Partnershipis a relation between persons who have agreed to share the profits of the
business carried on by all or any one of them acting for all. The persons are
called Partners. The name of the
business concern is known to be a ‘Partnership firm’. The documents detailing the term of the
agreement, powers of the Partners and objectives are enumerated in detail in a
document known as ‘Partnership deed’.
Partnership
act governs the conduct of the Partnership firm. The minimum number of partners
in a partnership firm is stipulated as ‘two’ and the maximum number is ‘10’ in
case of firms doing Banking business while in case of firms doing other forms
of business it is stipulated as ‘20’.
Further, a
‘Minor’ can also be admitted in a partnership firm, but only to the benefit of
the partnership. The Partnership is to
be registered with the Registrar of firms and on registration, the registration
certificate so issued to be held as a permanent document.
Partnership
is not a legal entity. The name of the
Partnership firm is only a collective expression to represent all
partners. Partnership firm does not have
a separate identity different from partners. The partnership firm in its
capacity cannot sell or purchase property. A Partner has no implied authority
to sell or buy any immovable property on behalf of the partnership. The legal entity is the partner himself. All
partners in their individual capacity should also join as parties to the
agreement to sell, conveyance deed and execute it in their individual
capacity.
At certain
times, a single partner represents the partnership firm, which is not a correct
practice. In such cases, the said partner should have power of attorney or
authority of other partners to execute the documents. Even if a partnership is
formed between an individual and a partnership firm the deed of the partnership
should be signed by all the partners of the firm.
When an
immovable property is transferred to a Partnership firm, it will vest in all
the partners of the firm and not in the name of the Partnership firm, since the
firm has no separate legal existence or entity. Transfer of property by or in
favour of a firm without the names of all the partners is ineffective.
However,
the distribution of the assets of the firm on dissolution, where a partnershipproperty is divided or distributed among partners or taken over by one or more
partners from others, does not amount to transfer of property and needs no
registration. Such a deed attracts stamp duty under a separate category
Dissolution deed and not as a conveyance deed.
If the
property purchased was in the name of Partner of the Partnership firm and on
his death, his share, right, interest in the property would vest in his heir or
legal representatives. In case of
transfer of such
Property, the heirs / legal representatives of the
deceased partner should also join in the execution of the document.
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