Is a Fresh Lease deed needed?
A Firm was established with 2 partners with equal stake. They Purchased a private leased Plot to do business on it. After some time Dispute arises and one Partner wants to go . so a new Admission Cum Retirement deed formed in which one Partner goes and its share Transferred to New partner. so the owner of the Plot who gives it on lease said that u have to make a new fresh lease Deed of the plot. the Plot is on the Firms name. so Please Advice me will I have to go for A Fresh lease Deed of the Plot or Not.
Section 14 of the Partnership Act defines what partnership property is. 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 own 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.
As per the Partnership Act, a partnership firm is not a separate legal entity (unlike companies). Thus, no transfer instrument is required. A partner can make an agreement with other partners to the effect that the land is transferred to the partnership firm as a part of his capital contribution. This will need to be mentioned in partnership deed. Thus, the property owned by partner in his/her name would be treated as property of the firm (being contribution of such a partner).
A partner can withdraw his capital from the assets of the firm subject to the contractual liability on retirement or relinquishment. If the firm is dissolved, the property may be distributed or given to any partner subject to the partnership deed.
Thus, the property is actually in the joint name of the partners held by the firm. With the creation of the new admission/retirement deed, since the partners have changed, the names in the lease deed will need to be changed, and a fresh lease is necessary.
Book a phone consultation with a top-rated lawyer on Lawfarm.