Dear Querist

Due to the death of one partner, the partnership firm has been dissolved if the remaining partner is also willing to winding up the firm. Now the surviving partner of the firm is responsible to sell the stock of the firm and after getting the money from selling the stock record the same in the account books of the firm and if there is any liability over the firm then first of all he has to settle that liability and then if there is anything remaining in the account or the property of the firm then half of that share in the property/accounts/money shall be handed over to the heirs of the deceased partner, if there is any loss to the firm then the legal heirs of the firm shall be liable to pay the loss as per section 50 of CPC as they shall be liable only to the extent of the property of the deceased which has come to their hands and has not been duly disposed of.

so Surviving partner has responsible to sell the remaining stock but if the legal heirs of the deceased partner think that they should also be involved in that transaction then they have a right to involved.

Settlement depends on the mutual agreement of the parties, if both the parties are ready to settle the matter amicably then it will be better otherwise, the court will decide the same as per the Law.

Surviving Partner shall hold 50% singularly and all the legal heirs of the Deceased partner shall hold 50% share jointly.

Feel Free to Call

Dear Sir/ Mam

1. The remaining partners decides to wind up business then they only have to take responsibility of selling the stock and winding up the business but if the legal heir wish to involve in selling they have right to involve in the process.

2. Both the surviving partner and the legal heir will have equal rights share and profit and loss of the winding up process.

3. After selling you need to mention the sale record in the account book records of the company.

4. All liabilities to the company will be paid and settle them.

5. Then the left amount will be divided among the surviving partner and legal heir of deceased person.

6. The losses will be paid according to the share and conduct of deceased by legal heir and other losses will be  paid by surviving partners only.

Surviving partner has to sell the remains stock to wind up business 

it should be done within reasonable period 

The legal heirs are eligible only to avail the benefits or dues in respect of the deceased partner and they do not have any rights in the partnership business, especially in the light of ther clause you have furnished in your question. 

The surviving partner can dissolve the partnership business as per law and distribute the dues meant for the deceased partner to his legal heirs, if any.

The Supreme Court observed that when there are only two partners in a firm, on the death of one the firm is deemed to be dissolved despite the existence of any clause which says otherwise. Therefore, if in a firm comprised of only two persons as partners one dies, the contract comes to an end

When there are only two partners in a firm, on the death of one partner, the firm is deemed to be dissolved despite the existence of any clause which says otherwise. In other words, in a partnership firm of two partners, when one of the partners dies then the partnership automatically dissolved even if the deed of partnership was made clearly instructed to appoint heir of the deceased as a new partner. As per the wishes of the directions of the deceased partner, the surviving partner may enter into a new partnership with the heir of the deceased partner, but that would constitute a new partnership.

The remaining partners can sell the stock as well as dissolve the partnership firm

Hi 

Section 42 of the Indian Partnership Act, 1932 (“Act”) provides for dissolution of partnership on occurrence of certain contingencies which includes ‘death of the partner’ as one of those contingencies.

Plain reading of the Section 42 would show that, subject to the contract between the partners, a firm stands dissolved by death of a partner.

However, in cases where the terms of the partnership deed are silent on continuation of partnership’s business, a contract to continue the partnership after the death of a partner may be implied from the conduct of the parties.

So, in your case, it appears that the surviving partner has rights to continue the business (either as a propreitor or under a new partnership deed), (i am referring to usage of words IT SHALL NOT BE MANDATORY ON THE SURVIVING PARTNER TO CLOSE THE BOOKS OF ACCOUNTS) in your query. 

So, in your case, the surviving partner has the right to continue the business in case the surviving partner wishes to do so. 

For settlement and payment of dues of partner,  the settlement date should be reckoned on the date of death of partner (i.e on date of death of partner , P/L accounts of all partners are crystallised) and surviving partner can in consultation with legal heirs can decided on when and how the legal heirs will be paid . It is the norm that the legal heirs are paid within 2 years from the date of death of the deceased partner. 

Hope this information is useful. 

1. a partnership is constituted between 2 or more persons

2. if there are 2 partners and one of them dies then the partnership firm undergoes compulsory dissolution since there cannot be any partnership having only a single partner

3. thus upon such dissolution the property of the firm has to be first applied for discharge of the debts and liabilities of the firm and thereafter if there is any surplus left, then that will be distributed between the surviving partner and the legal heirs of the deceased partner according to their rights in the partnership contract 

4. the stock of the firm has to be sold by the surviving partner and the legal heirs of deceased partner and the sale proceeds distributed among them as per the partnership contract

5. the clause reproduced by you in your query has no application in my view as that would apply in the case when one partner died leaving behind two or more surviving partners. In your case that is not the case. 

- As per Section 12 of the Partnership Act, in the event of the death of a partner, his heirs or legal representatives or their duly authorized agents shall have a right of access to and to inspect and copy any of the books of the firm.

- Further, as per Section 35 of the Act, where under a contract between the partners the firm is not dissolved by the death of a partner, the estate of a deceased partner is not liable for any act of the firm done after his death.

- Further under section 42, when one partner dies then Partnership can be dissolved.

- Further, after ascertaining the amount due to the deceased partner, the balance in his capital account should be transferred to an account opened in the name of his executors.

- Hence, the surviving partner has to take responsibility to sell the remains stock to wind up business