Assignment 28 FS

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ASSIGNMENT 28:

PARTNERSHIP
DEED
NAME: FAAREHA SHAHID
ROLL NO: 20
CLASS: BA LLB(h) SEM VIII REGULAR
SUBJECT: CLINICAL II
SUBMITTED TO: ADV RAJESH SHARDA
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INTRODUCTION

A partnership is a kind of business where a formal agreement between two or more people is
made and agreed to be the co-owners, distribute responsibilities for running an organization
and share the income or losses that the business generates. This features of partnerships are
documented in a document which is known as partnership deeds.

What is a Partnership Deed?

A partnership deed also called as a partnership agreement, is a record that outlines in detail
the rights and functionalities of all parties to a business operation. It has the force of law and
is designed to guide the partners in the conduct of the business.

If one needs to understand the partnership deed, before that he/she needs to know how does
the partnership deed come into existence. When two or more people want to start a new
business & to share the profits & losses they come together to form a partnership such written
agreement is known as ‘Partnership Deed’. One can also call it is a ‘Partnership Agreement’.
And when such business gets registered by its own name the same is called as a ‘Partnership
Firm’.

Partnership Deed Meaning

Partnership Deed is a written Partnership Agreement. It is basically made when two or more
people want to start a new business they come together under the mutual understanding with
the only purpose to do business & share profits & losses in the decided manner.

Key Points to Remember While Drafting Partnership Deed:

1. Number of Members:
In a Partnership, there is a minimum requirement for two members. Previously there was a
limitation on the number of partners as follows:

 a. Banking business-Less than or equal to ten


 b. Non-Banking business- Less than or equal to twenty

If there are more partners than the given above then it becomes illegal to continue the
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business of the partnership.


2. Minimum capital requirement:
There's no limitation on the requirement of capital at the beginning of the business. Partners
can start of the business with as much as minimum capital they want. The calculation of
stamp duty also depends on the amount of capital which has been put by partners.
3. The name should be different:
While deciding a name for the firm the care has been taken that it should not indicate any
undesirable intention, it should be simple & easy.

The Partnership comes into the limelight when:

 There is an outcome of agreement among the partners.


 The agreement can be either in written or oral form
 The Partnership Act does not demand that the agreement has to be in writing.
Wherever it is in the form of writing, the document, which comprises terms of the
agreement is called ‘Partnership Deed’
 It normally comprises the attributes about all the characteristics influencing the
association between the partners counting the aim of trade, contribution of capital by
each of the partner, the ratio in which the gains and losses will be divided by the
partners and privilege and entitlement of partners to interest on loan, interest on
capital, etc.,

The sections of partnership deed can be modified with the accord of all the partners. The deed
must be appropriately drafted and outlined as per the provisions of the ‘Stamp Act’ and
ideally registered with the Registrar of Firms.

Registration of Partnership Deed:

All the rights and responsibilities of each member are documented ina a document known as
Partnership Deed. This deed can be oral or written, however, an oral agreement is of no use
when the firm has to deal with the tax. Few essential characteristics of partnership deed area:

 The name of the firm.


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 Name and addresses of the partners.


 Nature of the business.
 The term or duration of the partnership.
 The amount of capital to be contributed by each partner.
 The drawings that can be made by each partner.
 The interest to be allowed on capital and charged on drawings.
 Rights of partners.
 Duties of partners.
 Remuneration to partners.
 The method used for calculating goodwill.
 Profit and loss sharing ratio

The sections of partnership deed can be modified with the accord of all the partners. The deed
must be appropriately drafted and outlined as per the provisions of the ‘Stamp Act’ and
ideally registered with the Registrar of Firms.

Partnership Deed Contents

While making partnership deed all the provisions and the legal points of the partnership deed
are included. This deed also includes basic guidelines for future projects and can be used as
evidence at times of conflict or legal procedures. For a general partnership deed below
mentioned information should be included.

