Chapter IV - Relations of Partners to Third Parties
Section 29
Section 29: Rights of a transferee of a partner’s interest
Section 29 distinguishes a transfer of a partner's economic interest from the rights to manage the firm or inspect its records.
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Need advice on Section 29?
This article is for general information. Refer to the Indian Partnership Act, 1932 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a charge on such interest, does not entitle the transferee, during the continuance of the firm, to interfere in the conduct of the business, or to require accounts, or to inspect the books of the firm, but entitles the transferee only to receive the share of profits of the transferring partner, and the transferee shall accept the account of profits agreed to by the partners.
(2) If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled, and, for the purpose of ascertaining that share, to an account as from the date of the dissolution.
Central rule and applicability
During the firm's continuance, an absolute transfer, mortgage or charge over a partner's interest gives the transferee the transferring partner's profit share, subject to accepting the profit account agreed by the partners. It does not by itself give management, account-demand or book-inspection rights. On dissolution or cessation of the transferring partner, the section provides the corresponding asset-share right against the remaining partners and an account to ascertain that share.
Limits and related provisions
A transferee does not automatically become a partner. Do not confuse an assignment of economic rights with admission under Section 31. The wording specifies an account as from the date of dissolution; the particular event, transfer terms, deed and applicable state law require review before calculating an entitlement.
Hypothetical business example
Hypothetical: A partner mortgages the partnership interest to secure a loan. While the firm continues, the lender cannot use that transfer alone to demand a management vote or inspect the books, although the statutory profit-share rights need to be considered.
Practical decision flow
Identify the interest transferred and whether the firm continues or the transferring partner has ceased to be a partner.
Separate profit and asset-share entitlements from management, inspection and partner-admission questions.
Read the transfer and deed terms and obtain the appropriate account and valuation where the statutory trigger occurs.
Check the applicable state law
This guide explains the central Section 29 baseline. State amendments, notifications and rules can affect its application. Confirm the law applicable to the firm's location and the relevant partnership agreement before acting.
Practical checklist
Do
- Identify the interest transferred and whether the firm continues or the transferring partner has ceased to be a partner.
- Separate profit and asset-share entitlements from management, inspection and partner-admission questions.
- Read the transfer and deed terms and obtain the appropriate account and valuation where the statutory trigger occurs.
Avoid
- A transferee does not automatically become a partner. Do not confuse an assignment of economic rights with admission under Section 31. The wording specifies an account as from the date of dissolution; the particular event, transfer terms, deed and applicable state law require review before calculating an entitlement.
Glossary
- Transferee
- The person receiving the transferred interest.
- Charge
- A security interest over the partner's interest, included in Section 29.
Frequently asked questions
Does buying a partner's interest automatically make the buyer a partner?
No. Transfer rights and admission as a partner are distinct.
Can the transferee automatically inspect books while the firm continues?
Section 29 does not confer that right by reason of the transfer.
What changes when the firm dissolves?
The transferee has the stated right to the transferring partner's asset share and an account for ascertaining it.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026