Signatories of balance sheet in partnership firm

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Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2018 Is it mandatory for retired partners to sign off the balance sheet?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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09 July 2018 The balance sheet as on the date of retirement should be signed by all partners
including the retired partner.

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2018 Sir,I need some section or case law to back your answer

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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25 July 2025 You're asking whether a **retired partner must sign the balance sheet** of a **partnership firm as on the date of retirement**, and you're seeking **legal backing (section or case law)** for that.

Here’s a structured and legally grounded answer:

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### 🔍 Legal Position

#### 📌 **Relevant Law: Indian Partnership Act, 1932**

* **Section 32**: *Retirement of a partner*
It deals with the procedure and effects of a partner retiring from a firm.

> A retired partner continues to be liable for acts of the firm done before his retirement unless there is a release by the other partners and third parties.

#### 📌 **Section 12(c) of the Indian Partnership Act, 1932**

* This section states that **decisions in matters relating to the conduct of the business** of the firm shall be decided by mutual consent of all partners.

**📍 Implication**: All partners, including those retiring during the financial year, are responsible for the business up to their date of retirement.

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### ✅ Practical and Legal Interpretation

* If a **balance sheet is prepared as on the date of retirement**, the **retired partner is legally responsible for the accounts up to that date**.
* Therefore, **he should sign the balance sheet**, as it reflects transactions he was jointly liable for.

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### 📚 Case Law Support

#### 1. **CIT v. A.W. Figgies & Co.** (1953) 24 ITR 405 (SC)

* The Supreme Court held that **a partnership is merely a collective name for partners**, and each partner is **jointly and severally liable** for actions until retirement.

#### 2. **K.D. Kamath & Co. v. CIT** \[(1971) 82 ITR 680 (SC)]

* Though primarily about tax deductibility, the case confirms that **a partner's liability continues until formal retirement and settlement** of obligations.

#### 3. **S.C. Cambatta & Co. Pvt. Ltd. v. CIT** \[(1961) 41 ITR 500 (Bom.)]

* Emphasizes that **retired partners remain liable** for acts and financials up to the date of their retirement unless discharged.

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### ✅ Conclusion

* Yes, the **retired partner must sign the balance sheet** *as on the date of retirement*, because:

* He is legally accountable for all transactions till that date.
* He must affirm the correctness of the accounts for the period during which he was a partner.
* This is supported by Sections 12 & 32 of the Indian Partnership Act and case law as above.

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If you need a sample declaration or draft for the retired partner's signature, I can help with that too.

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