 The Partnership Firm name accepted by all the partners should be mentioned. The
name should not have titles like “company” or “private company”
 Business nature should be mentioned
 The origin date of the business
 Headquarters and branches address
 Duration of Partnership (if applicable)
 Partner’s contribution to the capital, Profit sharing ratio, and Salary to be mentioned
 Interest on contribution and the Interest. Retirement or suspension terms and
conditions of the retirement or expulsion of a partner
 Preparation of the business’s accounts and the terms for internal and legal audit
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 Procedure for dissolution of a firm and guidelines for resolving any conflicts and
agreement method to follow

Importance of partnership deed

 Few are the important advantages of the well-drafted deed:

 It controls and monitors the rights, responsibilities, and liabilities of all the partners
 Avoids dispute between the partners
 Avoids confusion on profit and loss distribution ratio among the partners
 Individual partner’s responsibilities are mentioned clearly
 Partnership deed also defines a remuneration or salary of the partners and working
partners. But, interest is paid to each partner who has invested capital in the business.

Executing a Partnership Deed

Partnership agreement must be printed on a Non-Judicial Stamp Paper with a value of


Rs.100/- or more based on the value of properties held in the partnership firm. The
partnership agreement is usually signed in the presence of all the partners and each of the
partners would retain a signed original for his/her records. Once the document is signed by
the Partners, the document is witnessed and the signed partnership deed is held by each of the
Partners is duplicate or triplicate.
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DEED OF PARTNERSHIP

THIS DEED OF PARTNERSHIP is executed on this 1ST day of January 2019 between:

a. Sh. Rajiv Shukla s/o, Sh. Baghi Shukla, r/o of 2/3 CR Park, New Delhi, hereinafter
referred to as the "First Party" and

c. Sh. Abdul Jabbar s/o, Sh. Yasser Jabbar, r/o of C-2, Zakir Nagar, New Delhi, hereinafter
referred to as the "Second Party" and

The Party of the First Part and Second Part hereinafter collectively referred to as the
"Parties".

WHEREAS all the Parties are desirous of joining hands to carry on the business of organic
farming in Partnership, it has been mutually decided to reduce into writing the terms and
conditions of the Partnership.

NOW THIS DEED OF PARTNERSHIP WITNESSETH AS UNDER:

1. Name

That the business of the Partnership shall be carried on under the name and style of Farm
Fresh Company.

2. Term of Partnership

That the Partnership shall be deemed to have commenced from March 2019 and shall
continue unless otherwise determined by the Parties.

3. Place of Carrying Business

That the business of Partnership shall be carried from New Delhi or any other place as may
be agreed upon by the Parties.

4. Profit Sharing Ratio


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That irrespective of capital investment, profits or losses of Partnership (including losses of


capital nature, if any) shall be divided amongst and borne by the Parties equally.

5. Capital Contribution & Interest on Capital

That the necessary capital as well as further funds required for the purpose of Partnership
business shall be contributed or arranged by the Parties equally and in such manner as may be
mutually agreed upon by and between the Parties from time to time. Interest at the rate of 2
percent per annum or as may be prescribed under Section 40 (b) of the Income Tax Act, 1961
or any other applicable provisions as may be in force under the Income tax assessment of
Partnership firm for the relevant accounting period shall be payable to the Parties on account
standing to the credit of the account of the Parties. Such interest shall be calculated and
credited to the account of each partner at the close of each accounting year. However, in case
of loss or lower income, rate of interest can be nil or lower than 1 percent as may be agreed
upon by and between the Parties from time to time.

6. Remuneration

That the First Party and the Second Party shall be the working partners in the firm and they
shall be entitled to a remuneration of Rs. 20,00,000 (rupees twenty lakh only) per month and
Rs. 20,00,000 (rupees twenty lakh only) per month, respectively which shall be paid by the
10th of each month. The Parties shall be entitled to increase or reduce the above remuneration
as may be agreed upon from time to time by and between the parties.

