Partnership: relations between partners

Dear Professionals/ Experts,

We have a Registered partnership firm with 4 partners. Of late we have noticed erratic and abrupt changes in the attitude of one Partner which is adversly affecting the operations of the company. 

1) This Partner does not initiates any communication and gets back only if we enquire about company matters.

2) Often does things (meeting individuals) pertaining to company affairs without informing/ prior intimation to other partners nor communicates the outcome without being asked.

Since his actions can cause damages to the company Monetary or in other ways, what precautions can the rest of partners take to absolve themselves of any damages financial/other incurred due to his actiions which are not in the spirit of partnership. Can the other partners issue notice to him for the same after a dialogue? 

Is there a provision in the IPA for holding meetings between partners and recording the Minutes for this act?

Please advice urgently.  thanks in advance

Wisdom

Section 33 of the Partnership Act allows the expulsion of a partner in the following cases :-

i) If the original partnership contract provides so;

ii) The power given by original partnership contract is exercised in good faith and after giving due hearing. 

The expelled partner would be like a retired partner whose accounts can be finalised and he can be sent packing, and by way of abundant caution it has to be intimated by public notice to all to avoid future liability. 

As long as he remains partner - he is the agent of everyone - and his acts (if done within his implied/express authority) would continue to bind each and every partner. 

Many thanks Mr. Bharat   for the Prompt reply,

However expulsion is a lengthy legal battle and requires concrete evidence of misconduct, which we do not have at the moment. Suspicious Behaviour has been noticed since a few months only.

The question here is what can be done now to safegaurd the interests of other Partners of the firm against any future liabilities / damages? Any measures available?

Thanks

Wisdom

Dear Experts,

Can you please revert with your valuable inputs for the above query?

Thanks

Wisdom

The best way to resolve a dispute, it is said, is to have a dialogue/discussion among the parties.

My sugegstion to you would be for the three remainig partners to discuss a plan of action and then talk to the misbehaving partner on what you wish to do. In your case, the most likely action plan would be to remove him from the partnership. You may give him a little more than what may be his share (since you would save soem time, effort and money by not going thorugh the legal process.)

If the partnership clause does not provide for removal of a partner, you may also include it by discussing with the 4th partner but remember that this caluse can also be misused by the majority of the partners coming together to remove one partner.

He may agree to your plan but if he does not then you have to prove his misbehaviour and fight it in the Court.

Adv Bharat has stated it nicely - you will have a joint and several responsibility for each other's acts as partners as long as you are partners.

S Jadhav

i will advice to talk to the partner about his problem, counselling sort of things.

All partners are  the agent of everyone , and their act binds others. 

However, if Partnership cluse  clarify, that any major financial deal or Loan. , or any major act, must be done with consent of all concern, that will safeguard other partners. 

You can change such terms and condition, to safeguard interest, and issue notice to unfaithful one, nopt to carry on any activity. 

or dissolve old partnership & form a new one with selected partners.