Source: RTP,Dec20185 Marks
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Question Scenario

Ram & Co., a firm consists of three partners A, B and C having one third share each in the firm. According to A and B, the activities of C are not in the interest of the partnership and thus want to expel C from the firm. Advise A and B whether they can do so quoting the relevant provisions of the Indian Partnership Act, 1932.

Estimated Writing Time: 9 mins Try in Practice Mode

Suggested Answer

It is not possible for the majority of partners to expel a partner from the firm without satisfying the conditions as laid down in Section 33 of the Indian Partnership Act, 1932. The essential conditions before expulsion can be done are: \n(i) the power of expulsion must have existed in a contract between the partners;\n(ii) the power has been exercised by a majority of the partners; and\n(iii) It has been exercised in good faith. \nThe test of good faith includes: \n(a) that the expulsion must be in the interest of the partnership; \n(b) that the partner to be expelled is served with a notice; and \n(c) that the partner has been given an opportunity of being heard. \nThus, in the given case A and B the majority partners can expel the partner only if the above conditions are satisfied and procedure as stated above has been followed.

Exam Strategy Tip

When answering law questions in the CA Foundation exam, follow the "Provision -> Facts -> Conclusion" structure for maximum marks. Ensure to state the relevant sections where applicable to earn bonus marks from the evaluator.

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