Partnership firm

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Mohd Sarfaraz Latibani (Querist)
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20 March 2012 I am a partner in a partnership firm having 51% share. I want to resign from the partnership firm . I want to know can we add another partner in my place will it effect the partnership firm and do we need to change the PAN Card or any other document.

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Ajay Mishra

Ajay Mishra (Expert)
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20 March 2012 Hi

If the PAN is on Firm name then, there is no need to change PAN, unless the name of the firm is change.

INTRODUCTION AND RETIREMENT OF A PARTNER
Under the Partnership Act no person can be admitted into Partnership without the consent of the other partner or partners unless there is any contrary to the contract (section 31).
Any partner may, with the consent of all the other partners or in terms of the deed of Partnership where the Partnership is at will, by giving notice in writing to all other partners, to that effect, dissolve the Partnership or retire from Partnership. A retiring partner, however, continues to be liable to third parties even if the liability is taken over by the remaining partners (S 32). Therefore in a deed of retirement it is necessary to provide that in the event of the retiring partner being held liable by a third party, the remaining partners shall indemnify him to that extent, when the liabilities are taken over by the remaining partners. Insolvency of a partner also causes compulsory retirement of an insolvent partner (S. 35). It is, therefore, generally provided in a deed of Partnership when there are more than two partners that the insolvency of any partner will not dissolve the Partnership. If a partner retires, unless there is contract to the contrary, the retiring partner cannot use the firm name, represent himself as carrying on the business of the firm or solicit the customers of the Firm (S. 36). Therefore, in a deed of retirement it is generally not necessary to make explicit that the retiring partner shall not do any of these things. But, if he is to be restrained from carrying on similar business for a specified period or in a specified area, such condition can be provided in the deed of retirement and it is legal (S 36 (2).

DISSOLUTION OF PARTNERSHIP FIRM
The Act also provides that a Partnership firm may be dissolved under the following circumstances namely:
(a) as a result of any agreement between all the partners; or
(b) by adjudication of all the partners or all partners but one as insolvent, or;
(c) by the happening of an event which makes it unlawful for the business of the firm to be carried on in Partnership or;
(d) subject to agreement between the parties, on the happening of any of the following events such as (i) efflux of time, (ii) completion of the adventure, (iii) death of a partner, and (iv) insolvency of a partner.
In these last four cases the Partnership agreement may provide events. Even if the deed provides that the Partnership will not be dissolved on the death or insolvency of a partner, it does not mean that on the death or insolvency of a partner he ceases to have interest in the Partnership property. In such cases his interest in the Partnership property will survive to his heirs in case of his death and to his assignees in case of insolvency. In the absence of a term in the deed of Partnership to that effect, it cannot be that, the Partnership shall continue, and notwithstanding the death of a partner it will operate to extinguish his proprietary rights in the assets of the Firm. A Partnership can also be dissolved by the Court under the circumstances mentioned in Section 44 of the Act. Where the Partnership is ‘at will’ the Partnership can be dissolved by any partner or partners giving notice his/their intention to dissolve the firm.
A firm can be dissolved with the consent of all the partner or according to contract between the partners {AIR 1971 SC 1653}.
Suit filed after three years of executions of dissolution deed for rendition of account is barred by limitation.{Madam Lal Vs Shiv Narain 1986 (CCC) 464}.

Regards

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