• Transfer of credentials including turnover from proprietor to newly formed partnership

I am running civil construction and transportation business under proprietorship firm and have earned experience of many projects and significant turnover. now due to my old age and health related issues i wanted to add my family members as partners to this business and carry on the business under same name. 
 can my credentials including turnover earned in proprietorship be used by newly formed partnership firm where in i am one of the partner. to participate in tenders ??
is there any legal document i can prepare to submit before tendering authority to consider past experience and turnover of proprietor as of the partnership firm?
Asked 7 months ago in Business Law

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9 Answers

Trail of paper work will require for valid transfer start with deed for declaring a transfer along with all assets and liability. Your experience will carry forward in the firm being one of the partners. 

You can contact for the same. 

Yogendra Singh Rajawat
Advocate, Jaipur
22991 Answers
31 Consultations

Your credentials and experience of many years can be used by newly formed partnership firm wherein you are one of the partners of the firm to participate in tenders 

 

2) the said requirement regarding experience cannot be construed to mean that the said experience should be of the tenderer in his name only. It is possible to visualise a situation where a person having past experience has entered into a partnership and the tender has been submitted in the name of the partnership firm which may not have any past experience in its own name. That does not mean that the earlier experience of one of the partners of the firm cannot be taken into consideration.

 

3)

New Horizons Ltd. v. Union of India, (1995) 1 SCC 478, tthe Supreme Court indicated the correct approach in interpreting terms of an invitation to tender, to the following effect:

W.P.(C) 1712/2017 Page 6of 20 "the requirement regarding experience does not mean that the offer of the original company must be considered because it has experience in its name though it does not have experienced persons with it and ignore the offer of the new company because it does not have experience in its name though it has persons having experience in the field. While considering the requirement regarding experience it has to be borne in mind that the said requirement is contained in a document inviting offers for a commercial transaction. The terms and conditions of such a document have to be construed from the standpoint of a prudent businessman. When a businessman enters into a contract whereunder some work is to be performed he seeks to assure himself about the credentials of the person who is to be entrusted with the performance of the work. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a company he will look into the background of the company and the persons who are in control of the same and their capacity to execute the work. He would go not by the name of the company but by the persons behind the company."

 

4) rely upon SC judgment cited herein above 

Ajay Sethi
Advocate, Mumbai
96938 Answers
7822 Consultations

 

1) sole proprietorship should stop carrying on business 

 

2) partnership deed should mention that  the sole proprietorship's business was entirely subsumed or taken over by the partnership firm it should mention that that goodwill was parted; and separate consideration paid

Ajay Sethi
Advocate, Mumbai
96938 Answers
7822 Consultations

It depends upon terms and conditions of tender 

 

you can take the plea that one of the  partners has extensive experience in same field ,had turnover of d crores that his sole proprietorship was conveyed unto partnership firm 

 

3) 

Supreme Court of India

New Horizons Ltd vs Union Of India on 9 November, 1994

Equivalent citations: 1995 SCC (1) 478

Author: S.C. Agrawal

Bench: S.C. Agrawal, M.K Mukherjee

 PETITIONER:

NEW HORIZONS LTD.

Vs.

RESPONDENT:

UNION OF INDIA

DATE OF JUDGMENT09/11/1994

BENCH:

AGRAWAL, S.C. (J)

BENCH:

AGRAWAL, S.C. (J)

MUKHERJEE M.K. (J)

CITATION:

1995 SCC (1) 478

ACT:





 

Ajay Sethi
Advocate, Mumbai
96938 Answers
7822 Consultations

Drafting of the Partnership Deed would be the first step in conversion of a sole proprietorship into a partnership firm.

The major inclusion in the deed must be the declaration about the sole proprietorship which is being converted into a partnership by adding more partners and bringing in investment.

The deed must also state the details of all the changes expected to occur with the introduction of the new business partners.

After this, transfer all assets and liabilities into partnership firms as sale of business by proprietor to partnership firm.

Experience gained from erstwhile proprietorship firm could not be construed as experience of partners in an individual capacity if applied independently without the partners in any tender.

In a judgment of Supreme Court in New Horizons Ltd. v. Union of India, (1995) 1 SCC 478, wherein it was held that in the absence of any exclusionary clause in the tender document, it could not be said that past experience of a partner of the firm could not be considered. 

The Bench opined that coercing a tender inviting authority to blindly treat experience in the name of an erstwhile partnership firm as the experience of the partner in his individual capacity, would militate against every judicious consideration.

This applies to proprietorship firm too.

 

T Kalaiselvan
Advocate, Vellore
87138 Answers
2339 Consultations

The deed must also state the details of all the changes expected to occur with the introduction of the new business partners. 

There should be no reason for vagueness that may lead to unnecessary future disputes.

After this, transfer all assets and liabilities into partnership firms as sale of business by proprietor to partnership firm.

There are a few mandatory inclusions in deeds, such as date of sole proprietorship formation, proprietor’s name, business type, and other details, like Service Tax registration and VAT. You need to disclose the TIN and Service Tax number in this case.

If you are still at confusion, you can get a partnership deed drafted by an expert lawyer.

T Kalaiselvan
Advocate, Vellore
87138 Answers
2339 Consultations

Dear client, you should first have to make an partnership agreement to transfer your sole propietorship to the new partner in the partnership firm. The agreement must specify all the things which you need to transfer to the partnership firm and they will be transferred accordingly after execution.

In a decision of the Supreme Court in New Horizons Ltd. v. Union of India, (1995) 1 SCC 478, it was held that the requirement for experience does not imply that the original company's offer must be considered because it has experience in its name despite the fact that it does not employ experienced personnel, and that the new company's offer must be ignored because it lacks experience in its name despite the fact that it employs individuals with experience in the field.

Anik Miu
Advocate, Bangalore
10173 Answers
120 Consultations

Indicators for the technical capacity and experience field are quite diverse depending on the sector and project type or technology demanded for the specific project.

It is necessary to assess carefully how realistic and achievable the threshold values or levels of experience are. Using similar and successful precedents is helpful 

Describe the features to be met for a project to qualify as evidence of experience (that is, in order to be counted in the evaluation).

Avoid duplication in the criteria so as to avoid double counting certain types of experience (which may result in an over weighting).

The evidence that will be requested to confirm the existence of the experience claimed will have to be validated or be capable of validation.

This can be done in a variety of ways, such as requiring certificates from the government/client for past projects, or simply requiring contact details for a key person with the relevant government/client so that the accuracy of the information can be checked.

It is often appropriate to only count experience if the relevant member of the consortium commits a certain minimum percentage of the equity in the project.

For instance, project experience will only count if a member of the consortium invested more than a specific percentage of the equity in that project.

This means that the involvement of the consortium member in that project provided it with substantial experience that is relevant to the project currently in the tender process.

T Kalaiselvan
Advocate, Vellore
87138 Answers
2339 Consultations

You can’t add partners in propriety business you need to make a partnership firm for the same 

Prashant Nayak
Advocate, Mumbai
32479 Answers
201 Consultations

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