Back
2021 Supreme(Online)(KER) 1815
HIGH COURT OF KERALA
N. NAGARESH, J
JOSHI JOHN – Appellant
Versus
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA – Respondent
WP(C)/5833/2020
Sri.V.M.KRISHNAKUMAR, Sri.M.GOPIKRISHNAN NAMBIAR, Sri.K.JOHN MATHAI, Sri.JOSON MANAVALAN, Sri.KURYAN THOMAS, Sri.PAULOSE C. ABRAHAM, Smt.ANN MARIA FRANCIS, Sri.B.S.SURAJ KRISHNA, Shri.FEBIN RAJ T.S.
A partner in an at-will partnership may dissolve the partnership and retire unilaterally through notice, despite objections from remaining partners, aligning with the provisions of the Indian Partnership Act.
Headnote:
Partnership - R. Menon & Associates - Section 43, Indian Partnership Act; Section 27, Chartered Accountants Act; Regulation 190, Chartered Accountants Regulations - The court determined that unilateral notice of dissolution and retirement can be validly initiated in a partnership at will, recognizing the petitioner's right to retire despite the lack of consent from remaining partners.
Fact of the Case:
The petitioner, a Chartered Accountant, challenged the refusal of the 1st respondent to acknowledge his retirement and dissolve the partnership 'R. Menon & Associates' formally, asserting his right to establish a new sole proprietorship after notifying the other partners of his intention to dissolve the firm.
Finding of the Court:
The court held that the petitioner had successfully communicated his retirement in accordance with the provisions of the Indian Partnership Act, determining that the 1st respondent could not require consent from remaining partners for such dissolution or retirement, and thus affirmed the petitioner's professional autonomy.
Issues: Whether the 1st respondent can deny recognition of a partner's retirement in an at-will partnership despite sufficient notice, and whether this restriction contravenes the partner's right to practice their profession.
Ratio Decidendi: The court concluded that under Section 43 of the Indian Partnership Act, a partner may dissolve the firm with a written notice and that the regulations governing Chartered Accountants do not allow for denying a partner's retirement based on partner disputes.
Final Decision: The writ petition was allowed, directing the 1st respondent to recognize the petitioner's retirement and remove his name from the partnership records.
J U D G M E N T
~ ~ ~ ~ ~ ~ ~ ~ ~
The petitioner, who is a Chartered Accountant registered with the 1st respondent-Institute of Chartered Accountants of India, is aggrieved by the refusal of the 1st respondent to register his sole proprietorship on its website. The petitioner sought to command the respondent to record the dissolution of the firm 'R Menon and Associates' as shown in Exhibit P5(a) in view of Section 43 of the Partnership Act as well as Exhibit P4 and to delete the petitioner's name from the records pertaining to the said firm in all capacities whatsoever with effect from 21 November
2019. Certain other incidental reliefs were also sought.
2. The petitioner states that respondents 2 and 3 and the petitioner were Partners of a Firm “R. Menon & Associates”, having office at Ernakulam. The partnership was constituted as per Ext.P1 Partnership Agreement dated 30.06.2015. The duration of the partnership was ‘at will’ as per Clause 9 of Ext.P1. The 1st respondent issued Ext.P2 Registration Certificate dated 15.02.2018 to the partnership. The 2nd respondent, at the same time, was practising as Sole Practitioner also.
3. According to the petitioner, he was the Working Partner and respondents 2 and 3 were residing at Kozhikode and Dubai and were not taking active role in running the partnership. The husband of the 3rd respondent, as landlord, issued notice to the petitioner to vacate the partnership office premises. A Rent Control Petition was also filed. The Firm surrendered the premises to the said landlord, as both the other Partners gave consent to vacate the premises.
4. The petitioner, who had invested in the premises, stood to lose his investments due to vacating the premises.
He was no longer interested in continuing with the partnership and hence sent Ext.P4 notice to respondents 2 and 3, dissolving the partnership with effect from 20.11.2019. The 3rd respondent, however, sent Ext.P5 reply stating that the partnership cannot be so dissolved unilaterally. In Ext.P5, the 3rd respondent stated that if the petitioner wanted to exit, he should have resigned, leaving the other Partners to reconstitute and continue with the partnership.
5. Though the petitioner submitted an application to the 1st respondent-Institute to record dissolution of the Partnership, it has not been recorded as the web portal of the 1st respondent-Institute insisted on OTP confirmation by other Partners. The petitioner desired to continue as Chartered Accountant at a different address, as a partnership in the name and style “Joshi John & Associates”. On his application to register the new Firm, the 1st respondent noted in the web portal that since the petitioner is in charge of another partnership at different address, he has to change his Head Office address.
6. Thereafter, the petitioner proposed to register “Joshi John & Co.” as a sole proprietorship. Though the petitioner tried to upload Form-18 in respect of the proprietorship, the Form-18 by default is showing the petitioner as partner of the dissolved “R. Menon & Associates”. The petitioner sent a series of letters pointing out his difficulties in uploading the Form-18. The 1st respondent is taking a stand that in order to dissolve the Firm 'R. Menon & Associates', the consent of other two Partners is required. The stand of the 1st respondent seems to be that when an activity of dissolution of a Partnership Firm is pending, another activity of registration of a Proprietary Firm cannot be initiated.
7. As the issue involved is one affecting the fundamental right of the petitioner to pursue a profession, this Court passed an interim order on 20.10.2020 directing the 1st respondent to upload the Form-18 pertaining to the petitioner’s proprietary concern. The petitioner would submit that though the Form-18 was uploaded pursuant to the interim order of this Court, since the name of the dissolved Firm still exists in the records of the 1st respondent, the petitioner is denied the right to apply for M
