Claiming goodwill and share after 40 years

DRPHIRAKE (Querist) 14 January 2013 This query is : Resolved
Mr. A, an architect was carrying on his profession in the name of his proprietary concern M/s A & Co. up to 1963. Before his death in 1965, he had admitted his Son-in-Law as a partner in his firm, keeping intact the old name of the firm as M/s A & Co.. After the death of the Father-in-Law in 1965, the Son-in-Law became the sole proprietor of the firm and he also continued the original name of the firm as M/s A & Co. Now, the Son-in-Law has become very old, and has taken outside architect as a working partner keeping intact the old name of the firm as M/s A & Co.
Now, after about 40 years the heirs of Mr. A (the original founder) who are not qualified architects are claiming goodwill or share in the profits of the firm from the Son-in-Law. My queries are 1) Can the heirs of the original founder whose name still continues to the firm, can claim goodwill or share in the profits of the firm, even though more than 40 years have been elapsed from the death of their father? 2) As no heir is a qualified architect, is the claim of heirs is legally valid? 3) Can the heirs claim any money from the newly admitted outside working partner, when he will become the sole proprietor after the death of the Son-in-Law? 4) If the present partners change the name of the Firm, what will be the legal position? Please advice.

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Devajyoti Barman (Expert) 14 January 2013
It all depends upon the contents of the partnership deed.
In absence of a contract to the contrary the title of partnership firm would devolve upon the heirs of the partners including share in partnership property and the goodwill.
The existing partners can not take decisions without the consent of the legal heirs of the deceased partner/owner.
The legal heirs can now file a suit for dissolution of partnership so they can get back their share in profit, partnership property and the goodwill.

Yudhish Padman S (Expert) 14 January 2013
Dear DRPHIRAKE,

1) Can the heirs of the original founder whose name still continues to the firm, can claim goodwill or share in the profits of the firm, even though more than 40 years have been elapsed from the death of their father?

Yes. They can claim with mesne profits as far as the father's share is concerned. But if the father had sold his shares to this son-in-law absolutely, then the heirs have no claim because the Son-in-Law had become the absolute owner.

2) As no heir is a qualified architect, is the claim of heirs is legally valid?

Yes. The claim is legally valid.

3) Can the heirs claim any money from the newly admitted outside working partner, when he will become the sole proprietor after the death of the Son-in-Law?

The question is wrong. If the son-in-law is the sole proprietor as of now and he sells it to a new partner, then no claim can be made. But in anyother case, the new partner if he wants to become the sole proprietor, needs to pay the legal heirs and buy their shares.

4) If the present partners change the name of the Firm, what will be the legal position?

The legal position will still be the same.

Regards,
S. Yudhish Padman,
Advocate, Madras High Court.
[+91 9566217446]

P.S. You may also take into consideration Mr. Devajyoti Barman's advise on 'the contents of the partition deed'.