Questions regarding partnership firm's case

Nikhil chaudhary (Querist) 05 April 2025 This query is : Resolved
Hello dear lawyers,

In 1990, A registered partnership firm was formed named M/S Radhe Shyam Traders with four partners, A, B, C, D
In 1991, A HUDA Plot was purchased in the name of M/S Radhe Shyam.
In 1997, A, C, and D (3 out of 4 partners) retired from M/S Radhe Shyam by signing a dissolution deed and transferred all the assets and liabilities to B.
For 6 months, B was the only partner in the partnership firm.
In 1998, B signed a new partnership deed with new partners X and Y with the same name and address (B, X, Y).
B did not explicitly pool the assets of the old firm in the new firm.
In 1999, B retired from the M/S Radhe Shyam partnership firm. The constitution of the firm was changed, leaving X and Y as the remaining partners. The constitution of the firm was changed without taking any permission from HUDA.
From 1999 to 2007, no letter was sent by X and Y to HUDA to update the records of the HUDA.
In 2008, X AND Y (New partners) sent a letter to HUDA for a name change. HUDA REFUSED IT.
In 2009, X and Y filed a suit for a declaration of their rights in the HUDA property and an injunction against B (the previous partner).

I just have 2 questions:

1. When 3 out of 4 partners retire in a partnership firm by signing a dissolution deed, leaving one partner, the old partnership firm ceases to exist?

2. New Partners did not send any request to update the records of the HUDA for 7 years and sent their first letter in
2008 and filed suit for declaration and injunction against HUDA in 2009. Is this case under limitation? because I have researched that the case should have been filed after 3 years of changing the constitution of the firm.

Thank you so much for your answers.
I really appreciate your hard work.

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Quick Summary

This discussion explores the dissolution of a partnership firm, M/S Radhe Shyam Traders, formed in 1990. When three out of four partners retired in 1997, transferring assets and liabilities to the sole remaining partner, the original firm effectively ceased to exist. A new partnership was formed later with new partners, but HUDA refused a name change request. The core questions revolve around whether the firm's dissolution was valid and if the subsequent legal action regarding HUDA property is time-barred due to the delay in updating records.

T. Kalaiselvan, Advocate (Expert) 05 April 2025
1. When the partners quit the firm by signing the dissolution deed, then literally the partnership firm stands dissolved, one partner cannot run the partnership firm in the absence of all other partners.
In a partnership firm if all other partners retire, the firm is dissolved, and the remaining partner cannot continue the business under the original partnership agreement.
A dissolution deed signifies the partners' agreement to end the partnership, and in this scenario, the firm ceases to exist.
Therefore whatever activities undertook by the remaining partner to continue the partnership firm is deemed to be invalid and illegal.
If the remaining partner is registering this firm as proprietorship firm then he can continue.

kavksatyanarayana (Expert) 05 April 2025
Yes. As the firm was dissolved, only one partner cannot run a firm as it requires a minimum of two partners (partnership meaning is in it, i.e. one cannot be called a partnership firm). After 1997 the firm's run was illegal and not valid. And the remaining partner cannot run it as a proprietary firm.

Nikhil chaudhary (Querist) 05 April 2025
Thank you so much, T. Kalaiselvan sir AND Kavksatyanarayana sir for your time.

" It means after the retirement of all the old partners, when the remaining partner was continuing the business alone, and after some months, he inducted 2 more new partners to do the same business with the same name and changed the constitution of the firm. SO, THIS WILL BE THE FORMATION OF A NEW PARTNERSHIP FIRM AND NOT THE CONTINUATION OF THE OLD PARTNERSHIP FIRM."

T. Kalaiselvan, Advocate (Expert) 05 April 2025
You are right in your understanding.

Dr. J C Vashista (Expert) 06 April 2025
Once a company M/s Radhey Shyam Traders have been dissolved and got dissolution approved, the company stands dissolved and none of the partners (4 out of 4 partners) have any locus / interest in the company assets or liabilities.

2. New Partners did not send any request to update the records of the HUDA for 7 years and sent their first letter in 2008 and filed suit for declaration and injunction against HUDA in 2009. Is this case under limitation?

New partners (X, Y & B) do form new company which has no correlation with M/s Radhey Shyam Traders and/or any other company/ firm/ institution.
How and why HUDA is concerned / connected with formation / operation of new company and dissolution of a company namely M/s Radhey Shyam Traders which is non-existant after dissolution ?

P. Venu (Expert) 13 April 2025
Admittedly, HUDA had sold the property? How is it concerned with the change in partnership?

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