Partnership act

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Querist : Anonymous

Querist : Anonymous (Querist)

26 February 2015 Can a partner assign his share to someone else, as per Partnership Act.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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26 February 2015 after he receives it,it can be later transferred................

Querist : Anonymous

Querist : Anonymous (Querist)

27 February 2015 There is dispute amongst the partners and one of the partner wants to assign his share in the partnership firm to a third person which is not acceptable to other partners i.e the third partner want to enter the shoe of the existing partner.There is no distribution of assets amongst the partners or dissolution of partnership.

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Asha Kanta Sharma

Asha Kanta Sharma

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09 August 2024 Under the Indian Partnership Act, 1932, the assignment of a partner's share in the partnership to a third person involves several legal considerations. Here’s a detailed explanation:

### **1. Assignment of a Partner’s Share**

**Legal Framework:**

1. **Indian Partnership Act, 1932:**
- **Section 29** of the Indian Partnership Act, 1932, provides that a partner cannot assign his share in the partnership to a third person without the consent of the other partners. Specifically:
- **Section 29** states: “A partner may not assign his share in the partnership to a third person, or any part of such share, except with the consent of the other partners.”

2. **Assignment vs. Transfer:**
- **Assignment of Share:** Refers to the transfer of the right to receive a share of the profits and other benefits of the partnership, but not the rights and obligations of the partner unless explicitly agreed upon.
- **Transfer of Partnership Interest:** Involves the transfer of the partner's rights and obligations to a new partner, which requires the consent of all existing partners.

### **2. Dispute and Consent**

1. **Consent Required:**
- If one partner wishes to assign his share to a third person, this assignment is only valid if all the other partners agree to it. The Partnership Act does not permit the unilateral assignment of a partner's share without the consent of the other partners.

2. **Partnership Agreement:**
- The partnership deed may have specific clauses regarding the assignment or transfer of a partner’s share. These provisions must be adhered to. If the deed requires consent for the assignment, that process must be followed.

### **3. Remedies in Case of Dispute**

1. **Resolution of Disputes:**
- If there is a dispute among the partners and one partner wishes to assign his share to a third person, the dispute needs to be resolved in accordance with the terms of the partnership agreement and applicable legal provisions.
- **Mediation or Arbitration:** The partnership agreement may include a clause for resolving disputes through mediation or arbitration. This route can be considered if the partners are unable to reach an agreement.

2. **Dissolution of Partnership:**
- If the assignment is not acceptable and the dispute cannot be resolved, the partnership may need to be dissolved, and the assets and liabilities distributed among the partners according to their shares. The process for dissolution is detailed in the Indian Partnership Act.

### **4. Draft of Assignment Deed**

If the partners agree to the assignment, the following points should be covered in an **Assignment Deed**:

**Draft Assignment Deed:**

```
**Assignment Deed**

**This Deed of Assignment** is made on this [Date] day of [Month, Year] between:

1. **[Assignor’s Name]**, a partner of [Firm’s Name], residing at [Address], (hereinafter referred to as "Assignor").

2. **[Assignee’s Name]**, residing at [Address], (hereinafter referred to as "Assignee").

3. **[Remaining Partners’ Names]**, partners of [Firm’s Name], residing at [Addresses] (hereinafter referred to as "Remaining Partners").

**Whereas**:

- The Assignor is a partner in the firm known as [Firm’s Name] which is governed by the partnership deed dated [Deed Date].
- The Assignor wishes to assign his share in the partnership to the Assignee.
- The Remaining Partners have consented to the assignment.

**Now, Therefore, it is agreed as follows:**

1. **Assignment:**
- The Assignor hereby assigns his share in the partnership, including all rights to receive profits and obligations, to the Assignee.

2. **Consent:**
- The Remaining Partners have consented to the assignment and agree to admit the Assignee as a partner in the firm.

3. **Effective Date:**
- The assignment shall be effective from [Effective Date].

4. **Amendment of Partnership Deed:**
- The partnership deed shall be amended to reflect the new partnership structure, including the inclusion of the Assignee as a partner.

5. **Release of Claims:**
- The Assignor hereby releases any claims against the firm and the Remaining Partners with respect to the partnership share being assigned.

**In Witness Whereof**, the parties hereto have set their hands and seals to this Deed on the day, month, and year first above written.

**Assignor:**

Signature: __________________________

**Assignee:**

Signature: __________________________

**Remaining Partners:**

1. **[Partner 1’s Name]**
Signature: __________________________

2. **[Partner 2’s Name]**
Signature: __________________________

**Witnesses:**

1. **[Witness 1’s Name]**
Signature: __________________________
Address: __________________________

2. **[Witness 2’s Name]**
Signature: __________________________
Address: __________________________
```

### **5. Conclusion**

- A partner cannot assign his share to a third person without the consent of the other partners as per Section 29 of the Indian Partnership Act, 1932.
- Any assignment or transfer must be in accordance with the partnership deed and legal requirements.
- If there is a dispute, the matter should be resolved based on the terms of the partnership agreement, possibly through mediation or arbitration, or by dissolving the partnership if necessary.

Consulting with a legal professional is advisable to handle disputes and assignments in accordance with the law and partnership agreement.