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Swapan (Manager)     10 August 2010

After Dissolution

Dear Colleagues

Can a partner of unregistered partnership firm continue to provide services to new and existing clients with different name and style after dissolving partnership by serving notice to another partner ?


1. Two partners

2. Partnership  - AT WILL and Unregistered.

3. No agreement of Restraint of work

4. There is a clause of Not to indulge in any other work during the firm is in existence (since it is dissolved now)

5. Settlement of accounts pending.

Would appreciate expert views!







 4 Replies

Darshan Panchal (Advocate)     10 August 2010

As provided under section 54 of the Partnership Act 1932, an exception has been stipulated for agreement in restraint of trade which provides that  partners may, while or in anticipation of , dissolving the firm, agree that some or all of them(partners) shall not carry a business similar to that carried on by the firm within a specified period or within specified local limits. Here, in this case as stated by you there is no such restriction of a similar business. Therefore, partners after dissolution can carry out similar business without the consent of the other partners. Pendency of settlement of accounts does not have any bearing in absence of any restriction on business and in view of the firm having been dissolved already.

Swapan (Manager)     11 August 2010

Thanks a Ton Mr Panchal!!!

Its been a great help.

Swapan (Manager)     11 August 2010

Dear Mr Panchal



"Be debarred from carrying of the same nature of business in their personal capacity or with any other person/company till the existence of this firm."


1. Does the presence of above clause restricts any partner to carry out similar business activity till settlement of accounts of dissolved firm.


2. Also as per Section 47, IPA 1932 - can a partner serve existing clients from her personal capacity as to finish the unfinished work which was committed jointly before dissolution.?


Please give your views.





Saratchandra Sivalenka (Lawyer)     20 September 2010


The firm is not considered as wound up until all commitments are fully settled. Any commitment made prior to dissolution by the firm are still pending duties of all partners/firms. In pratice, if all partners give up the business to other partners, the matter is considered fully settled.


Sivalenka SP Saratchandra Kumar, MA, BL

Hyderabad Lawyer for NRIs

Door No 1-8-540/2, First Floor

Next Lane to Odeon Theatre, Chikkadpally

Hyderabad, AP 500020


Tel: +91-9490119818


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