V.RAJESHWAR (Advocate) 08 February 2010

whether Firm can claim good will of proprietory concern

dear frineds,

'ABC' a partnership firm has submitted the bid for certain contract. As per bid qualifying requirement, the bidder should have

i) average annual turnover of the bidder should not be less than 3 cr in the preceding three years

ii) the bidder must have experience of having successfully completed works of value not less than 3cr

Issue: The bid was submitted by partnership firm 'ABC' but on perusing the three balance sheets, it is understood that they belong to proprietary concern, which is also named as 'ABC'. The name of the proprietor shown in the balance sheets do not reflect in the partnership deed of ‘ABC’.

If we assume that partnership firm has purchased the proprietory concern ‘ABC’ and registered the firm name as ‘ABC’ so as to meet the qualifying requirement.

In such an event, whether we can consider the financial credentials and work experience of such proprietary concern for evaluating the credentials of the ‘ABC’ partnership firm more so when such proprietor is not a partner in the firm. please answer.

rajeshwar

Reply Follow

4 Replies

Daksh (Student) 08 February 2010

Dear Rajeshwar,

Every bid has two limbs Financial and technical. In the instant case it seems that bidder seems to qualify the financial part and on the technical the goodwill issue is to be seen. The same can be sorted out by getting the written clarification from the bidder.

Best regards

Daksh

V.RAJESHWAR (Advocate) 08 February 2010

Dear daksh,

for financial part also, how can we consider the trunover /balance sheets of proprietroy concern, when such proprietor is not even a partner in the partnership firm, which has submitted the bid. In my view, Proprietary concern unlike a company is not a legal entity, the revenues and work experience are merely personal in nature, which are not transferable.

rajeshwar

Suresh CSLLM (Service) 12 February 2010

There is no any legal concept or provisions for Propritorship. However as per practise, propritorship is merely a business name carried by Individual / propritor. All the transaction of propritorship havet to do alongwith the name of propritor, both are goes together always.

Suresh

Sivadas Chettur (Chartered accountant) 14 February 2010

Theturnover and the experience etc clearly belongs to the Individual. The firm can never claim it as its own even on purchase of that proprietory concern. If the partners of the firm can establish that there was a firm in existence and the nomenclature of propreitory concern was factually incorrect then perhaps you may have a case. But since in your case the partners never had any relation as partners with the individual who achieved the turnover, I feel that you have no remedy in the eyes of law.

siva208@yahoo.com