Group No: IX

Roll Number: 131214

Business Law Group

RAJIV GANDHI NATIONAL UNIVERSITY OF LAW

CURRICULUM MOOT, 2017

In the Hon’ble District Court of XYZ

Civil Suit No ____/2017

In the matter of

Ms. Sonam _____________________________________________Plaintiff

V.
XYZ________________________________________________Respondent

MEMORIAL FOR PETITIONER

Memorial for Petitioner

 TABLE OF CONTENTS

LIST OF ABBREVIATIONS ..................................................................................... III

INDEX OF AUTHORITIES...................................................................................... IV

STATEMENT OF JURISDICTION .............................................................................. V

STATEMENT OF FACTS ......................................................................................... VI

ISSUES RAISED .................................................................................................... VII

SUMMARY OF ARGUMENTS ............................................................................... VIII

BODY OF ARGUMENTS ............................................................................................ 1

A. That Plaintiff was a legitimate partner in the firm and therefore is entitled to her

share in the benefits earned by the firm. .......................................................................... 1

I. The Plaintiff was a partner in the firm until she voluntarily retired after

attaining the age of majority ........................................................................................... 1

II. That Plaintiff is entitled to her share in the benefits earned by the firm in last

15 years ............................................................................................................................. 2

B. That the expulsion of the plaintiff from the firm is unlawful ................................ 5

I. The expulsion was not done with the consent of all the partners as required

by law ................................................................................................................................ 5

II. The expulsion was not exercised in good faith ..................................................... 6

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 III. That the defendant has committed fraud by wilfully omitting the procedure

mentioned under section 33 ........................................................................................... 8

IV. That the admission of Akhil as a new partner in the firm is invalid............... 8

PRAYER ................................................................................................................. 10

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 LIST OF ABBREVIATIONS

S. No. Abbreviation Full Form

1 AIR All India Reporter

2 Anr. Another

3 A.P. Andhra Pradesh

4 & And

5 All Allahabad

6 Co. Company

7 Del Delhi

8 s. Section

9 Ker Kerala

10 Kar Karnataka

11 ss. Sections

12 Hon’ble Honourable

13 HC High Court

14 ¶ Paragraph

15 Bom. Bombay

16 Ltd. Limited

17 Cal. Calcutta

18 Ors. Others

19 SCC Supreme Court Cases

20 SC Supreme Court

21 v. Versus

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 INDEX OF AUTHORITIES

CASES

1. Blisset v. Daniel .............................................................................................................. 11

2. Briess v. Woolley, (1954) A.C. 333 ............................................................................... 14

3. Davies v. London and Provincial Marine Insurance Co., (1878) 8 Ch. D. 469 ................ 14

4. Harris v. A. Harris Ltd 1936 S.C. 183, 204 – 205 per ...................................................... 11

5. S.P.C. Naidu v. Jagannath, A.I.R. 1994 S.C. 853. .......................................................... 14

6. Santiram Mullick v. Hiranmoy Bagchi and Ors, (1991) 2CALLT399 (HC) ....................... 13

7. Shriram v. Gouri Shankar, A.I.R. 1961 Bom. 136. ...........................................................8

8. With v. O’Flangan, (1936) Ch. 575 ................................................................................ 14

STATUTES

1. Indian Contract Act, 1872

2. Partnership Act, 1932

BOOKS

1. Law of Specific Relief, J. P.S. Narayana, 6th Ed. (2007), pp. 156,157 .........................................11

2. Specific Relief Act, M.C. Sarkar, 17th Ed. (2016), pp. 135, 137 ...................................................13

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 STATEMENT OF JURISDICTION

The petitioner invokes the jurisdiction of the Hon’ble Court under section 9 of the Code of Civil Procedure, 1908.

Courts to Try All Civil Suits Unless Barred: The Courts shall (subject to the provisions herein
contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance
is either expressly or impliedly barred.
Explanation I.- A suit in which the right to property or to an office is contested is a suit of a civil
nature, notwithstanding that such right may depend entirely on the decision of questions as to
religious rites or ceremonies.
Explanation ll.- For the purposes of this section, it is immaterial whether or not any fees are
attached to the office referred to in Explanation I or whether or not such office is attached to a
particular place.

