Partners of firms are responsible to pay the loans , but during loan any partner retires then partnership do not goes to dissolution of the firm if partners are more then two and accounts are to be settled between the retiring partner and remaining partner
In other case if other partner joins the firm in place of retiring partner under new partnership , then the liability of retiring partner do not cease until the accounts settled but it may be shifted to new partner if he accepts liability of payment under an express agreement
So far as share in property has concern it would be transferred through registered deed only and mortgage property would remain mortgage until fresh registered transfer deed is not executed between retiring partner and admitting partner
In case property being not changed as collateral security when the share of retiring partner is already mortgaged with bank then liability of retiring partner would remain intact with bank with the new partner
Bank do not go in dispute of partners and advises to borrower firm to transfer the share present in mortgage property to new admitted partner under new partnership agreement or replace the mortgage property belonging to new partners for accountability of new partnership
So far as auditing of firm account by bank has concern , mortgage to be replaced in the partnership of new partner in case of continuity of loan account ,executant of loan document of new partners couple with mortgage property of firms property of retiring partner create diversity in liability , to cope the diversity , liability to be fastened upon new partnership and fresh mortgage to be obtained of new partnership owning share of new partners
Novation of contract (Sec 62 of Indian contract Act) between financing bank arises when it is arrived between financing bank and new partnership , the previous contract rescinded and novation of contract formed by new partnership while acknowledging the liability of dissolved firm ,
Acknowledgement of previous liability of dissolved firm should be obtained with duly stamped of acknowledgement, by new partnership firm
Sec 39 of Partnership Act is very relevant in case where partners are more then two and one retires and in place of retired partner another partner being admitted then partnership continues with the new partnership agreement
This was discussed in a reported civil appeal number 6659-6660 of 2010 Supreme Court title Guru Nanak Industries Faridabad & another v/s Amar singh (D) through LR’s decided on 26/05/2020
In para number 12 of judgement it was discussed regarding dissolution of firm and retirement of partner
There is clear distinction between a case of retirement and case of dissolution of firm
On retirement of partner , the reconstituted firm continues and retiring partner is to be paid his dues in terms of sec 37 of the partnership act but in dissolution of firm accounts are to be settled and distributed as per mode prescribed in sec 48 of partnership act
