Partnership firm
Riddhi Shah
(Querist) 13 February 2014
This query is : Resolved
There were two partners but now one partner has expired so do we need any dissolution deed or it will automatically become proprietor? Also it was a chemist so what are the documents which needs to be submitted to bmc for cancellation of partnership and to activate the license for proprietor? please guide.
SHIRISH PAWAR, 7738990900
(Expert) 13 February 2014
For running proprietary firm you need to obtain separate license. The business will not become proprietary automatically.
ajay sethi
(Expert) 13 February 2014
visit ward office of BMC for change in license . In a landmark judgment, in Mohd Laiquiddin v Kamala Devi Misra (deceased) by LRs,(1) the Supreme Court has ruled that on the death of a partner of a firm comprised of only two partners, the firm is dissolved automatically; this is notwithstanding any clause to the contrary in the partnership deed. The court found that Section 4 of the 1932 Partnership Act defines a 'partnership' as a contract between more than one person (since it uses the term 'persons'). Therefore, if in a firm comprised of only two persons as partners one dies, the contract comes to an end. There cannot be any contract unilaterally without acceptance by the other partner.
ajay sethi
(Expert) 13 February 2014
The court relied on its earlier ruling (Parvathammal v CIT)(6) that in a firm consisting of two partners, upon the death of one of the partners, the firm automatically dissolved. It observed that:
"A partnership normally dissolves on the death of the partner unless there was an agreement in the original partnership deed. Even assuming that there was such an agreement in a partnership consisting of two partners on the death of one of them the partnership automatically comes to an end and there is no partnership which survives and into which a third party can be introduced. Partnership was not a matter of heritable status but purely one of contract."
Rajendra K Goyal
(Expert) 13 February 2014
After the death of partner the firm is dissolved.
The assets of the deceased partner has to be paid to the legal heirs of the deceased.
All new licenses have to be taken / changed for the new firm either proprietorship or partnership.
Vidhi Joshi
(Expert) 13 February 2014
agree with sethi ji...firm will get dissolved unless a provision is kept in partnership deed to bring any legal heir of any partner as a partner in case of any unforeseen event.
Advocate. Arunagiri
(Expert) 13 February 2014
In case of death of partner, the legal heir has the right to get refund of capital contribution + share in accumulated profits, if any. Legal Heirs will not become partners
