Hi I am partner with another person in a partnership firm. place of business is in Mumabi an we have partnership deed signed but not registered (Maharashtra need compulsory registration of partnership deed). There is dispute and the other partner is trying to control whole business and also took control of all mails (as is admin) and all online sales channels. Therefore I am in dark about the business being generated and the partner immediately transfers the money from bank to his personal account I want to be out of it and ensure that I donot get hassled afterwards. May I 1,Resign 2. partnership is at will so can I just issue a notice for dissolution 3. Do I need to publish the same in papers I need to understand dissolution/resignation process. There is no third party liabilities in the firm. I want to be sure that in future I am not being hassled by any 3rd party for wrong deed of the partner Please help
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1) 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) if no date mentioned in notice from date of receipt of notice
4) you can publish it in local newspapers
5) inform the firm suppliers , customers and clients about dissolution of firm
Thanks for quick revert What is the process from date of dissolution and how the firm ultimately get dissolved. Does it also require appointment of CA/auditor for accounts preparation and closure. Can the dissolution notice be used to freeze bank accounts. What if partner still quarrel and remedy Can the debtors be asked to pay to respective partners as per their agreed .written share
As soon as firm is dissolved it ceases to transact normal business
2) the mode of settlement of accounts between partners after dissolution is determined by partnership agreement
3) in absence of clause in agreement section 48 lays down provisions for settlement of accounts
4) the assets of firm are used to pay off debts of firm to third parties
5) in paying each partner what is due to him on account of advances , capital and surplus divided among partners in profit sharing ratio
6) all accounts are closed . Necessary to open realisation account for realisation of assets of firm a d pay liabilities
7) cash account is open to record all cash transactions
Both registered and unregistered are legal though of course registration and non registration have different legal consequences.
The provisions for dissolution of partnership firm under section 43 of the partnership act, 1932 is given below for your reference:
Section43
DISSOLUTION BY NOTICE OF PARTNERSHIP AT WILL.
(1) Where the partnership is at will, the firm may be dissolved by any partner giving
notice in writing to all the other partners of his intention to dissolve the firm.
(2) The firm is dissolved as from the date mentioned in the notice as the date of
dissolution or, if no date is so mentioned, as from the date of the communication of
the notice.
If you desire it to be given wide publicity then you may publish same through some leading newspapers in the local and in the places where your business activities is popular.
The sub firms, agencies and other vital customers may be notified about this through official communications.
Notwithstanding the dissolution of a firm, the partners continue to be liable as
such to third parties for any act done by any of them which would have been an act
of the firm, if done before the dissolution, until public notice is given of the
dissolution :
1)Provided that the estate of a partner who dies, or who is adjudicated an insolvent, or
of a partner who, not having been known to the person dealing with the firm to be a
partner, retires from the firm, is not liable under this section for acts done after the
date on which he ceases to be a partner.
(2) Notices under sub-section (1) may be given by any partner.
On the dissolution of a firm every partner or his representative is entitled, as against
all the other partners or their representatives, to have the property of the firm
applied in payment of the debts and liabilities of the firm, and to have the surplus
distributed among the partners or which representatives according to their rights.
After the dissolution of a firm the authority of each partner to bind the firm, and the
other mutual rights and obligations of the partners, continue notwithstanding the
dissolution, so far as may be necessary to wind up the affairs of the firm and to
complete transactions begun but unfinished at the time of the dissolution, but not
otherwise :
Provided that the firm is in no case bound by the acts of a partner who had been
adjudicated insolvent, but this proviso does not affect the liability of any person who
has after the adjudication represented himself or knowingly permitted himself to be
represented as a partner of the insolvent.
In settling the accounts of a firm after dissolution, the following rules shall, subject
to agreement by the partners, be observed :
(a) Losses, including deficiencies of capital, shall be paid first out of profits, next out
of capital, and, lastly, if necessary, by the partners individually in the proportions
in which they were entitled to share profits;
(b) the assets of the firm, including any sums contributed by the partners to make
up deficiencies of capital, shall be applied in the following manner and order :
(i) in paying the debts of the firm to third parties;
(ii) in paying to each partner rateably what is due to him from the firm for advances
as distinguished from capital;
(iii) in paying to each partner rateably what is due to him on account of capital; and
(iv) the residue, if any, shall be divided among the partners in the proportions in
which they were entitled to share profits.
1. Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.
2. You can also file a suit for dissolution on the ground that your partner is guilty of conduct which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business, or willfully or persistently commits breach of agreements relating to the management of the affairs of the firm or the conduct of its business, or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him.
3. The partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolution.
4. On the dissolution of a firm every partner or his representative is entitled, as against all the other partners or their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights.
