There were 2 partners who had a C&F agreement with a government company. Now, one of the partners has retired, and the firm has been dissolved. The other person is now conducting business under a new firm name without disclosing the dissolution and establishment of the new firm. The government company became aware of this situation when invoices were issued in the name of the new firm.
Please advise on whether approval can be granted for paying the invoices. If not, please provide reasons, considering it is a government organization. Kindly offer your suggestions.
From India, New Delhi
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Please advise on whether approval can be granted for paying the invoices. If not, please provide reasons, considering it is a government organization. Kindly offer your suggestions.
From India, New Delhi
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Dear Colleague,
In the given situation, you need to have a full reading and understanding of the Partnership Deed Copy. You have to understand what the terms of the Deed say about the Partners in the event of the death of the other. Whether the legal heirs are bound by the clause is to be understood. Whether the rights are given to the other Partner alive to raise invoices on his own and act for the firm are all to be studied. Hence, please read the copy of the Partnership Deed with the assistance of a Professional Lawyer and then only proceed with any steps.
From India, Chennai
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321In the given situation, you need to have a full reading and understanding of the Partnership Deed Copy. You have to understand what the terms of the Deed say about the Partners in the event of the death of the other. Whether the legal heirs are bound by the clause is to be understood. Whether the rights are given to the other Partner alive to raise invoices on his own and act for the firm are all to be studied. Hence, please read the copy of the Partnership Deed with the assistance of a Professional Lawyer and then only proceed with any steps.
From India, Chennai
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ABC has been the CFA since 2016, and their contract is valid until 31.03.2022. There were two partners in the firm named Ram and Shyam. One of the partners, Ram, has informed us that the firm dissolved on 31.03.2021 due to the voluntary retirement of the other partner, Shyam. Therefore, ABC firm no longer exists.
Ram has informed us (a government organization) that he is also the proprietor of another organization, namely XYZ. Ram has proposed that we take on all the liabilities of ABC Firm under the name of XYZ.
Ram submitted the invoices in December 2021. Until that time, the government organization was utilizing CFA's services, and stocks had been dispatched to various locations as per the supply orders provided by the government organization.
Now, the government employee is requesting post facto approval of the appointment of XYZ from 1.04.2021 to 31.03.2022. ABC needs to be closed.
Please advise on what actions should be taken in this case.
From India, New Delhi
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Ram has informed us (a government organization) that he is also the proprietor of another organization, namely XYZ. Ram has proposed that we take on all the liabilities of ABC Firm under the name of XYZ.
Ram submitted the invoices in December 2021. Until that time, the government organization was utilizing CFA's services, and stocks had been dispatched to various locations as per the supply orders provided by the government organization.
Now, the government employee is requesting post facto approval of the appointment of XYZ from 1.04.2021 to 31.03.2022. ABC needs to be closed.
Please advise on what actions should be taken in this case.
From India, New Delhi
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Dear Colleague,
I do not think the forum can give a direct answer to your question as it needs a deeper understanding of the Partnership Deed of ABC as well as practical knowledge of the Partnership Act 1932.
Hence, it will be appropriate to consult a practicing lawyer on this subject at the earliest to go in the right direction or correct path. Based on the given details, ABC and XYZ seem to be different, and there is no connection between these two firms. Therefore, take due care in taking further steps, and the only option is to consult a practicing lawyer in the field of CIVIL LAWS.
For example, the Act has specific provisions for all aspects but has to be interpreted based on facts and then to decide the legal merits:
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The Partnership Act, 1932 Section 32 RETIREMENT OF A PARTNER.
(1) A partner may retire -
(a) with the consent of all the other partners,
(b) in accordance with an express agreement by the partners, or
(c) where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.
(2) A retiring partner may be discharged from any liability to any third party for acts of the firm done before his retirement by an agreement made by him with such third party and the partners of the reconstituted firm, and such agreement may be implied by a course of dealing between such third party and the reconstituted firm after he had knowledge of the retirement.
(3) Notwithstanding the retirement of a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement.
Provided that a retired partner is not liable to any third party who deals with the firm without knowing that he was a party.
