provisions of the Yājñavalkyasmṛti i.e., agreement, business, sharing of profits and mutual agency. Mutual rights and duties of partners incorporated in the Partnership Act shows striking conformity with the laws of Yājñavalkya. According to Section 9 of this Act, partners are bound to carry on with the business for the greatest common advantage and to be just and faithful to each other.

Under Section 10 and 13 (f) of this Act, it is obligatory in case of every partner to indemnify any loss cause by his fraud caused in the conduct of business, or by his willful neglect etc., respectively.^[8] In this way, it is the right of a partner under Section 13 (e) subject to contract between the partners to receive indemnity in respect of payments made, and liabilities incurred by him either in the ordinary and proper conduct of the business, or in emergency protecting from loss.^[9]

Section 33 (1) confers the right to expel a partner by a majority of partners provided such power is reserved under the provisions of contract and is exercised in good faith.^[10]

Footnotes and references:

[1]:

samavāyena vaṇijāṃ lābhārthaṃ karma kurvatām/ lābhālābhau yathādravyaṃ yathā vā saṃvidā kṛtau// Yājñavalkyasmṛti,2.259

[2]:

vaṇikprabhṛtayo yatra karma sambhūya kurvate/ tatsumphūyasamutthānaṃ vyavahārapadam smṛtam/ Nāradasmṛti, 4.3.1

[3]:

pratiṣiddhamanādiṣṭaṃ pramādādyacca nāśitam/ sa taddadyādviplavācca rakṣitāddaśamāṃśabhāk// Yājñavalkyasmṛti, 2.260

[4]:

jihmaṃ tyajeyurnirlābhamaśakto’nyena kārayet/ Ibid., 2.265

[5]:

deśāntaragate prete dravyaṃ dāyādabāndhavāḥ/ jñātayo vā hareyustadāgatāstairvinā nṛpaḥ// Ibid., 2.264

[6]:

anena vidhirākhyāta ṛtvikkarṣakakarmiṇām// Ibid., 2.265

[7]:

Kapoor, S.K., Op.cit., page3

[8]:

Ibid., pp 20-22

[9]:

Ibid., page24

[10]:

Ibid., pages51-52