• Partnership dispute

A and B originally constituted partnership firmon 8/2/13 and obtained property through lease in name of firm from society.That  on 14 MAY 2013 partner B resigned and his resignation was accepted by partner A.That due to some reason partner B  had not reconstituted FRESH DEED  nor dissolved  FIRM as mentioned in deed remaining partner will carry BUSINESS  but carried business with sleeping partner .That 0n 2/2/16 constituted fresh deed by inducting sleeping partner as active working partner in the firm and sent it by registerd  post to registrar.THAT  today when he had gone to deputy registrar  office found that partner B who earlier had resigned constituted forged deed dated14/5/2013 by inducting his father as partner and by making  forged signatures of PARTNER A and had given official notification of induction of his father as partner..
That today society secretary also sent notice to firm that partner B at the time of execution of deed was government servant and under section 65 contract act is fraud so demanding full value of property..today when talked to partner B and his father they told they are interested in dissolution of firm on fraud ground or if u will prove partner B  father entry is fraud  then partnership firm existed with sleeping partner which can not exist and liable to be dissolved and they will recieve share in the property.now what to do to solve issue as fast as possible but in no case i want dissolution of firm.
Asked 10 months ago in Business Law from Aligarh, Uttar Pradesh
1)You have to contest suit filed by society 

2) deny that contract stood frustrated and that lease deed was fraudulently obtained 

3) that B had resigned as partner and his father was admitted as partner in May 2013 prior to execution of lease deed 

4)if B had forged A signature then A should file criminal complaint of forgery , fabrication of documents against B 

5) it is necessary to peruse various documents cited by you to advice further 

6) contact a local lawyer 
Ajay Sethi
Advocate, Mumbai
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a sleeping partner does not take active interest in management of partnership business . he shares profits and losses and is responsible for acts of the firm to third parties 

you can take the stand that business was carried on with the sleeping partner 
Ajay Sethi
Advocate, Mumbai
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1220 Consultations
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You should firstly file a suit against the erstwhile partner to seek a declaration of illegality of the partnership deed which had been originally executed. It is basic principle that one who causes an instrument to be executed on the basis of fraud or misrepresentation, cannot claim rights thereunder. However, the instrument i.e partnership deed has to be declared as void by the court. Also file a criminal case for cheating and breach trust against him.
Ashish Davessar
Advocate, Jaipur
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Section 65 of the contract act says that "Obligation of person who has received advantage under void agreement, or contract that becomes void.—When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it. —When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it."
By the above it cannot be said that the lease of property from the society has been affected by the developments in the partnership firm. The society has leased out the property to firm and not to the partnership deed. If the contract i void between the partners, the partnership will be dissolved and new partnership can be formed in the name of the firm so there is nothing that is going to bother the society in this regard. 
 
However, for the fraud played by partner B against the firm or A  has to be dealt with in accordance with the law and rules meant for it on that aspect.  That is a different subject.  Partner A an even book partner B for his fraudulent acts including forging his signature, fabricating document for wrongful gains, cheating,and other issues involved in it. Besides, upon the resignation or retirement of a partner the partnership shall stand dissolved, therefore it is the fault of A to have continued the firm under partnership even after a partner has retired, so first introspect your own position before initiating any further action in this regard. 
T Kalaiselvan
Advocate, Vellore
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secretary of society has filed damage suit under section 65 to restore property now what to do?
 The society has no locus standi to file such a suit against the firm, because it is not maintainable especially under section 65 of the contract act,that too there is no damage to the society  over the internal issues of the partnership firm which has taken the society's property on lease. 
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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is it jusifiable for me to say after resignation of partner B firm was carrying business with the sleeping partner?
If the partnership deed is clear and specifically mention that upon the resignation or retirement of an active partner, the partnership firm shall stand dissolved, the the continuance of the partnership firm especially with the sleeping partner may certainly not justify the continuation of the firm even after the resignation of partner B.
T Kalaiselvan
Advocate, Vellore
14090 Answers
127 Consultations
5.0 on 5.0

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