Shantanu was running business of ABC Travel Agency from several years. He purchased 10 cars amounting to 100 lakh for the purpose of running them on…

(a) According to Section 6 of the Indian Partnership Act,1932 in determining whether a group of persons is or is not a partnership firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together. For determining the existence of partnership, it must be proved that: (a) There was an agreement between all the partners concerned; (b) The agreement was to share the profits of a business and (c) The business was carried on by all or any of them acting for all. Sharing of profit, which is prima facie evidence, exists but mutual agency among Shantanu and Shankar, which is an essential element, does not exist here as Shantanu borrowed 50Lakhs for his business from Shankar for which will take25% of profit share. In the absence of mutual agency, the most essential element of partnership, the arrangement between Shantanu and Shankar cannot be treated as a partnership under the Indian Partnership Act,1932.