SC clarifies when partnership firm can be dissolved

Partnership act agreement India

In a recent judgment titled Guru Nanak Industries and Anr v Amar Singh (deceased) through legal representatives, the Supreme Court held that the retirement of a partner of the partnership firm consisting of only two partners will lead to the dissolution of the partnership firm.

In this case, Swaran Singh and Amar Singh entered into a partnership agreement in 1981, establishing a firm named Guru Nanak Industries, which was involved in the business of the manufacturing and sale of print machinery for paper and polythenes. The profit-sharing ratio between the two partners was 60:40.

In 1989, the company and Swaran Singh filed a civil suit against Amar Singh, claiming that the latter had retired from the partnership with effect from 24 August 1988, and he had voluntarily accepted payment of his share capital. In 1989, Amar Singh filed a suit for dissolution of the partnership and rendition of accounts, arguing that he never resigned from the partnership.

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