Sections 14 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 14 explains what counts as the property of the firm, including goodwill, and presumes that assets bought with the firm's money belong to the firm. Section 15 says that this property is to be held and used by the partners exclusively for the purposes of the business. Both sections are subject to contract between the partners.
Subject to contract between the partners, firm property includes all property, rights and interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of its business, and also includes the goodwill of the business (section 14). Unless the contrary intention appears, property acquired with money belonging to the firm is deemed to have been acquired for the firm. The property is to be held and used by the partners exclusively for the purposes of the business (section 15).
Section 14: what is the property of the firm
Section 14 begins "Subject to contract between the partners", so the partnership deed can decide what is, or is not, firm property. If the deed is silent, the section supplies the default meaning.
First paragraph: the three sources
| Source of property | Wording in the text |
|---|---|
| Brought in | Property, rights and interests in property originally brought into the stock of the firm |
| Acquired by or for the firm | Acquired, by purchase or otherwise, by or for the firm |
| Acquired for the business | Acquired for the purposes and in the course of the business of the firm |
| Goodwill | The section says the property of the firm includes also the goodwill of the business |
The text covers "property and rights and interests in property", so it is not limited to physical things like machines or stock. It includes rights, such as the right to receive money, and interests in property, such as a tenancy or a share in something.
Goodwill. Goodwill is named expressly as firm property. The text does not define goodwill. It matters on a partner's exit or the firm's closure, when goodwill must be dealt with; see rights of an outgoing partner on goodwill and share and, for sale after dissolution, section 55.
Second paragraph: the presumption about firm money
Unless the contrary intention appears, property and rights and interests in property acquired with money belonging to the firm are deemed to have been acquired for the firm.
The rule works as a default presumption:
- If firm money paid for it, the property is presumed to be the firm's.
- The presumption holds unless a contrary intention appears, so the partners can show, or the deed can state, that the asset is meant to be someone's own.
Example. The firm of Tarun and Usha pays Rs 8 lakh from its bank account to buy a delivery van and registers it in Tarun's name for convenience. Under section 14, the van is deemed to have been acquired for the firm unless a contrary intention appears. If Usha and Tarun had signed a note saying the van belongs to Tarun personally, that could show a contrary intention.
The reverse case, a partner's own asset used by the firm, is not covered by the text of section 14 in terms; whether it is firm property depends on whether it was "brought into the stock of the firm" or otherwise falls within the three sources above, or on the deed.
If you want to settle in writing which assets are brought in as capital and which stay personal, our partnership deed drafting service can include a schedule of firm property.
Section 15: application of the property of the firm
Section 15 is one sentence: subject to contract between the partners, the property of the firm shall be held and used by the partners exclusively for the purposes of the business.
| Element | Text |
|---|---|
| Whose property | The property of the firm (as defined in section 14) |
| Who holds and uses it | The partners |
| For what | Exclusively for the purposes of the business |
| Can the contract vary it | Yes, subject to contract between the partners |
What follows:
- No private use by default. Partners may not treat firm assets as their own. Using firm funds or stock for a personal venture falls outside "exclusively for the purposes of the business".
- Held jointly for the business. The words "held and used by the partners" show that the property is held for the firm's business, not for individual partners to deal with as they like.
- The text goes no further. It does not set out remedies for misuse or how the property is shared on dissolution; those are dealt with in other provisions. For example, how assets are applied on winding up is in sections 46 and 47 and on payment of debts in sections 49 and 50.
Example. Vimal, a partner in a furniture firm, uses firm timber worth Rs 50,000 to build furniture for his own house. That is not use for the purposes of the business. Unless the deed allows it, section 15 is against him, and the section on personal profits discussed in sections 16 and 17 may also be relevant.
Practical points
- Keep a fixed asset register. List what the firm owns, who holds title and whether it came from firm funds or from a partner.
- State contrary intentions. If a partner's personal asset is only lent to the firm, record that in the deed.
- Treat goodwill as an asset. Plan for it at the time of admission, retirement or closure.
- Business use only. Keep personal expenses out of firm accounts unless the deed permits them.
- Tax treatment of firm assets is a separate subject; see our income-tax guides.
Need help recording firm property?
Disputes about "whose asset is it" usually arise because the deed said nothing. If you want a clear schedule of firm property, goodwill and personal assets used by the business, we can prepare it as part of your partnership deed.
Key takeaways
- Sections 14 and 15 are subject to contract between the partners.
- Firm property includes property brought in, property acquired by or for the firm, property acquired for the business, and goodwill.
- Property acquired with firm money is deemed acquired for the firm unless the contrary intention appears.
- Firm property is to be held and used exclusively for the purposes of the business.
- The text is silent on remedies for misuse; check other provisions and the deed.
Read next
- Section 13: mutual rights and liabilities of partners
- Sections 16 and 17: personal profits and rights after a change in the firm
- Rights of an outgoing partner: goodwill and share
- Duties of partners under the Partnership Act
Disclaimer: Based on the text of the Indian Partnership Act, 1932 as consulted on 1 October 2026. Several States have amended the registration chapter and make their own rules, forms and fees for the Registrar of Firms. This article is general information, not legal advice; check the official text and your State's rules before acting.