Real relation
between the parties, as shown by all relevant facts taken together to determine
whether a group of persons is or is not a firm, or whether a person is or is
not a partner in a firm, as per section 6 of Indian Partnership Act, 1932
Thus as per
Explanations of section 6, following shall not make one partner or create
partnership:
(I) The
sharing of profits or of gross returns arising from property by persons holding
a joint or common interest in that property.
(II) Mere receipt
by a person of a share:
(a) of the
profits of a business, or
(b) of a
payment contingent upon the earning of profits, or varying with the profits
earned by a business,
does not
itself make him a partner with the persons carrying on the business
(III) Further mere
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.
See section 6 of the Indian Partnership Act, 1932 on lawzonline.com