Expulsion of a partner is recognized as a mode of retirement resulting in a change in the constitution of a registered Firm, and the relevant provisions and rules provide for the procedure to report and challenge such changes.

JUDGMENT :

(A.S. Chandurkar, J.) :

1. RULE. Rule made returnable forthwith and heard the learned counsel for the parties.

2. The refusal on the part of the Registrar of Firms to record change in the constitution of the Partnership Firm consequent upon expulsion of some partners is under challenge in this writ petition filed under Article 226 of the Constitution of India.

3. The facts relevant for adjudicating the writ petition are that it is the case of the petitioner-Firm that it’s partners, along with respondent nos.2 to 6, constituted a Partnership Firm - Firm that was duly registered under the provisions of the Indian Partnership Act, 1932 (for short, “the Act of 1932”). The Firm consisted of thirteen partners. Eight partners issued a notice to the remaining partners on 25th June 2011 stating therein that since the said noticees failed to comply with the contractual obligations mentioned in the Partnership Deed dated 14th August 2009, they were being expelled from the Firm. This notice was replied by respondent nos.2 to 6 denying the allegations as made and questioning the legality of their expulsion. Based on such action of expulsion, the partners claiming to constitute the Firm, issued a notice on 3rd January 2014 to the Registrar of Firms with a request to delete the names of the expelled partners from the Registrar of Firms and amend the entries accordingly. This was followed by various reminders and ultimately by a notice dated 19th February 2016, the Registrar of Firms was called upon to take necessary steps within a period of seven days of receiving the notice. In response, the Assistant Registrar of Firms issued a communication to the petitioner on 15th March 2016 stating therein that there was no provision under the Act of 1932 to record any change that occurs in a Firm on the basis of expulsion of a partner. It was further stated that under Section 63, read with Form “E”, there was no provision to record such change. The partners were directed to take necessary steps and obtain orders from a Court of law. Being aggrieved, the Firm, through one of it’s partner, has challenged this communication dated 15th March 2016. A further intimation given to the Firm on 14th June 2017, reiterating the same stand is also under challenge.

4. Mr. R.D. Soni, learned counsel for the petitioner referred to various provisions of the Act of 1932 and especially Sections 32, 33 and 63 of the Act of 1932 to submit that expulsion of a partner was permissible under the Act of 1932. The provisions of Section 32(2) to (4) thereof had been made applicable even with regard to an expelled partner by treating such partner to be a retired partner. The Registrar of Firms, therefore, was not justified in refusing to take necessary steps so as to remove the names of the expelled partners. The requisite information having been duly furnished under Form “E”, prescribed under the Maharashtra Partnership Rules, 1989 (for short, “Rules of 1989”), the Registrar of Firms ought to have acted accordingly. It was further submitted that if the partners who had been expelled sought to raise a dispute, the same was liable to be adjudicated in accordance with law. Only on the ground that there was some dispute with regard to the aspect of expulsion, the Registrar of Firms could not have refused to record the change in the constitution of the Firm, as reported. The reasons given by the Assistant Registrar of Firms were not supported by the provisions of the Act of 1932 and hence the refusal on the part of the Registrar of Firms to record the change was liable to be set aside.

5. On the other hand, Mr. Rushikesh C. Barge, learned counsel for respondent nos.2 to 6 opposed the writ petition and submitted that in terms of the Deed of Partnership, it was open for the aggrieved partners to invoke the arbitration clause present in the Partnership Deed. Referring to clauses 18, 19 and 23 of the Partnership Deed, it was submitted that the manner in which such dispute could b