Profit of share in one of the deceased partner
Shashank Mehta
(Querist) 04 February 2014
This query is : Resolved
Dear Sir,
I am one of the legal heir in a partnership firm. The partnership firm consists of 4 partners i.e. A, B, C & D. Partner B expired in 1993. I am daughter of partner B.
Now partner B have in all 3 legal heirs, out of which 1 of the legal heir named X is involved in the business by mutual understanding between the other 3 partners. Till now the partnership deed of the firm is in the existing circumstances without any addition/omission.
The share of profit of partner B in the firm is wholly taken by X and also X became an Associate Member in firm without informing other legal heirs of partner B.
As one of the legal heir can I ask for the share of profit of partner B from the date partner B expired? Should the share of profit of partner B be divided among all the legal heirs of partner B?
If yes, from where can I get the records of Income Tax returns filed for past 20 years so I can fight for my share of profit accordingly?
Does partnership firm covered under RTI act? Can I ask Income Tax department to provide me the Income Tax return submitted by the firm as I am one of the legal heir?
I would be very thankful for all your advices.
Devajyoti Barman
(Expert) 04 February 2014
The deed of partnership deed needs to be seen first to make any consecutive reply.
From your query it appears that on death of B his legal heirs are not made partner of the firm though they are admitted as beneficiary of profit.
If that is so then all heirs of B are equally entitled to share of profit on account of B though X may get little more due to his activities in the firm.
You being the daughter of B can ask for your share of profit. If the firm refuses to part with the same, you can file suit for dissolution of partnership and rendition of accounts including your claim for due share.
Rajendra K Goyal
(Expert) 05 February 2014
Partnership comes to an end after the death of a partner. The continuation of partnership with out new deed would amount to unregistered partnership doing business.
You can claim share upto 1993 as legal heir of the deceased partner and that too is time barred.
Shashank Mehta
(Querist) 05 February 2014
I am really sorry for posting this query twice, actually first I thought to post it under Property Law but then I thought it would come under Civil Law so posted again.
Devajyoti Barman and Rajendra K Goyal thank you very much for replying.
Devajyoti Sir, partnership deed was not changed after the death of partner B was informed to us by Society/Association of the shop. Can we legally ask them to give us a latest copy of the partnership deed under RTI or some other way?
Can we ask the to share the Balance Sheet or IT Return of the firm/shop to
Registration of Firms?
Once I have the partnership deed with me I will share.
Thank you again.
Rajendra K Goyal
(Expert) 05 February 2014
RTI is not applicable in case of private concern. You can try from Registrar Office where the partnership was registered.
As a partner one can claim access to the accounts of the firm.
ajay sethi
(Expert) 05 February 2014
agree with Mr barman / Mr Goyal
R.V.RAO
(Expert) 05 February 2014
agree with sri goyalji.
partnership is dissolved on death of a partner and needs to be constituted,where in, you being a legal heir of Mr.B, needs to sign the new deed of partnership before filing the same with Registrar of firms.
you can make a written complaint to the registrar of firms (R.O.F), with a copy of original partnership deed (if you have a copy, or else quote the firm's regn. no and a copy of death cert. of Mr.B)
you may, if possible personally approach the R.O.F, to seek justice.
if this route fails ,lawyer notice for dissolving the firm is your last resort.
ask also if you have some elderly family relatives, to intervene.
Shashank Mehta
(Querist) 05 February 2014
Dear Sir's,
Thank you.
I am writing the below paragraph just by reading some blogs and The Indian Partnership Act 1932.
I came across a blog wherein some advocate has said that "When there are two partners, and one of them dies, the firm is automatically dissolved even if there is clause in the partnership deed that the firm will continue in existence. But if there been more than two partners and the firm was not at will, the said firm can continue even after the death of a partner"
I don't know the above is true up to what extent. It is nowhere mentioned in The Indian Partnership Act 1932.
Also I came to know from R.O.F office Bandra, Mumbai; that they have records of registration only after the year 1985, but this firm was formed in 60's. So from where can I get the copy of partnership deed?
R.V.RAO
(Expert) 06 February 2014
old auditors or old lawyers of the firm or ancestors of any present partners or their fore fathers etc. or your own father's old records etc... may have firm deed copy.
usually firm is at will or not can be seen only from the deed.
as you say partnership act is silent, why bother on will or not.
but in good olden days every thing was put explicitly and in sound footing ,i assume.
T. Kalaiselvan, Advocate
(Expert) 06 February 2014
You may follow the advise the expert Mr. Rao on the subject for your last query.
Shashank Mehta
(Querist) 07 February 2014
Thank you Mr. Rao & Mr. Kalaiselvan.
This partnership firm is a shop in Mumbai. There are many shop over there and it has society/association for all the shop.
The Society/Association has the copy of the partnership deed in their records, but they wont give us as we are unknown person to them.
Is there anyway in which as a legal heir of the partnership firm I can demand the partnership deed from Society/Association?
Rajendra K Goyal
(Expert) 07 February 2014
You can ask for a copy of partnership deed from Registrar of firms under RTI.
Shashank Mehta
(Querist) 07 February 2014
But sir the firm was formed in early 60's
and Registrar of Firms has the record of registration post 1985..
Can't we ask the association or society under which the shop comes to share the partnership deed??
R.V.RAO
(Expert) 07 February 2014
yes.the society /association can help you. as part owner of shop /partner,you are entitled to the deed f partnership copy being an old document.
you may approach them through some old relatives/other elderly shop owners,after convincing them you r partner in a firm
Shashank Mehta
(Querist) 07 February 2014
I agree to what you say, but convincing them verbally was not success as them wont believe on us.
Is there any legal way in which I can demand the deed from society without taking help from relatives?