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 STATEMENT OF FACTS

1. The plaintiff, i.e., Ms. Sonam is Mr. Ashok’s daughter who used to be partner for benefits in

a registered firm by the name of XYZ. She was made ancilliary to the benfits of the firm,

immediately after she was born.

2. The respondent is a partnership firm, named XYZ, registered under the Indian Partnership

Act, 1932. There used to be five partners, Mr. Ashok, his wife Mrs. Geeta Rani, his daughter

Ms. Sonam and his two younger brothers, Mr. Raman and Mr. Dhiru.

3. When plaintiff was 3 years old, a baby boy named Akhil was born to respondent. On his

birth Ashok removed Sonam's name as a partner and added Akhil's name as a partner

without the knowledge of Geeta and Dhiru.

4. When plaintiff attained the age of majority, she gave a notice for not continuing to be a

partner in the firm as mandatory under Section 30 of the Partnership Act 1932.

5. She claimed her due benefits on relinquishing her partnership share. She was informed that

she is no more a partner in the firm. She filed a suit for fraud and claimed her share in the

benefits earned by the firm in last 15 years.

6. The plaintiff contends that her removal from the firm was fraudulent and she is entitled to a

share in 15 years of profits of the firm.

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 ISSUES RAISED

ISSUE I

WHETHER THE REMOVAL OF THE PLAINTIFF FROM THE PARTNERSHIP FIRM LEGAL OR NOT?

ISSUE II

WHETHER THE PLAINTIFF IS ENTITLED TO A SHARE IN THE PROFITS OF THE PARTNERSHIP

FIRM OF THE LAST 15 YEARS?

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 SUMMARY OF ARGUMENTS

A. THAT PLAINTIFF WAS A LEGITIMATE PARTNER IN THE FIRM AND

THEREFORE IS ENTITLED TO HER SHARE IN THE BENEFITS EARNED
BY THE FIRM.

The plaintiff was a legitimate partner in the firm on the ground that the procedure laid down under
section 33 of the Indian Partnership Act, 1932 was not followed by the defendant and that plaintiff
is entitled to her share in the profits in accordance to Section 30(2) of the act.

B. THAT THE EXPULSION OF THE PLAINTIFF FROM THE FIRM IS

UNLAWFUL.

The expulsion of Sonam by Ashok was not in accordance to the provisions of Section 33(1) of The
Indian Partnership Act, 1932. Every partner has the right to continue in the partnership. He cannot
be expelled from the firm by any majority of the partners unless conferred by partnership agreement
and exercised in good faith and for the benefit of the firm.

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 BODY OF ARGUMENTS

A. THAT PLAINTIFF WAS A LEGITIMATE PARTNER IN THE FIRM AND

THEREFORE IS ENTITLED TO HER SHARE IN THE BENEFITS EARNED BY

THE FIRM.

It is most humbly submitted before this Hon’ble court that the plaintiff was a legitimate partner in
the firm on the ground that the procedure laid down under section 33 of the Indian Partnership Act,
1932 was not followed by the defendant. To substantiate this point, the arguments are presented in a
two-fold manner, i.e.

(i) The Plaintiff was a partner in the firm until she voluntarily retired after attaining the age
of majority
(ii) That Plaintiff is entitled to her share in the benefits earned by the firm in last 15 years.

I. THE PLAINTIFF WAS A PARTNER IN THE FIRM UNTIL SHE VOLUNTARILY RETIRED

AFTER ATTAINING THE AGE OF MAJORITY

It is humbly submitted before this Hon’ble court that plaintiff is a legitimate partner in the
Partnership firm in accordance with provisions of Section 30 of the Indian Partnership Act, 1932
which deals with the status of minor in a Partnership Firm. Section 30(1) of the Act states that:

“A person who is a minor according to the law to which he is subject may not be a partner in a
firm, but with the consent of all the partners for the time being, he may be admitted to the
benefits of partnership”1

Section 30(1) provides that a minor may not be a partner in a firm, but with the consent of all the
partners for the time being, he may be admitted to the benefits of partnership. The introduction of a
minor to the benefits of partnership presupposes existence of a valid partnership between persons

