Dear Querist, in relation to your question, my advice to you is:-

1. Partnership firm or any agreement regarding partnership, totally depends upon your agreement at the time of partnership.

2. Partnership agreement always have a clause saying about dissolution. If it says it is at will than you can serve a notice to the other partner and can dissolve that firm and all the things will be dissolved as per the capital you have invested.

3. As per your case, you have contributed 100% capital, so there is no need for sharing the capital. 

4. Every firm has its own account, which needs to settled as per law before dissolution or at the time of dissolution, so you can contact to the other party for such settlement of accounts.

5. So, after serving notice of dissolution of firm you can clearly dissolve it and close your bank account as partnership firm 

6. There is a point which you must bear in mind, as your partner has contributed in creating goodwill for your company, so he can claim it as a share.

Everything which I have suggested you is in accordance with the partnership Act, 1932 as amended upto date.

Feel free to contact me.

property in question is the property of the firm, within the meaning of Section 14 of the Indian Partnership Act, and it has to be held and used exclusively for the business of the firm.

2) So long as the partnership continues, no part of the property can be regarded as belonging to any individual partner who is not competent to deal with the same as he likes.

3) Secondly, it cannot be said that a partner has any definite and ascertainable share in any specific item of partnership assets. A partner is not entitled to get his share in specie in the movable and immovable properties of the firm.

4) Section 48 of the Indian Partnership Act provides that, on dissolution of the firm, its assets must first be applied for payment of the debts and liabilities of the firm and if any residue is left after such payment the same shall be divided among the partners proportionately to their shares in the profits of the business of the firm. Before dissolution, however, a partner cannot claim to have any definite and ascertainable share in any particular property of the firm;

The financial returns to partners of the Partnership Firm are divided in following three heads:

• Remuneration
• Interest on Capital Introduced
• Share of Profit

PARTNERSHIP ACT 1932 Definition :- Section 4 “Partnership is the relation between persons who have agreed to share the profit of business carried on by all or any one of them acting for all.

Partnership can only arise as a result of agreements express or implicit, between two or more persons. Partnership is thus created by a contract;

The ratio to share profit between partners is decided mutually by them.

In case, the partnership deed does not provide any specific ratio, the profit is divided equally between all partners. While deciding the ratio, you should also note that this is the loss-sharing ratio as well

The partnership agreement may contain a clause to the right of the partners to claim interest on capital at a certain rate such interest subject to contract between the partners is payable only out of profit, if any, earned in the firm. 

On the dissolution of a firm every partner or his representative, to have the property of firm applied in payment of the debts & liabilities of firm & to have the surplus distributed among the partners or representatives.

A firm can be dissolved as per the mutual agreement between the parties or expressed terms in the partnership deed.

Dissolution of the firm means to discontinue all the business activities within the firm. When the activities are stopped and the assets are used to pay off the debt it amounts to the dissolution of the firm. 

- As per law, any property acquired by a partnership firm for the purpose of carrying on its business is a partnership property.

- Further, that property acquired by a partnership firm for the purpose of carrying on its business shall be solely used for the purpose of such business.

- Further, the Partners shall have interests over the property and profits of a firm after dissolution, and such interest shall only be available to them, on the remaining property, after the payment of all the debts and liabilities of the firm.

- Further , in a partnership firm one partner cannot sell the said property without the consent of others .

- Hence, it is clear that without taking consent of that partner , you have no right to sell that shop , even funded by you , because now this shop become the property of the firm . 

- Further, as there is already clause for profit sharing , then you are bond with the profit sharing . 

It all depends upon the title deed. If it is in your name then he doesn't have any share in the property.

Its not clear whether hundred percent contribution of yours in the capital of business was mentioned in the partition deed or not. 

Moreover it's to be seen in who's name the shop room was purchased  if it was in the name of the Firm then he has a share on sale proceeds of the shop room. 

No, your partner do not have rights in the assets. Only sharing ratio in business profit.

Partnership firm is not dissolved 

it in the event of dissolution of firm only if any residue is left then first partner would be entitled to 70 per cent share of profits and second partner 30 per cent share 

The proceeds would be divided as per profit sharing ratio on dissolution of firm 

Dear Querist, thank you for making us clear about your situation and for a better understanding, my advice to you is as follows:-

1. Since, you have invested the whole capital goods, there is no need to share the capital ratio as it was never invested by the other partner.

2. As, your partnership shop was only about to share the profits from sale proceeds than you should settle all the bank accounts where this money of the sale proceeds is getting deposited; before closing the partnership.

3. As, it is never your case that the other person has contributed a single penny towards capital, than you should not be worried about it as he can't claim anything in this regard.

4. As, you both were running a franchise shop, there is no need for sharing of goodwill as well.

5. As, your agreement is silent on net proceeds, than two situation will arise:-

a) if the net balances are coming from sale proceeds than as he is your partner in profit and loss sharings, you should give him his part.

b) if the net balances are not coming from sale proceeds than you are entitled solely for it.

6. At the end, when the goods will be sold out than also you don't need to give a single penny to any person because they form a part of your invested capital and not a part of profit sharing capital.

Feel free to call.

Share the partnership deed as advised earlier to analyse your query properly. 

Since firm continues to be in existence he is not entitled to 30 per cent share in profits on sale of assets 

2) In Narayanappa vs. Bhaskara Krishnappa , the Supreme Court, while considering a question of similar nature, held as under :

"From a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership, it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to any one. His right is to obtain such profits, if any, as fell to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in cl. (a) and sub-cl. (i), (ii) and (iii) of cl. (b) of s. 48".

Dear sir/ma'am,

since the property was bought by you, it belong to you, you have the right to sell at whichever price and keep that amount.

The partner is only entitled for the profit and losses incurred in the business.

since nothing was mentioned in the partnership deed regrading the selling and enjoying the amount by selling the shop, you have the right fully over it.

Dear Querist, in relation to your follow up question my advice to you is as follows:-

While trying to say you about sale proceeds I meant the sale proceeds which you were getting from the sale of goods and not from sale of shop, as he never contributed in it, so the working partner is not entitled for it.

He is entitled only for sale proceeds from the sale of the shops goods.

The profit or loss only can be share by the partners.

The amount invested by the partners would become their share in the partnership firm.

Thus on dissolution of partnership firm every partner or his representative, to have the property of firm applied in payment of the debts & liabilities of firm & to have the surplus distributed among the partners or representatives.

Your question is about the sharing of assets of firm:

The firm shall apply its assets including any contribution to make up the deficiency firstly, for paying the third party debts, secondly for paying any loan or advance by any partner and lastly for paying back their capitals. Any surplus left after all the above payments is shared by partners in profit sharing ratio.

On dissolution of partnership firm, Settling of assets and liabilities is that the  liabilities are paid-off and assets are realized.

The working partner's claim  of his share in the profit upon the dissolution of the partnership firm would be as per the agreement entered in the partnership deed.

Dissolution of partnership firm is a process in which relationship between partners of firm is dissolved or terminated. If a relationship between all the partners of firm is dissolved then it is known as dissolution of firm. In case of dissolution of partnership of firm, the firm ceases to exist. This process includes the discarding and disposing of all the assets of firm or and settlements of accounts, assets, and liabilities.

When a partnership or a corporation winds up its operations, it has to liquidate and distribute its assets to the owners or shareholders. The partnership or corporation must assemble its assets, settle with creditors and debtors, and distribute its remaining assets among the owners or shareholders.