Settlement of Dues for Retiering Partner

Querist : Anonymous (Querist) 17 March 2010 This query is : Resolved
Hi,

My Father & four other family members are partners in an Unregister Partnership firm. The partnership deed is based on 'At Will' basis and my Father would like to retire from the partnership. My father has already submitted a 30 day notice as per the requirement of partnership deed and have requested for all the dues to be settled by last working date.

However, other partners of the firm are reluctant to provide my father his due share. Can someone advise of the options available with my Father if indeed other partners do not provide for the settlement amount?

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Kumar Thadhani (Expert) 17 March 2010
Ask your father to issue legal notice to other four partners and if no reply is received then sue or file petition for recovery of dues.

Querist : Anonymous (Querist) 17 March 2010
Thanks Kumar for the promp reply. Will my Father have the option to file petition as 1) The partnership is not registered and second the deed clearly states that no partner can go to court of law in case of disputes and everything needs to be resolved through third party Arbitrators only.

Raj Kumar Makkad (Expert) 17 March 2010
Your father's civil rights cannot be taken away by any clause of the partnership-deed and even though it is unregistered then also your father can approach civil court but not for recovery of dues but for

RENDTION OF ACCOUNTS AND DELIEVERY OF SHARE

because for filing recovery suit, a lot of court fee shall be required to be affixed by your father and as the amount shall be imaginary without having any account book in possession so stamp duty shall also be imaginary so file suit for rendition of accounts after serving due notice to all remaining partners but not before the expiry of notice period.

Parveen Kr. Aggarwal (Expert) 17 March 2010
As the partnership is at will and notice of dissolution has been served by your father, the firm will get dissolved upon service of such notice. After dissolution of the firm, your father may sue for recovery of the amount receivable by him (if the amount is ascertained) despite the firm being unregistered [Section 69(3)(a) of the Indian Partnership Act, 1932].

In case of unregistered partnership firm having arbitration clause in the partnership deed, arbitration clause can be invoked for dissolution of firm & renditioin of accounts (AIR 1995 SC 715, AIR 1996 SC 2209).

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