1
Indian Partnership Act, 1932 Section 30 (1).

1
competent to contract must exist before a minor can be admitted to its benefits. 2 It is possible that
the major members decide to constitute partnership and admit the minor to the benefit of the said
partnership.3

In the instant case clearly plaintiff was admitted as a partner in the partnership firm with the consent
of all the partners.4

II. THAT PLAINTIFF IS ENTITLED TO HER SHARE IN THE BENEFITS EARNED BY THE FIRM
IN LAST 15 YEARS

It is humbly submitted before this Hon’ble court that plaintiff is entitled to her share in the profits
in accordance to Section 30(2) of the act which states that:

“Such minor has a right to such share of the property and of the profits of the firm as may be
agreed upon, and he may have access to and inspect and copy any of the accounts of the firm.”5

In the instant case, plaintiff was admitted as a partner in the firm as soon as she was born. It is
alleged by the plaintiff that she is also lawfully entitled to the profits of last 18 years which has been
generated by the firm.6
Further with reference to Section 30(5) of the act which states that:

“At any time within six months of his attaining majority, or of his obtaining knowledge that he
had been admitted to the benefits of partnership, whichever date is later, such person may give
public notice that he has elected to become or that he has elected not to become a partner in the
firm, and such notice shall determine his position as regards the firm.”7

2
Shriram v. Gouri Shankar, A.I.R. 1961 Bom. 136.
3
The Commissioner of Income-tax, Mysore v. Shah Mohandas, A.I.R. 1966 S.C. 15.
4
¶1, Moot Proposition.
5
Indian Partnership Act, 1932 Section 30 (2).
6
¶1, Moot Proposition.
7
Indian Partnership Act, 1932 Section 30 (5).

2
A minor partner has two options within 6 months of his attaining majority or on his obtaining
knowledge that he had been admitted to the benefits of partnership, whichever date is later, the
minor partner has to decide whether he shall remain a partner or leave the firm where he has
elected not to become partner he may give public notice that he has elected not to become partner
and such notice shall determine his position as regards the firm.

If he fails to give such notice he shall become a partner in the firm on the expiry of the said six
months.

(a) When he becomes partner:

If the minor becomes a partner of his own willingness or by his failure to give the public notice within
specified time, his rights and liabilities as given in Section 30(7) are as follows:

(i) He becomes personally liable to third parties for all acts of the firm done since he
was admitted to the benefits of partnership.
(ii) His share in the property and the profits of the firm remains the same to which he
was entitled as a minor.

(b) When he elects not to become a partner:

(i) His rights and liabilities continue to be those of a minor upto the date of giving
public notice.
(ii) His share shall not be liable for any acts of the firm done after the date of the notice.8

He shall be entitled to sue the partners for his share of the property and profits. It may be noted that
such minor shall give notice to the Registrar that he has or has not become a partner. Further with
reference to Section 30(8) of the act which states that –

“Where such person elects not to become a partner.

a) his rights and liabilities shall continue to be those of a minor under this section upto the date
on which he gives public notice.
b) his share shall not be liable for any acts of the firm done after the date of the notice, and

8
Commentary Indian Partnership Act, 1932, ICAI.

3
 c) he shall be entitled to sue the partners for his share of the property and profits in accordance
with sub section (4)”9

In the instant case plaintiff gave a notice10 for not continuing to be a partner in the firm as
mandatory under Section 30 of the Partnership Act 1932 11.

She claimed her due benefits on relinquishing her partnership share and hence with accordance to the
above provisions she is entitled for the share in profits.

9
Indian Partnership Act, 1932 Section 30 (8).
10
¶2, Moot Proposition.
11
Indian Partnership Act, 1932 Section 30 (5).

4
 B. THAT THE EXPULSION OF THE PLAINTIFF FROM THE FIRM IS UNLAWFUL

I. THE EXPULSION WAS NOT DONE WITH THE CONSENT OF ALL THE PARTNERS AS

REQUIRED BY LAW.

