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CMA Intermediate · Business Laws and Ethics · Indian Partnership Act, 1932

Ravi, Sunil and Meena run a partnership firm in Pune. Their partnership deed is silent on expulsion. Ravi and Sunil, being a majority, pass a resolution to expel Meena because they find her working style irritating. What is the legal position under the Indian Partnership Act, 1932?

The expulsion is invalid. A partner cannot be expelled by any majority of partners unless a power of expulsion is conferred by the partnership contract and exercised in good faith. Since the deed is silent, the majority resolution cannot remove Meena.

  1. AThe expulsion is valid because a majority of partners decided it
  2. BThe expulsion is valid if Meena is given one month's notice
  3. CThe expulsion is invalid because no power of expulsion is conferred by contract and a majority cannot expel a partnerCorrect
  4. DThe expulsion is valid if the firm is registered

Explanation

Section 33(1) says a partner may not be expelled by any majority of the partners, save in the exercise in good faith of powers conferred by contract between the partners. The deed here confers no such power, so the majority resolution cannot expel Meena. Notice period and registration do not supply the missing power.

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