(4) Notices under subsection (3) may be given by the retired partner or by any partner of the reconstituted firm.
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Hence, take due care in taking further steps, and the only option is to consult a practicing lawyer in the field of CIVIL LAWS. This needs to be done by you at the earliest, and based on lawyers' advice only, you can decide further. Take Care.
From India, Chennai
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I do not think the forum can give a direct answer to your question as it needs a deeper understanding of the Partnership Deed of ABC as well as practical knowledge of the Partnership Act 1932.
Hence, it will be appropriate to consult a practicing lawyer on this subject at the earliest to go in the right direction or correct path. Based on the given details, ABC and XYZ seem to be different, and there is no connection between these two firms. Therefore, take due care in taking further steps, and the only option is to consult a practicing lawyer in the field of CIVIL LAWS.
For example, the Act has specific provisions for all aspects but has to be interpreted based on facts and then to decide the legal merits:
--------------------------------------------------------
The Partnership Act, 1932 Section 32 RETIREMENT OF A PARTNER.
(1) A partner may retire -
(a) with the consent of all the other partners,
(b) in accordance with an express agreement by the partners, or
(c) where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.
(2) A retiring partner may be discharged from any liability to any third party for acts of the firm done before his retirement by an agreement made by him with such third party and the partners of the reconstituted firm, and such agreement may be implied by a course of dealing between such third party and the reconstituted firm after he had knowledge of the retirement.
(3) Notwithstanding the retirement of a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement.
Provided that a retired partner is not liable to any third party who deals with the firm without knowing that he was a party.
(4) Notices under subsection (3) may be given by the retired partner or by any partner of the reconstituted firm.
----------------------------------------------------
Hence, take due care in taking further steps, and the only option is to consult a practicing lawyer in the field of CIVIL LAWS. This needs to be done by you at the earliest, and based on lawyers' advice only, you can decide further. Take Care.
From India, Chennai
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As per the Partnership Act of 1932, once a partner retires, the original partnership firm would no longer exist. Therefore, ABC Firm has not been in existence since 31.03.21. It is a fact that the government organization continued dealing with XYZ firm for various reasons, and now the matter is up for post facto approval.
The methodology adopted in switching from ABC to XYZ is definitely wrong and improper. It is not permitted in the government sector to change contracts without following due process. However, since there are pending bills from ABC Firm and dealings were continued despite the knowledge of the factual position, they must be resolved. Therefore, the suggestion is for the competent authority to approve the same, under the condition that the rates remain unchanged, there is no downward trend in the market, the services were satisfactory, etc., and issue a reasoned order mentioning all these facts. Before granting approval, consider appointing a committee of 2-3 department heads and record their recommendations. The responsible officials should be warned for their negligence in not adhering to the required rules.
By following this process, you can resolve an otherwise complicated matter without attracting the attention of Vigilance and other relevant agencies. Instances like these occur in government organizations where officials, in their eagerness to complete tasks, take shortcuts that can later become burdens for the approving authority. This process has been employed in similar instances, allowing me to resolve the mess left by others without getting into trouble.
From India, Mumbai
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The methodology adopted in switching from ABC to XYZ is definitely wrong and improper. It is not permitted in the government sector to change contracts without following due process. However, since there are pending bills from ABC Firm and dealings were continued despite the knowledge of the factual position, they must be resolved. Therefore, the suggestion is for the competent authority to approve the same, under the condition that the rates remain unchanged, there is no downward trend in the market, the services were satisfactory, etc., and issue a reasoned order mentioning all these facts. Before granting approval, consider appointing a committee of 2-3 department heads and record their recommendations. The responsible officials should be warned for their negligence in not adhering to the required rules.
By following this process, you can resolve an otherwise complicated matter without attracting the attention of Vigilance and other relevant agencies. Instances like these occur in government organizations where officials, in their eagerness to complete tasks, take shortcuts that can later become burdens for the approving authority. This process has been employed in similar instances, allowing me to resolve the mess left by others without getting into trouble.
From India, Mumbai
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Approval - N & F Act.pdf
Partnership Act.pps