It is humbly submitted before the Hon’ble court that the expulsion of Sonam by Ashok was not in
accordance to the provisions of Section 33(1) of The Indian Partnership Act, 1932 which states that:

“A partner may not be expelled from a firm by any majority of the partners, save in the exercise
in good faith of powers conferred by contract between the partners.”12

Every partner has the right to continue in the partnership. He cannot be expelled from the firm by
any majority of the partners unless conferred by partnership agreement and exercised in good faith
and for the benefit of the firm.13 A partner may not be expelled from a firm by a majority of partners
except in exercise, in good faith, of powers conferred by contract between the partners. It is thus,
essential that:
(i) the power of expulsion must have existed in a contract between the partners;
(ii) the power has been exercised by a majority of the partners ;and
(iii) it has been exercised in good faith. I fall these conditions are not present, the expulsion is not
deemed to be in bona fide interest of the business of the firm.14

In the leading case of Blisset v. Daniel related to the expulsion of one partner by the partners
holding a majority of the copartnery shares, Vice-Chancellor Page stated that “A power so conferred
by the co-partnery articles exercised by partners holding a majority of shares must be understood to
exist, not for the benefit of any particular parties holding two-thirds or more of the shares, but for
the benefit of the whole society.” The purported expulsion was held by the Vice-Chancellor, at the
instance of the expelled partner, to be in the equity sense “a fraud upon the power” vested in the
majority of the partners.” Harris v. A. Harris Ltd15.

12
Indian Partnership Act, 1932 Section 33 (1).
13
Commentary Indian Partnership Act, 1932, ICAI.
14
Ibid.
15
Harris v. A. Harris Ltd 1936 S.C. 183, 204 – 205 per.

5
But in the instant case when Sonam was 3 years old, a baby boy named Akhil was born to Ashok
and Geeta. On his birth Ashok removed Sonam's name as a partner and added Akhil's name as a
partner without the knowledge of Geeta and Dhiru,16 both Gita and Dhiru were the partners in the
firm.

Therefore it was necessary for Ashok to take consent of both the partners which in the Instant case
was not taken hence Sonam’s expulsion from the firm was invalid and Sonam was a partner of the
firm till the notice was given.

II. THE EXPULSION WAS NOT EXERCISED IN GOOD FAITH

It is humbly submitted before the Hon’ble court that the expulsion of Sonam was not in good faith
and hence the defense cannot be taken. Section 33(1) of the act deals with the concept of “good
faith”. No expulsion is possible unless a power to that effect has been conferred by a contract. This
power must be exercised in good faith for the general interest of the whole firm. If the power to
expel has been exercised bona fide the same cannot be challenged in a court of law.17

Any such power to expel must be exercised with the utmost good faith and the court will be alive to
the possibility of abuse, particularly where there is an ulterior motive for the expulsion. Blisset v
Daniel18is an example of the court exercising this control, when it restrained an expulsion designed
to take advantage of the fact that the partner purportedly expelled had been induced by the other
partners to sign accounts which would falsely have valued his share in the firm to their benefit.

The test of good faith as required under Section 33(1) 19 includes three things:

(a) That the expulsion must be in the interest of the partnership.

(b) That the partner to be expelled is served with a notice.

(c) That he is given an opportunity of being heard.20

In the instant case none of the above condition is being satisfied to use the defense of good faith as:

16
Moot Proposition, ¶2.
17
Russell v. Russell, 14 Ch. D. 471.
18
Ibid.
19
Indian Partnership Act, 1932 Section 33 (1).
20
Ibid.

6
Firstly, in the instant case there expulsion was not in the interest of the partnership firm as both
Sonam and Akhil were minors and Ashok had to carry out their part of work so it was of no
concern for the partnership firm that which of them was to be partner.

Secondly, in the instant case there was no notice that was provided to the minor regarding expulsion.

Thirdly, there was no opportunity to be heard for minor.

It was held in the case of Santiram Mullick v. Hiranmoy Bagchi and Ors.21 that for expelling a partner the
term of partnership must confer power of expulsion specifically and even in such a case its exercise
will not be in good faith unless it is done with the honest view of the interest of the firm and with
the notice to the partner affected and an opportunity of being heard. Section 33 of the Partnership
Act is reproduced below:

(1) A partner may not be expelled from a firm by any majority of the partners, save in the exercise in
good faith of powers conferred by contract between the partners.
(2) The provisions of Sub-sections (2), (3) and (4) of Section 3222 shall apply to an expelled partner
as if he were a retired partner."

