Advocate for Property registration,property registration,registration stamp duty,Bangalore property registration
A
“Partnership” is typically defined as a relationship between individuals i.e.
two or more persons, who have agreed to share the profits/ losses of the
business, which is carried on by all or any one of them acting for all. Such
persons are called “partners” and the business concern is known as “partnershipfirm”. The document containing the terms
of the partnership agreement, powers of the partners and objectives of the
partnership is known as a “partnership deed”.
The
Indian Partnership Act, 1932 (hereinafter called the “Act”), governs the
conduct of the partnership business and the minimum number of partners
prescribed is two, whereas the maximum number is 10, in case of firms doing
Banking business and 20 in other cases.
A minor
can be admitted only to the benefits of the partnership business. The
partnership concern is to be registered with the Registrar of Firms and on
registration a registration certificate is issued.
Section 14
of the Act defines what constitutes Partnership property. The property of the
firm is nothing but the joint property of the partners held in their joint
names as opposed to the properties owned by the individual partners in their
personal names. Partnership property consists of property originally brought in
by the individual partners as their capital contribution or may consist of
property purchased by the partners jointly out of the funds belonging to the
partnership concern.
Issues
may arise to determine the ownership/ title of the immovable property, in cases
where either the property belonging to a partner is put to firm’s use or in
cases where the immovable property is jointly owned by the partners i.e. by the
partnership firm and the same is converted and title to a jointly held property
is conferred to an individual partner. In such cases the courts have drawn a
judicious line to distinguish and differentiate between the two.
Section
22 of the Act states that in order to bind the firm and all its partners
thereof, every act must be done in the name of the firm or expressly on behalf
of the firm. It is desirable to make the firm duly represented by one or more
of its partners as a party to any such transaction. It is also clarified that a
mere description of the signatory that he/ she is a partner of a firm may not
be sufficient to bind the firm. In cases where an immovable property is to be
acquired or sold by way of purchase/ sale or by way of lease or otherwise, it
is essential to make all or some of the partners as parties and not just the
firm in its name.
A
Partnership is not a legal entity and the name of the partnership firm is only
a collective expression representing all the partners constituting the firm.
Thus a transfer of property can only be made by or in favour of a legal or
juridical person as provided in Section 5 of the Transfer of Property Act.
A
Partnership firm unlike a Company registered under the Indian Companies Act,
does not have a separate legal identity, different from partner and a
partnership firm cannot sell or purchase property in its name. A partner has no implied authority to sell or
buy any immovable property on behalf of the partnership. The legal entity is the partner himself. All partners in their individual capacity
should also join as parties to the agreement to sell or to the conveyance deed
and execute it in their individual capacity. When an immovable property is
transferred to a firm it vests in all the partners of the firm and not in the
firm, since the firm has no separate legal existence.
At
certain times, a single partner represents the partnership firm, which is not a
correct practice. In such cases, the
said partner should have power of attorney or authority of other partners to
execute the documents.
Even if a partnership is formed between an individual
and a partnership firm the deed of the partnership should be signed by all the
partners of the firm. Transfer of property by or in favour of a firm without
the names of partners is ineffective.
However,
the distribution of the assets of the firm on dissolution, where a partnershipproperty is divided or distributed among partners or taken over by one or more
partners from others, does not amount to transfer of property and needs no
registration. Such a deed attracts stamp
duty under a separate category Dissolution deed and not as a conveyance deed.
If the
property purchased was in the name of a partner of the firm and on his death,
his share, right, interest in the property would vest in his heirs or legal
representatives. In case of transfer of
such property, the heirs/legal representatives of the deceased partner should
also join the execution of the document.
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