Expulsion of a partner under the Indian Partnership Act requires adherence to good faith and natural justice; vague allegations and lack of opportunity to defend render expulsion unjustified.

JUDGMENT :

(Moushumi Bhattacharya, J.)

The petitioner prays for interim protection against a show cause notice dated 20.10.2023 and a notice of expulsion dated 15.11.2023. The petitioner is one of 5 partners in a prosperous partnership firm which carries on business by the name of M/s Serajuddin & Co.

2. The petitioner Meraj Yusha is supported by the 3rd respondent, Sarosh Yazdani. The other 3 respondents namely Hamida Khatoon, Mohammad Intekhab Alam and Seraj Yusha are opposed to the petitioner (and Sarosh) and issued the impugned notices.

3. The Court refused to grant interim protection on 30.11.2023 primarily on the ground that the complete facts were not before the Court. The order records that the reasons for the impugned show cause notice and the letter of expulsion should first be considered before any interim relief is granted to the petitioner. The parties filed their respective affidavits and the matter was considered threadbare thereafter.

4. The decision which follows now is on the complete set of facts disclosed by the parties. The Court proposes to deal with the individual allegations raised in the impugned show cause notice since that is the starting-point of the challenge before the Court.

5. The first allegation in the show cause notice dated 20.10.2023 is that Meraj unlawfully executed and signed Loan cum Hypothecation Agreements on behalf of the Firm in violation of the terms of the Partnership Deed. The specific allegations under this heading however show that the violation relates to all the 3 Agreements which are dated 19.3.2021 and made in favour of Tata Motors Finance. One of the agreements was executed between Tata Motors Finance and Yazdani Steel and Power Limited. Meraj apparently signed on behalf of Yazdani Steel as the Managing Director and on behalf of the Firm as the guarantor. The allegation is that such act is illegal and in violation of the terms of the Partnership Deed.

6. The facts disclosed in the pleadings however show that none of the 3 Agreements dated 19.3.2021 were challenged by the respondents in the interregnum which spanned more than 2½ years. Surprisingly, the respondents have also not been able to show a single letter between March, 2021 to October, 2023 sent to the petitioner bringing the complaint on record or questioning the petitioner on the same.

7. Even more curious is the constitution of Yazdani Steel which is one of the parties to the Agreements. The petition discloses a statement which shows that Seraj (Respondent no. 4) holds 10.68% shares in Yazdani Steel and the respondents were Directors of interconnected Companies / Firms including Yazdani Steel. The Master Data on the MCA also bears testimony to this. These facts would naturally raise the presumption not only of the respondents' complicity but also of the respondents being possible beneficiaries of the Hypothecation / Guarantee Agreements. It is also relevant that none of the opposing respondents took any steps to cancel these 3 Agreements from 19.3.2021 to the date of the show cause notice, which is 20.10.2023.

8. The second allegation in the show cause notice is of undermining the morale of senior employees / auditors and partners of the Firm and defying the decisions taken by the majority of the partners.

9. The show cause notice however does not disclose a single instance in corroboration of this allegation. Learned counsel appearing for the respondents have argued that the petitioner Meraj opposed respondent no. 4 Seraj from taking over as the Managing Partner of the Firm. It has also been submitted that Meraj opposed a few of the resolutions taken by the majority partners. Even if such allegations are to be believed, it was incumbent on the respondents to disclose particulars in the show cause notice which forms the crux of the impugned action.

10. The third allegation is of the petitioner's malafide acts after the demise of one of the joint managing partners of the Firm, Md. Mofazzalur Rahman.

11. Although th