Legal opinion from experts

Rajinesh (Querist) 09 May 2020 This query is : Resolved
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This discussion clarifies that unregistered documents lack legal value in India. While notarised partnerships are valid, registration is strongly advised. Experts explain that property owned by a partnership firm belongs to the firm itself, not individual partners, even if partners retire or are replaced. Attempting to avoid stamp duty and registration fees through complex partnership changes is risky and can lead to disputes. It's crucial to have a clear, registered sale deed for immovable property.

Guest (Expert) 09 May 2020
No Un Registered Document could fetch Legal value. Discuss with your local Civil Side Advocate in detail

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Rajendra K Goyal (Expert) 09 May 2020
Notarized partnership though valid, but it is always better to get the partnership registered.

How many partners are there in the partnership?

What is the business of the partnership?

On which terms and conditions, the partner is admitted?

What about the other business / assets and liabilities after retirement of original partner?

What is the reason for adopting such tactics instead of getting clear marketable title through registered sale deed?

The partnership is dissolved each time when any of new partner is added / resign.

Legality of such transaction can be judged only after going through all related documents, but it is true it can result many risks / legal disputes / litigations.

The property would remain of the partnership, not of the individual.

If it is only to save registration stamp charges, not a good idea / avenue.

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Raj Kumar Makkad (Expert) 09 May 2020
Every immovable property requires its registration with the sub/joint registrar as per the provisions of Indian Registration Act. You have not heard correct proposition of law. Stamp duty is payable in the present situation also while getting the said property registered in the name of the partnership firm. It is correct that when the dissolution of the partnership takes place, the same property can be distributed to an individual erstwhile partner of the said firm.

Rajinesh (Querist) 09 May 2020
Rajender ji, In this situation Title will be of PARTNERSHIP FIRM and the right to sell this property will be with present partners?

Rajinesh (Querist) 09 May 2020
@Raj kumar Makkad ji , IF PROPERTY IS ALREADY IN THE NAME OF PARTNERSHIP FIRM WITH 3 PARTNERS, 2 PARTNERS RETIRE FROM THIS PARTNERSHIP FIRM LEAVING WITH ONLY ONE PARTNER.
Then I and my friend gets make ourself add in this partnership firm and then retire the single partner who was left.

Then in this scenario only Me and My friend will be left as partner of partnership firm and the Plot is owned by Partnership Firm.

By Doing that Can we buy the property by notarized partnership deed without stamp duty and registration?

Raj Kumar Makkad (Expert) 09 May 2020
In the process you narrated, the property still shall remain in the name of the partnership firm. The partnership firm can sell its property to any person including any of the partners in his individual capacity and in that event, the registration of the property shall be mandatory.

kavksatyanarayana (Expert) 09 May 2020
In the above, you have stated that "IF THE PROPERTY IS IN THE NAME OF PARTNERSHIP FIRM, WITH 3 PARTNERS, 2 PARTNERS RETIRED FROM PARTNERSHIP FIRM WITH LEAVING ONLY ONE PARTNER". In the Firm when there are 3 partners, 2 partners resigned then it is deemed to be dissolved as with one Partner there is not a partnership. After retirement, no person can join. Only before the retirement of partner/partners, the new partner or partners shall be entered.

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Rajendra K Goyal (Expert) 10 May 2020
You said:

In this situation Title will be of PARTNERSHIP FIRM and the right to sell this property will be with present partners?

Reply:
Any property belonging to partnership can be sold by partnership. Any partner can sign the sale deed on behalf of the partnership till nothing prevent him in doing so in partnership deed. Action would be binding on the partnership.

You said:

IF PROPERTY IS ALREADY IN THE NAME OF PARTNERSHIP FIRM WITH 3 PARTNERS, 2 PARTNERS RETIRE FROM THIS PARTNERSHIP FIRM LEAVING WITH ONLY ONE PARTNER.

Reply:
Partnership is dissolved on resignation of one partner. If only one partner left, property / asset can belong to him individually (provided clearly mentioned as such in dissolution deed) and not to partnership (already dissolved). Partnership cannot have only one partner at any stage. If dissolution deed mention nothing about property / any assets, it would belong to all previous partners.

Rajendra K Goyal (Expert) 10 May 2020
You said:

Then I and my friend gets make ourself add in this partnership firm and then retire the single partner who was left. Then in this scenario only Me and My friend will be left as partner of partnership firm and the Plot is owned by Partnership Firm.

Reply:

If the property / asset / plot was not distributed, it would belong to all previous partners and not to only so called one partner (if situation not clarified in dissolution deed signed by all previous partners).

You said:

By Doing that Can we buy the property by notarized partnership deed without stamp duty and registration?

Reply:
Advised to purchase through registered sale deed duly signed by all previous partners

T. Kalaiselvan, Advocate (Expert) 14 May 2020
The partnership firm has not been dissolved.
The retired partners have been replaced by new incumbents.
The property belongs to the firm and not to the individual partners.
Even though the partners retired or still existing in the firm, thy cannot claim title to the property owned by the partnership firm.
It is the property of the firm.
Therefore in my opinion, there is no necessity for the new incumbents to purchase the property.
Reconstitution of firm is for the partners alone and not for the property.
Hence first analyse the facts and revert with your actual doubts instead of getting confused and also confusing the experts here by posting the questions with improper details.
There is no need for the new partners to buy the property which remains on the partnership firm's name.
It will remain as the firm's asset with the firm itself on the name of the firm and not on the name of the partners.

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