Legal remedy in case of Unregistered Partnership

Querist : Anonymous (Querist) 20 March 2011 This query is : Resolved
Hi. Where 2 out of 3 partners of an unregistered partnership firm, take away capital, vendors and clients of the firm and start a separate partnership doing the same business as that of the earlier unregistered partnership firm; what legal remedy may be invoked against such partners and the employees who helped such partners.
Does Section 69 of Partnership Act completely bars any civil action for breach?
Can a criminal action for criminal breach of trust be appropriate in the case?
Any other remedy that may be sought?

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adv. rajeev ( rajoo ) (Expert) 20 March 2011
When it is an unregd.,firm you cannot take any action.

Devajyoti Barman (Expert) 20 March 2011
Section 69 of the Partnership Act only when the unregistered Firm wishes to take any legal proceeding against any of its client or customers etc to redress it s grievance against them.
This bar of section 69 would not come into play when the suit is filed among partners inter se or by the third person against the firm.
So in this case the disgruntled partner can very much apply for dissolution of partnership, injunction against the new firm and for accounts. The criminal action can also be initiated for defalcation of fund etc.

R.Ramachandran (Expert) 20 March 2011
Yes, I agree with the views of Mr. Barman.

malipeddi jaggarao (Expert) 20 March 2011
Section 69 Clause (3) (a) exempts the restriction of legal course imposed on the unregistered partnership for exercising rights of the partners inter-se or for seeking dissolution. The third partner has got every right through legal process for accounts, dissolution etc.

Querist : Anonymous (Querist) 21 March 2011
Mr. Rajeev, even I was of your view. But I would definitely want to take whatever action we can.
Thanks Mr. Barman. Will do as you suggest. Would post if I need any further guidance.

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