Anil Saraogi (Advocate) 13 December 2020

Partnership firm bank account matter

There is a Partnership Form LF, with two partners: MMD and SRC.

The Partnership Deed has a clause that ONLY Partner MMD would have right to open and operate any bank account.

Q1: Is such a restrictive clause valid as per The Indian Partnership Act?

Q2: Can a bank open account with only MMD's signature on record for operation of account?

Quick Summary

This discussion explores the validity of a clause in a partnership deed granting only one partner the sole right to open and operate the firm's bank account, as per the Indian Partnership Act. The core issue is whether such a restrictive clause is legally sound, especially if introduced without the full consent of all partners. Advice suggests consulting a local lawyer for guidance on amending the deed or addressing disputes arising from such clauses.

4 Replies

Vineet Gupta 13 December 2020

yes if it is expressly mentioned and agreed by the parties. you can amend the agreement

P. Venu (Advocate) 14 December 2020

What is the problem, if the condition is mutually agreed?

Anil Saraogi (Advocate) 14 December 2020

Thanks Vineetji.

Issue is that MMD got this clause introduced without consent of SRC. And SRC negligently signed the Deed.

Now can SRC give notice to MMD for cancellation of this clause ?

Dr J C Vashista (Advocate) 15 December 2020

Originally posted by : Anil Saraogi
	There is a Partnership Form LF, with two partners: MMD and SRC. The Partnership Deed has a clause that ONLY Partner MMD would have right to open and operate any bank account. Q1: Is such a restrictive clause valid as per The Indian Partnership Act? Q2: Can a bank open account with only MMD's signature on record for operation of account?

@ Anil Saraogi,

Provisions of Indian Partnership Act comes to play when there is any dispute.

In terms of existing agreement MMD is sole operator of Bank account of the firm, which may be amended by partners.

It would be advisable to consult and engage a local prudent lawyer for better appreciation of facts / documents, professional guidance and necessary proceeding.