Supreme Court of India· 09 September 2026

Must the immovable assets of a dissolved partnership be valued as on the date of actual assessment, not frozen at the date of dissolution?

V. SUMITRA REDDY & ANR v. K. RANGANADHA REDDY & ORS

2026 INSC 979 · CIVIL APPEAL NO. 8167 OF 2017
Coram: Justice Ujjal Bhuyan · Justice Vipul M. Pancholi

🔖 Save this judgment 🔔 Follow Section 7 of the Indian Partners…📬 Get today's judgments

View the original judgment PDFFree to read. To download it — or the LexStreak typeset copy with the headnote and Points of Law — create an account; downloads are part of the Pro plan.

Answer

The immovable assets of a dissolved partnership must be valued as on the date of actual assessment, not frozen at the date of dissolution.

Yes. The immovable assets of a dissolved partnership must be valued as on the date of actual assessment, not frozen at the date of dissolution, because no partner is entitled to take advantage of the appreciation in the value of the partnership's assets at the expense of the others; freezing the value at the historical cut-off date would be unfair and impractical where the remaining partners continue to hold and benefit from the property.

Headnote

Indian Partnership Act, 1932 — ss.7, 43, 46, 47, 48 — Dissolution of partnership at will — Valuation of partner's share in immovable assets — Indian Partnership Act, 1932 — s.48 — Right of partner on dissolution — Held: On dissolution of a partnership firm, every partner has a two-fold right — to have accounts settled as on the date of dissolution, and to share the residue of the assets after they are liquidated and the liabilities under Section 48 are satisfied. (¶57) Indian Partnership Act, 1932 — Dissolution — Cut-off date limited to profit ascertainment — Held further: The cut-off date fixed in a preliminary decree for rendition of accounts is significant only for ascertaining profits and losses up to that date, and has no bearing on the value of the residue of assets a partner is entitled to receive. (¶57) Indian Partnership Act, 1932 — Valuation on dissolution — Real, not notional, basis — Held further: An outgoing partner's share in the immovable assets of a dissolved partnership must be valued as on the date of actual assessment, since no partner may retain the benefit of appreciation in its value. (¶60) Indian Partnership Act, 1932 — Dissolution — Disposition — Held further: Retaining dissolved-partnership property in a reconstituted firm without paying the outgoing partner's share is impermissible, and freezing its value at the historical date of dissolution would be unfair and impractical; the civil appeal is dismissed. (¶¶60-61)

Headnote

You've used your free headnotes this month

The answer above and the Court's own paragraphs stay free. LexStreak's full headnote on this judgment needs an account — a free one opens it again.

Create my free account

In the Court's own words

Paragraph 60We are of the considered opinion that the decision rendered by the High Court in its impugned judgment and order dated 09.04.2012 is in accordance with law. It is pragmatic and equitable as well. The partnership in question is a partnership at will. Therefore, on receipt of notice of dissolution issued by the plaintiff, the partnership firm stood dissolved on and from 18.10.1983. The remaining partners may have continued to retain the assets of the erstwhile partnership by constituting a fresh partnership. But that is not permissible. The properties, i.e. the land in question belong to the erstwhile partnership M/s Viraj Constructions. The new partnership could have retained the said land in question only by purchasing it from the erstwhile partnership which had not been done. Therefore, retention of the land in question by the new partnership is illegal. That apart, if the same has to be sold today at the value which prevailed as on 18.10.1983, it will cause serious prejudice to the plaintiff and would be grossly unfair to him, besides being a wholly impractical proposition. On the dissolution of the partnership firm, all the partners are entitled to their share of profits rateably. Defendants had the option and still has the option to purchase the land in question on auction whereafter the sale proceeds from such auction sale can be distributed amongst the erstwhile partners as per their share. But this is an option for the defendants to explore and not for this Court to suggest.

Acts & Sections

Section 7 of the Indian Partnership Act, 1932Section 43 of the Indian Partnership Act, 1932Section 44 of the Indian Partnership Act, 1932Section 46 of the Indian Partnership Act, 1932Section 47 of the Indian Partnership Act, 1932Section 48 of the Indian Partnership Act, 1932Section 17(1) of the Registration Act, 1908Order XL Rule 1 of the Code of Civil Procedure, 1908

One judgment a day. That's the whole habit.

Read the full text of V. SUMITRA REDDY & ANR v. K. RANGANADHA REDDY & ORS — and get the Supreme Court's output as a five-minute daily read, with plain-language headnotes and the questions each judgment settles.

Create my free account

Free forever plan · 30 seconds · data stays in India

Open the full judgment →

Also decided in this judgment

Is a partner's right on dissolution of a firm two-fold: to settle accounts and to share the liquidated residue under Section 48 of the Indian Partnership Act, 1932?Does a partner's interest in partnership property amount to his proportionate share of the assets once they are realised and converted into money?Is a partnership 'at will' where the partners have fixed by contract its duration or the mode of its determination?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections