The contract, whether oral or written, between your father and his partner which enables your father to receive a fixed remuneration and a share of profits is exclusive and separate. The licence to do business is not relevant here. Your father may very well proceed against his partner based on proper evidence.
Legality Of Partnership
My father was a partner in a partnership with his friend for last 40 years[ not registered ]in Andhra pradesh The firm is a dealer for sale of fertilizer, pesticides etc. His friend holds the valid license for sale of fertilisers issued by the State Govt. While my father contributed capital to run the business plus was eligible for fixed remuneration and share of profits as per partnership deed. My father has to get some money outstanding as per Capital a/c as per audited financials of books. His partner is not clearing the dues for past few years. We want to proceed legally. Query : Is this partnership illegal under court of law as my father does not have any license considering the provision of Essential Commodities act and Indian Contract Act. Does our claim for money due be dismissed considering facts mentioned above
Asked 7 months ago in Business Law
7 Answers
section 43 of Indian partnership act provides firm may be dissolved by any partner giving notice in writing to other partners of intention RTI dissolve the firm
2) firm would be dissolved from date mentioned in notice as date of dissolution
3)
As soon as firm is dissolved it ceases to transact normal business
4) the mode of settlement of accounts between partners after dissolution is determined by partnership agreement
5)in absence of clause in agreement section 48 lays down provisions for settlement of accounts
6) the assets of firm are used to pay off debts of firm to third parties
7) in paying each partner what is due to him on account of advances , capital and surplus divided among partners in profit sharing ratio
11)all accounts are closed . Necessary to open realisation account for realisation of assets of firm a d pay liabilities cash account is open to record all cash transactions
One of partners is holding a licence for sake of fertilisers
2)An act of one partner in the course of the business of the firm is, in fact, an act of all partners.
claim would not be dismissed
According to the Indian Partnership Act, 1932, a partnership can be formed by an oral or written agreement between two or more persons. The registration of a partnership firm is not mandatory, but it has certain advantages and disadvantages. A registered partnership firm has legal recognition and can sue or be sued in its own name. An unregistered partnership firm, on the other hand, has certain limitations and disabilities, such as not being able to enforce its rights or obligations against third parties or other partners in a court of law.
The legality of your father’s partnership firm may depend on the nature and terms of the agreement that he had with his friend. If there was a written partnership deed that clearly defined the roles, responsibilities, and profit-sharing ratio of each partner, then it may be considered as a valid agreement between them. However, if there was no written partnership deed or if the partnership deed was vague or ambiguous, then it may be difficult to prove the existence and validity of the partnership in a court of law.
The Essential Commodities Act, 1955, is an act that regulates the production, supply, and distribution of certain commodities that are essential for the public. The act empowers the central and state governments to issue licenses and permits for dealing with such commodities and to impose restrictions and penalties for violating the provisions of the act. The Indian Contract Act, 1872, is an act that governs the formation and enforcement of contracts in India. The act lays down the principles and rules for valid contracts, their performance, breach, and remedies.
Your father’s partnership firm may be illegal under the Essential Commodities Act if it was dealing with fertilizers without a valid license issued by the state government. This may attract criminal liability and penalties under the act. Your father may also be liable under the Indian Contract Act if he breached any contractual obligations that he had with his customers or suppliers.
Your claim for money due from your father’s partner may not be dismissed if you can prove that your father was a partner in the firm and that he had contributed capital and was entitled to a share of profits as per the partnership deed. You may also have to prove that your father’s partner owes him money as per the audited financial statements of the firm. You may have to file a civil suit for recovery of money against your father’s partner in the court of competent jurisdiction.
An unregistered partnership deed is still a valid agreement between the partners but has certain limitations. It cannot be used as evidence to settle disputes between partners or third parties in a court of law. Partners cannot enforce rights or obligations under the partnership deed against third parties.
As a consequence of the non-registration of the firm, a partnership firm cannot approach the legal authorities for help in case of any dispute or breach of contract. To do so, the firm or the concerned partner has to have its name registered with the Registrar of Firms.
a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract hit by the provision of section 69 or the partnership act . However a suit by a partner to recover money from a third person is not barred by section 69 of the Act, if the transaction, involved in the suit, is in his own name only and the defendant had no notice of the existence of the partnership
In India, partnerships can be registered or unregistered, and they are governed by the Indian Partnership Act, 1932. While it's ideal for partnerships to be registered, unregistered partnerships are not necessarily illegal.
The fact that your father does not have a license for dealing in fertilizers may be a separate issue related to compliance with the Essential Commodities Act and other relevant regulations. This may need to be addressed separately from the partnership issue.
Regarding the money your father is owed based on the partnership agreement, you may still have a valid claim for it. The partnership deed should outline the terms of capital contribution, remuneration, and profit-sharing. If your father's partner is not clearing the dues as per the agreement, your father may have legal recourse to recover the outstanding amount.
Greetings of the Day,
I have read your issue but find that there are some facts which need to be clarified. You can approach on either nine two one two one two four five eight five or seven zero four two eight three three six eight six for personal approach.
We Hope that a personal consultation would be fruitful to the issue and it would be better for you to talk to someone directly.
Best Regards
SPS Law Chambers
New Delhi.
Dear sir/Madam,
The partnership is not illegal and you are suggested to serve a legal notice to the other partner demanding the dues. If not paid by him, gather all the evidence you have and then file the court case for recovery.
