Reconstitution of Partnership Firm on Death of a Partner

Hello all.
As per Section 42(c) of Indian Partnership Act, 1932: Subject to contact between the partners, a firm is dissolved by the death of a partner.

Further, as per section 39: The dissolution of a partnership between all the partners of a firm is called the "dissolution of the firm".

So, in case when one of the partners of a partnership firm expires, is it sufficient for a firm to legally carry on its business by making a new partnership deed with admission of a new partner; while continuing the old firm (I.e. Firm will survive and it's registration details like PAN, GST, Trade License shall remain same).

Essentially, the question here I think is, that, is there any difference between "Reconstitution of Partnership" and "Reconstitution of Partnership Firm"?

Great question, Abhishek! Let me clarify the concepts for you:

1. Death of a Partner — Effect on Partnership Firm

Section 42(c) of the Indian Partnership Act, 1932 states:
Subject to contract between partners, the death of a partner results in the dissolution of the partnership.
However, Section 39 says that dissolution of the firm occurs only when all partners dissolve the partnership.
So, when a partner dies, the existing partnership is dissolved, but this does not necessarily mean the firm ceases to exist as a business entity.

2. Reconstitution of Partnership

When a partner dies, the partnership is dissolved by operation of law, but the business can continue by reconstituting the partnership.
Reconstitution means the formation of a new partnership agreement among the surviving partners and/or new partners.
This new partnership is treated as a continuation of the old business, but technically it is a new partnership.

3. Reconstitution of Partnership Firm

The term "Reconstitution of Partnership Firm" is often used synonymously with reconstitution of partnership, but legally:
- The old partnership firm dissolves on the death of a partner.
- The new firm is formed after reconstitution.
The new firm may retain the same business name, PAN, GST registration, trade license, etc., if applicable and allowed by authorities, but technically it is a new entity.

4. Legal and Practical Implications

Is it sufficient to just make a new partnership deed and continue the old firm?
- No, you need to execute a new partnership deed, reflecting the changed partners.
- You must intimate authorities (PAN, GST, Trade License) about the change in partners as per applicable laws. Some registrations may continue with the same PAN or GSTIN if the firm’s constitution remains substantially the same.
Re-registration may be required depending on local laws and the authority’s guidelines.

5. Summary

Term	Meaning
Reconstitution of Partnership	Formation of a new partnership agreement after changes like death, retirement, admission of partners.
Reconstitution of Partnership Firm	The formation of a new firm after dissolution of the old firm on death or other events, continuing the business.

Conclusion

Death of partner = dissolution of old partnership.
New partnership formed by reconstitution with new deed.
Firm name, PAN, GST etc., may continue but requires due intimation and possibly fresh registrations.
Legally, reconstitution means creating a new partnership and not merely continuing the old one without changes.