7. Drawings by Partner

Each partner shall be entitled to draw (in addition to the remuneration as per clause 6) out of
the partnership business any sum or sums of money not exceeding Rs. 10,00,000 (rupees ten
lakh only) per month for his own use, such sums to be duly accounted for on each succeeding
settlement of accounts and division of profits of the partnership and if any excess drawings is
found on any such settlement, the same shall be refunded by the partner(s) concerned (with
interest at percent per annum).

8. Maintenance of Accounts

That regular books of accounts shall be maintained during the course of the business and
these shall be closed on the 31st March each year and shall be opened to inspection of the
parties to this deed at all reasonable hours at the Principal place of business.
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9. Operation of Bank Accounts

That the Bank account(s) of the firm will be operated by the Parties jointly or any two of
them jointly.

10. Partners to work in the interests of Partnership

Each Partner shall --

a. work honestly, diligently and shall devote their whole time and attention to the business of
the firm.

b. be just and faithful to other partners.

c. give complete and truthful details of all matters relating to the affairs of the firm.

d. punctually pay and discharge their personal debts and liabilities.

e. shall do nothing to harm the interests of the Partnership.

11. Partners not to do certain Acts

Neither partner shall, without the consent of all other partners

(a) Engage or be concerned or interested in any other business or occupation either directly or
indirectly;

(b) Take any apprentice or hire or dismiss any agent or servant of the firm;

(c) Lend any of the moneys or deliver, upon credit, any of the goods of the firm to any person
or persons whom the other partner shall have previously in writing forbidden him to trust;

(d) Except in the ordinary course of business give any security or promise for the payment of
money on account of the firm;

(e) Draw or accept or endorse any bill of exchange or promissory note on account of the firm;

(f) Remit the whole or any part of any debt or sum due to the firm;

12. Introduction of a New Partner

If all partners agree, a new Partner may be introduced into the business of the Partnership on
such terms and conditions as may be mutually agreed between the Parties to this deed and the
new partner
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13. Death or retirement of a Partner

In the event of death of a partner, the Partnership shall continue with the nominee/ legal heir
of such Partner, joining the firm.

OR If, during the continuance of the partnership, any partner retires or dies, the remaining
partner or partners shall have the option, by giving a notice in writing to the retiring partner
or to the legal representatives of the deceased partner, as the case may be, within a period of
___ days after the retirement or death, to purchase the share of the other partners, at the date
of his retirement or death, in the capital and assets of the partnership. The purchase price, in
such an event, shall be such price as is mutually decided by and between the parties.

If, however, the option to purchase share of the retiring or deceased partner is not exercised
as aforesaid the partnership shall be wound up and the assets distributed as per the provisions
of the Indian Partnership Act, 1932.

14. Dissolution of Partnership

(a) That the Partnership is at will and may be dissolved at any time mutually or by giving one
month notice in writing by the outgoing party to the others.

(b) That in the case of dissolution of the firm the net realization on the sale of assets shall be
distributed amongst the Parties equally after meeting the liabilities of the firm.

15. Arbitration Clause

Every dispute or difference arising between the partners as to the interpretation, operation, or
effect of any clause in the partnership which cannot be mutually resolved, shall be referred to
the arbitration of Mr. Mohd Oves (name of the Arbitrator) failing him, to any other arbitrator
chosen by the partners in writing. The decision of such an arbitrator shall be binding on the
partners. Subject as aforesaid the Arbitration and Conciliation Act, 1996 and the rules made
thereunder shall apply to the arbitration proceedings under this clause.

16. Governing Law

Except as aforesaid, the Partnership shall further abide by the provisions of the Indian
Partnership Act, 1932.
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IN WITNESS WHEREOF, the parties have set their hands this 1st day of January 2019.

First Party

Sh. Rajiv Shukla

s/o, Sh. Baghi Shukla

r/o of 2/3 CR Park, New Delhi

Second Party

Sh. Abdul Jabbar

s/o, Sh. Yasser Jabbar,

r/o of C-2, Zakir Nagar, New Delhi,

Witnesses:

1. Mr. Sami Yusuf

2. Mr. Zain Bikha

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