In view of Section 33 of the Partnership Act unless there is such an agreement there can be no
expulsion of any partner from the partnership the expulsion is contrary to law.
Section 33 of the act does not contemplate expulsion of a partner unless the terms of agreement of
the partnership firm confer upon the majority of the partners to do so and that too such power has
to be exercised in good-faith. Therefore, the law of the land is that a partner may be expelled from a
firm by the majority of the partners and in good-faith if the terms of partnership confer such power,
otherwise not.
The remedy is in Section 44 of the Partnership Act.23 If a partner commits breach of the agreement
then under Clause (d) of Section 44 at the suit of a partner, the court may dissolve the partnership
firm.
Hence in the instant case the defense of good faith cannot be taken.

21
Santiram Mullick v. Hiranmoy Bagchi and Ors, (1991) 2CALLT399 (HC).
22
Indian Partnership Act, 1932, Section 32.
23
Indian Partnership Act, 1932, Section 44.

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III. THAT THE DEFENDANT HAS COMMITTED FRAUD BY WILFULLY OMITTING THE

PROCEDURE MENTIONED UNDER SECTION 33.

Section 17(2) of the Indian Contracts Act24 states defines fraud as: the active concealment of a fact
by one having knowledge or belief of the fact
In State of Andhra Pradesh v. T. Suryachandra Rao,25 the Apex court explained:
By “fraud” is meant an intention to deceive; whether it is from any expectation of advantage to the
party himself or from the ill will towards the other is immaterial. The expression “fraud” involves
two elements, deceit and injury to the person deceived. Injury is something other than economic
loss, that is, deprivation of property, whether movable or immovable or of money and it will include
any harm whatever caused to any person in body, mind, reputation or such others.

Fraud, the court said, “is an act of deliberate deception with the design of securing something by
taking unfair of another. It is a deception in order to gain by another’s loss.”26

It is a duty to disclose changes, if a statement is true when made, but subsequently becomes false by
the change of circumstances, there is a duty to disclose the change, before the other party acts upon
it/ If the change is not notified to the other party, it would amount to fraud. 27
In the instant case, it was the duty of the defendant to disclose the changes to the petitioner as well
as the other partners which he actively concealed.

IV. THAT THE ADMISSION OF AKHIL AS A NEW PARTNER IN THE FIRM IS INVALID.

According to section 31 of the Indian Partnership Act, 1932, subject to contract between the
partners and to the provisions of Sec. 30 m no person shall be introduced as a partner into a firm
without the consent of all the existing partners.

Section 31 of the act states that every partner has the right to prevent the introduction of a new
partner in the firm without the consent of all the existing partners.

24
Indian Partnership Act, 1932, Section 17(2).
25
State of Andhra Pradesh Vs. T. Suryachandra Rao AIR 2005 SC 3110.
26
S.P.C. Naidu v. Jagannath, A.I.R. 1994 S.C. 853.
27
Briess v. Woolley, (1954) A.C. 333; With v. O’Flangan, (1936) Ch. 575; Davies v. London and Provincial Marine
Insurance Co., (1878) 8 Ch. D. 469.

8
By virtue of the abovementioned sections no person can be introduced as a partner in a firm
without the consent of all the partners. A partner cannot by transferring his own interest, make
anybody else a partner in his stead or instead of any other partner, unless the other partners agree to
accept that person as a partner.

Hence the admission of the new partner in the firm is Invalid.

9
 PRAYER

Wherefore, in light of the issues raised, arguments advanced and authorities cited, the Defendant
respectfully request this Hon’ble court to adjudge and declare:

1. That Plaintiff was a legitimate partner in the firm and therefore is entitled to her share in the
benefits earned by the firm.

2. That the expulsion of the plaintiff from the firm is unlawful

The Court may also make any such order as it may deem fit in terms of equity, justice and
due conscience.
And for this act of kindness the respondent shall as duty bound ever humbly pray.

Date: _____________ Sd/

Counsel on behalf of the Plaintiff

10