Siva (Consultant) 16 April 2009

Expulsion of Partner from a registered Firm

Hi,
In a registered Partnership Firm A,B & C are the Partners. Partnership has been created under 'At Will' and 'A' being the Managing Partner. The Partner 'C' is not committed to his work as he himself engaged with other businesses and also, not invested any amount as mentioned in the partnership deed and his code of conduct is not good as well.

Though sending 'N' number of legal Notices (via Registered Post to his Residential address) and Reminders, he didn't even participate in any of the General Meeting or Extraordianry General Meetings which was arranged by the other 2 partners on behalf of the Firm to show cause for the grounds mentioned above. Since he neither turned up in person nor send a proxy, the other two 'A' and 'B' (majority of the partners) have decided to exercise of the power to expel that 'C' parnter under Section-33, Indian Partnership Act, 1932, and also sent a Notice for the same to the concerned. Also, Minutes of the Meeting has been prepared and special resolution has been passed by the majority of the partners to expel the 'C'.

Here, with regard to expulsion, I would like to know whether both partners, 'A' & 'B', has to give public notice in any of the vernacular newspaper BEFORE registered with Registrar of Firms about expulsion OR AFTER registering about expulsion of Partner, the other two has to give the public notice? Or Are we need to get a Court order for this? Or we need to publish in Government Gazette? Or Is there any Proceduure/Guidelines/Order to be followed? Kindly clarify me.

Appreciate your immediate respond.
Thanks in advance!

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5 Replies

A V Vishal (Advocate) 16 April 2009

33. EXPULSION OF A PARTNER.

(1) A partner may not be expelled from a firm by any majority of the partners, save in the exercise in good faith or powers conferred by contract between the partners.

(2) The provisions of sub-sections (2), (3) and (4) of section 32 shall apply to an expelled partner as if he were a retired partner.

72. MODE OF GIVING PUBLIC NOTICE.

A public notice under this Act is given

(a) Where it relates to the retirement or expulsion of a partner from a registered firm, or to the dissolution of a registered firm, or to the election to become or not to become a partner in a registered firm by a person attaining majority who was admitted as a minor to the benefits of partnership, by notice to the Registrar of Firms under section 63, and by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates, has its place or principal place of business, and

(b) in any other case, publication in the Official Gazette, and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business.

BHANU RASPUTRA (ADVOCATE & SOLICITOR divyatta.r@gmail.com) 16 April 2009

1st give written notice through ADVOCATE AND THEN GIVE IN ANY 2 LOCAL NEWSPAPER OF LANGUAGE KNOWN TO YOUR PARTNER.

IF AFTER NOTICE , DO NOT REPLY. THEN U HAVE TO GO TO COURT FOR DISSOLUTION OF PARTNERSHIP FIRM OR F OR EXPLUSION OF PARTNER FROM FIRM.

Y V Vishweshwar Rao (Advocate ) 16 April 2009

Whether the terms of Partnership Deed , the non participation in the business and No investment in the Partnership Business enables the A & B Partners to expell the C -- ?

Siva (Consultant) 20 April 2009

Dear All,
Thanks a lot for your immediate respond.

My Query is not about 'Dissolution of the Firm'. My question is about 'How to Register an Expel Partner in the Register of Firms'.

For instance, A,B and C are the partners of the firm.

A & B have decided to Expel the partner 'C' (without dissolution of the Firm) since for the reasons under that partner 'C' is:
(1) not actively involved in the said partnership,
(2) not participating in any of the General Boady meetings, (3) not invested any amount as agreed by him and also mentioned in the partnership deed and
(4) his code of conduct is not good.

A & B, being the continuing partners, sent 3 notices to attend the General Body Meeting as well as the Extraordinary General meeting conducted by them to show cause for the grounds above mentioned. But partner 'C' has not attended any of the meetings and not even responded.

Again, Parties A & B have sent legal notice drawn by an advocate by giving 1 month notice to show cause for the grounds above mentioned. But partner 'C' has not attended any of the meetings and not even responded for this as well.

So Partners, A & B, being the majority, expelled partner 'C' under Section - 33 and given proper notice to him as per advocate's advise. The Advocate also advised the continuing partners to register the amended FORM-V along with all the notices sent to Partner 'C', in the Registrar of firms.

But in the Registrar Office, they'll be seeking Court Order for the same since the expelled partner has not singned in the FORM-V. However, he may not be. In Registrar office, the authority said they haven't dealt with any expulsion case so far and they may not knowing the procedures to register the expulsion case.

But our lawyer said that the continuing partners has to register the notices that they sent in Rs. 100 stamp paper and to notify the same to the District Registrar (DR).

So that am asking you whether we need to get a court order to register the FORM-V (Reconstitution of firm) or is that sufficient to file the notices in Rs.100 stamp paper and forward it to the DR to file the amended FORM-V (A & B, be the continuing partners and C is the outgoing partner).

Appreciate your immediate respond.

Thanks in advance!

Note: Whether the Paper AD about expulsion of partner has to be given only after Registration of new FORM-V or the partners A & B jointly can give now since they've already expelled the partner 'C' under section-33 (by not registered yet).