Referring to the provisions of the Indian Partnership Act, 1932, answer the following:
(i) "If a partner is otherwise expelled; the expulsion is null and void." Discuss.
(ii) "The partner who is expelled will cease to be liable to the third party for the act of the firm done after expulsion." Analyse.
According to Section 33 of the Indian Partnership Act, 1932
(i) the power of expulsion must have existed in a contract between the partners;
The test of good faith as required under Section 33(1) includes three things:
(ii) “The partner who is expelled will cease to be liable to the third party for the act of the firm done after expulsion”
According to Section 32(3) of the Indian Partnership Act, 1932, notwithstanding the expulsion a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the expulsion, until public notice is given of the expulsion.
(i) If a partner is otherwise expelled, the expulsion is null and void.
(ii) the power has been exercised by a majority of the partners; and
(iii) it has been exercised in good faith.
If all these conditions are not present, the expulsion is not deemed to be in bona fide interest of the business of the firm.
(i) The expulsion must be in the interest of the partnership.
(ii) The partner to be expelled is served with a notice.
(iii) He is given an opportunity of being heard. Hence, it is correct to say that, if a partner is otherwise expelled, the expulsion is null and void.
However, an expelled partner is not liable to any third party who deals with the firm without knowing that he was a partner.
Hence, the statement given is partially correct.
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