Srinivasan (Marketing) 30 September 2012

Validity of partner in a un-registered partnership firm

Dear Sir,

Please help me understand the following:

I became a partner in a un-registered partnership firm during february 2012 where the firm had only lady as a Managing Partner and the firm was managed by MP's husband. After inducting myself and another person as partner The firm got term loan and machinery loan of 2Cr. The Money was spent by MP giving various reasons. Re-onstitution deed stated that any one partner can operate the accounts and we both incoming partner did not bring-in any capital. Accordingly the silent partner (Lady) use to sign the checks without our knowledge. Learning this, I indicated to Firm manager (not to partner or bank) that I would retire from the partnership in the month of April 2012 and I stopped going to office from June 2012. I waited till mid of July 2012 and did not notice any changes as far as accounts operation or settlement of accounts or re-constitution deed concerned. I issued a notice to bank stating that do not honor any of the transcation without having all 3 partners signatures. Inspite of the letter acknowledged by bank, the bank still allowing the operation of the account with one partner signature stating that I'm no longer a partner as I have already resigned from the partnership. Infact I only indicated the retirement and have not issued a resignation letter to bank or partner. I had asked firm to close my accounts and relive me from the liability and they are not responding to me any manner and operating the accounts as usual. Please help me understand what course of action can be initiated against these and any consequences.

Thanks Much.

Manjunatha

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4 Replies

VINOD VERMA (C E O) 30 September 2012

As on date Partnership deeds do not require any registration except for the change of Partnership with the Register of Fitms, where in form A & C are completed showing therein the incoming/outgoing partners, if any. You have entered into a Partnership firm that has obtained loan from the Bank and this must have been backed with collateral security, the Bankers do not acept the change in Partnership after the disbursal of loan. So, you will be liable jointly and severally for the repayment of loan, in the event of default. If your name was not there inb in the form A & C, the Bank cannot hold you liable for the repayment. So check this important auspect.. for God sake do not sign on the dotted line with your eyes closed. Write a strong letter to the Bank with copy to there Head Office mentioning that you have resigned and you should be absolved of your liability, if the Bank has accepted the new Partnership deed.

Srinivasan (Marketing) 01 October 2012

Sir, Thanks for the responce.

Just I received a letter from bank stating that I'm no longer a partner of the firm hence they can not honor the letter that I submitted to Dena bank and they have not yet relived me from the partner ship by way of re-constitution deed.

Questions are:

- What is the time limit within which the re-constitution deed to be submitted to bank after the partner resignation

- What is the time limit to reconsile the firm accounts to close the existing partner liability

- According to bank letter, Resignation is given on April 20, 2012 and till date Bank or remaining partners have not taken any steps to close further.

In this case, Bank Branch Manager is favouring Managers of firm.

Appreciate any help with these. Thanks a lot sir.

Manjunatha

VINOD VERMA (C E O) 02 October 2012

There is no time limit, the bank has to close the first account immediately on the receipt of information of dissolution/reconstitution, and start afresh the new account, even the limit documents have to be got signed afresh and if the Bank is not agreeing to your stopping of the account operation you are safe as you do not have any liability as well from the limits the newly formed firm has obtained.

The accounts need to be prepared on the date of re-constitution, but can be done in 1-3 months time as mutually agreeable

Rest assured, in case the Bank manager is favouring the other s, he will bring in troubles for himself.

All you need to d is write/move an application addressed to the Public Information Officer in the Bank, under RTI Act 2005, along with a postal oirder for Rs. 10.00 and ask them to provide you information about the account, wherein you were also a partner. The application is required to be made as an individual. The Manager will not be able to hold back the facts in your case.This information provided by the bank could be very useful to you in the long run.

Srinivasan (Marketing) 03 October 2012

Thanks for the suggestions sir. Infact the case is that, I became a partner in a firm (due to friendship) on February 2012 as the firm was not getting a loan from bank. The firm Managing Partner is a lady - house wife of my friend as he could not became firm partner due to CIBIL and Criminal disputes. After the loan of 2Cr sanction, I was forced to exit by the acts of Firm Running managers (some portion of the amount transferred to their personal accounts and their other firms in the name of their wife) in May 2012. However Banks or partners did not acknowledge my exit till end of last month where they send a letter statiing that I'm no more a partner as per the resignation letter and hence can not honor my letter submitted in the month of july 2012 to the bank stating that "not to honor any of the transcation with this account without having all 3 partners signature". I understand that their were transaction of more than a 1Cr from the bank od/credit facility during these period after myself issuing letter to bank. Now have no idea how and whom to move about this case. Any further suggestion helps. Manager is favouring managers of the firm as I'm outsider and he is troubling me with sleep-less nights.

Thanks sir.