Hanspal Singh (Chartered Accountant) (58 Points)
25 March 2013A Patnership Deed was entered between Karta of "HUF" and 2 Individuals "A" & "B".(3 partners)
Later on Individual "B" dies leaving only the HUF and Individual "A" as the remaining 2 partners
Is this partnership valid in law .
Also if Karta of "HUF" is "A" only, will such partnership be valid in law? (i.e. Karta and the indivuals as partners are "A")
Please reply!!
CA CMA CS Ram Pavan Kumar Melam
(CA)
(6980 Points)
Replied 21 May 2013
As per Section 42(c) of the Indian Partnership Act, 1932......a firm is dissolved by the death of a partner, unless otherwise mentioned in the partnership deed. If a partnership deed binds the legal representatives then the partnership shall be continued.
It is essential in order to constitute a partnership that there should be a plurality of persons. Just as on man can contract with himself, similarly no man can become a partner with himself.
The Supreme Court of India, in case of M/s Rasiklal & Co Vs Commissioner of held that "…………. an HUF directly or indirectly cannot become a partner of a firm because the firm is an association of individuals." "…….in law, an HUF can never be a partner of partnership firm."
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