Paramvir & Associates, a firm of Practising Professionals consists of three partners Ashok, Paramvir and Vir having one third share each in the firm. According to Ashok and Paramvir, the activities of Vir are not in

CS Executive · Setting up of Business Entities and Closure · PYQS · June 2019
Paramvir & Associates, a firm of Practising Professionals consists of three partners Ashok, Paramvir and Vir having one third share each in the firm. According to Ashok and Paramvir, the activities of Vir are not in the interest of the firm and thus want to expel Vir from the firm. Advise Ashok and Paramvir whether they can do so quoting the relevant provisions of the Indian Partnership Act, 1932.

Answer & Explanation:

Section 33 of the India Partnership Act, 1932, lays down certain conditions for expulsion for Partners of the Firm. In view of this, Ashok and Paramvir cannot expel Vir from their Firm without satisfying certain conditions. The essential conditions before expulsion to be satisfied are: The power of expulsion must have existed in a contract between the partners, The power has been exercised by a majority of the partners, and It has been exercised in good faith. The test of good faith includes: That the expulsion must be in the interest of the partnership, That the partner to be expelled is served with a notice, and That the partner has been given an opportunity of being heard. Accordingly, if Ashok and Paramvir must satisfy the above conditions and follow the procedures, then only they may expel Vir from the Firm.

Topics: Indian Partnership Act, 1932

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