| COURT: | Supreme Court |
| CORAM: | Krishna Murari J, N. V. Ramana J, Sanjiv Khanna J |
| SECTION(S): | Section 37 Partnership Act |
| GENRE: | Domestic Tax, Other Laws |
| CATCH WORDS: | Dissolution, Partnership, Retirement |
| COUNSEL: | - |
| DATE: | May 26, 2020 (Date of pronouncement) |
| DATE: | May 28, 2020 (Date of publication) |
| AY: | - |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| There is a clear distinction between ‘retirement of a partner’ and ‘dissolution of a partnership firm’. On retirement of the partner, the reconstituted firm continues and the retiring partner is to be paid his dues in terms of Section 37 of the Partnership Act. In case of dissolution, accounts have to be settled and distributed as per the mode prescribed in Section 48 of the Partnership Act. When the partners agree to dissolve a partnership, it is a case of dissolution and not retirement A partnership firm must have at least two partners. When there are only two partners and one has agreed to retire, then the retirement amounts to dissolution of the firm (Imp judgements referred) | |
The primary claim and submission of the appellants is that Amar Singh had resigned as a partner and, therefore, in terms of clause (10) of the partnership deed (Exhibit P-3) dated 6 th May 1981, he would be entitled to only the capital standing in his credit in the books of accounts. However, the argument has to be rejected as in the present case there were only two partners and there is overwhelming evidence on record that Amar Singh had not resigned as a partner. On the other hand, there was mutual understanding and agreement that the partnership firm would be dissolved
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