Partnership- Property on death of one of two partners?

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This discussion explores the ownership of landed property held by a two-person partnership when one partner passes away. The key questions revolve around whether the property becomes jointly owned by the deceased partner's family and the surviving partner, or if it transfers solely to the surviving partner. Views suggest the property may become joint ownership, not registered in the firm's name, and the registered deed is crucial. If the surviving partner sells the property and the deceased's heirs consent to the full sale proceeds going to them, this could be considered a gift to the heirs.

R Agarwal

R Agarwal (Querist)

06 July 2020 Respected Members,

A partnership firm has two partners which owns some landed property. One of the two partners passed away.

Question :
1. Who becomes the owner of the landed property?

2. Does it become joint property of 1st deceased partner's family & 2nd partner and accordingly will these names be mutated in land records?

3. Does it become sole properietorship of 2nd partner i.e he becomes the sole owner of the property?

Contradictory views :

1. Local experts have given contradictory views.

2. I read the view of the Supreme court in a judgement of 2016? that the partnership automatically dissolves even if there is clause to the contrary (In this partnership also there was a clause that the partnership shall not dissolve on death of a partner).

I would be very thankful for your valued reply.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 July 2020 It become joint property of 1st deceased partner's family & 2nd partner.
Property will not be registered in the name of Partnership firm.
Check whose name is there in registered deed.

R Agarwal

R Agarwal (Querist)

07 July 2020 Thanks a lot Mr Seetharaman for your valued inputs.

Sir, further to this, if the given property is sold now and if the LH of the 1st partner give their consent in the sale deed for partner no 2 to receive the full amount, will it amount to gift in the hands of the LH?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

07 July 2020 Yes, it amount to gift.

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