What is the way to give a written proof that I am legal heir?
R.V.RAO
(Expert) 07 February 2014
you said in beginning ,you are legal heir of a deceased partner.if you convince us with a proof,am sure u can convince others also.
even after filing a legal case for your share of partnership assets and profits,the court will seek unflinching and irrefutable evidence about your legal hire claim.
the firm's lawyers and auditors you may approach, as u r diffident of seeking elderly relatives help and intervention.
definitely, your own advocate can help in the matter.approach some exp.lawyer if not done already.
Shashank Mehta
(Querist) 08 February 2014
We have not yet approached any lawyer, but have taken an advice for one. He said even he cannot send any notice to association/society. He said he need to bring an order from court.
Should we go ahead with his advice?
Guest
(Expert) 08 February 2014
Mr. Rao,
At least the querist has not convinced me to be the daughter of the deceased partner, as girls are not named as "Shashank".
Shashank Mehta
(Querist) 08 February 2014
Sir I am writing on behalf of my mom.
Guest
(Expert) 08 February 2014
Mr. Shashank,
If you had been writing on behalf of my mom, then why did not you mention, you were the daughter of the deceased. You could well have narrated the problem on behalf your mom?
You have also not stated, what provision has been made in the partnership deed in case of death of a partner.
So far as you have wasted the time of the experts, who have taken your statement to be correct.
Better check the provisions of the partnership deed and meet some expert personally to examine the deed to get appropriate advice, instead of falsely representing the case as your own or with your own interpretations. You or your mom should not expect to win on false or partial presentation of facts.
Shashank Mehta
(Querist) 08 February 2014
Sorry sir if I has wasted your time. does it really make difference if somebody is writing the query using somebody else UserId. The query remains the same, I am just writing the query for my mom...
Guest
(Expert) 08 February 2014
So, you do not see any difference in duping the experts on your impersonation?
What was your compulsion not the represent the case as of your mother, instead of stating yourself as the daughter of the deceased?
Just try to impersonate in some case in the court of law and you would see the results.
Shashank Mehta
(Querist) 08 February 2014
There was no compulsion, the only reason is it was very difficult for me to explain this whole matter and in that if I would have added that I am writing this for my mom might would have created some confusion and that's the only reason.
I just needed some advice so I have put my question here.
I really appreciate and am very grateful to all those who have replied to my query.
prabhakar singh
(Expert) 08 February 2014
I agree with Dhingra ji that it is not only bad and teasing to misguide us but also detrimental to the very cause of querist;yet often they argue in justification though they do not have any!?
Any way coming to the query i agree with Mr.Goyal that section 42(c) of the Indian Partnership Act treats a firm dissolved on the death of a partner.
Heirs of deceased may or may not join the firm subject to terms of the partnership deed which is not in your custody.Even in it's absence one thing is sure that to continue business further the firm is required to be reconstituted.
RTI Act's provisions are not applicable to any partnership firm is another certain thing.
Heirs of a deceased partner have right to claim share of his profit ,if any ,from the rest partners by claiming accounting and denial emerges as cause of action for a civil suit.
But such a suit can be brought forward with in three years from the date of death of the deceased following the demand and refusal.
In instant query death is told to have taken place in year 1993 so cause of action has gone barred by all imaginations.
So unless old partners volunteer for accounting,the right can not be enforced by law courts,hence it is redundant to consider whether you can gather information from tax authorities or not.
One thing is striking that one of the heir
,say X,reportedly joined the firm but whether he was paid with share of all heirs or not is missing part in the query.In case he was paid for all heirs some intelligent
craft advocacy can be done for and on behalf of other heirs.
Better visit a local business law practitioner in your city would be final advise to you.
prabhakar singh
(Expert) 08 February 2014
I agree with Dhingra ji that it is not only bad and teasing to misguide us but also detrimental to the very cause of querist;yet often they argue in justification though they do not have any!?
Any way coming to the query i agree with Mr.Goyal that section 42(c) of the Indian Partnership Act treats a firm dissolved on the death of a partner.
Heirs of deceased may or may not join the firm subject to terms of the partnership deed which is not in your custody.Even in it's absence one thing is sure that to continue business further the firm is required to be reconstituted.
RTI Act's provisions are not applicable to any partnership firm is another certain thing.
Heirs of a deceased partner have right to claim share of his profit ,if any ,from the rest partners by claiming accounting and denial emerges as cause of action for a civil suit.
But such a suit can be brought forward with in three years from the date of death of the deceased following the demand and refusal.
In instant query death is told to have taken place in year 1993 so cause of action has gone barred by all imaginations.
So unless old partners volunteer for accounting,the right can not be enforced by law courts,hence it is redundant to consider whether you can gather information from tax authorities or not.
One thing is striking that one of the heir
,say X,reportedly joined the firm but whether he was paid with share of all heirs or not is missing part in the query.In case he was paid for all heirs some intelligent
craft advocacy can be done for and on behalf of other heirs.
Better visit a local business law practitioner in your city would be final advise to you.
Shashank Mehta
(Querist) 08 February 2014
Thanks a lot Prabhakar sir. I really appreciate your reply.
Regarding X he is paid equally as other partners as they have mutual understanding. But will have to check what do they declare in the books of account for the deceased partner.
T. Kalaiselvan, Advocate
(Expert) 10 February 2014
Mr. Prabakar singh has explained and given opinion in depth to the query as well as very decently advised the author to maintain sincerity while seeking clarifications here. To add, as suggested, the author may confirm that if Mr. X had received the profits since the date of joining the company that was due to the deceased partner on behalf of all the heirs, if so, on the basis of the recent knowledge about the said information, the limitation period can be brought in for seeking relief in a suit for recovery of legal heirs due in the profits due to the deceased partner from Mr. X
