The retail firm dealing with car accessories was started by Kalika Singh on a rented property.
When the responsibility of the firm came to the sons of Kalika Singh and it was changed to a partnership firm from sole proprietorship and each partner having an equal share from the profit. The firm was renamed from “Jay Motor Industries” to “Jay Auto Accessories”. The company was one of the lead authorized dealer of “Pioneer Corporation” car accessories which included Car stereo and speakers. Due to some financial problem the firm was not able to cope with the monthly payment for the stocks which came in through Pioneer Corporation as an agreement of the dealership that the firm has to buy a certain amount of stock every month. Two of elder partner decided to close the dealership whereas the youngest decided not to agree due to this the youngest started his own firm with a different name as a sole proprietor under same line of business such that he can bring in stocks which were sent in by Pioneer, hence he started supplying these products to different retail outlets nearby where the requirement came and because of which the profitability of the partnership firm took a hit. None of the other partners took any action at that time regarding this and they just let it pass. Later on after few years when the book of accounts was affected due to this other partners consulted the accountant and started a different firm under the name of “India Auto Arcade” under which there were only two partner, the trading license of “Jay Auto Accessories” has been cancelled but the partnership agreement is not dissolved.
Coming to the current the scenario the youngest partner is still running his business from the same counter of “India Auto Arcade” bringing his own stocks and selling them under the name of “India auto Arcade”. He has his own firm registered as “Jay World” (Not sure) and buying stocks from companies. He is not sharing the profit which is made by him with the company. Due to the current situation it seems that youngest partner is doing a biased business under which he is using the resources of the current partnership firm and not sharing the profit made by him and running a sole proprietorship despite of being in a partnership agreement.
Q1. What legal action can be taken to claim damages form the youngest partner and stop him from running a sole proprietorship
Asked 2 years ago in Business Law from Kolkata, West Bengal
1)jay auto accessories is partnership firm in which all brothers are partners
2)on account of financial problems dealership of pioneer was closed but partnership firm was not dissolved .
3) however younger brother continued business with pioneer corporation as sole proprietor and no objection was raised by other partners .
4)in india Auto arcade youngest brother is not a partner but continues to remain a partner in jay auto accessories .
5)if youngest partner is misusing firm name india auto arcade legal notice can be issued to him to restrain him from using said name for selling his products .
6) Indi auto arcade can obtain injunction against youngest partner to restrain him from using firm name indi auto arcade for selling his products
1. You are silent on the name and style of the business run by the youngest member who appear to have separated form the partnership firm long ago.
2. if he has separated then how is he using ' India Auto Arcade' as business counter? This needs to be clarified.
3. In any event the partnership form namely ' India Auto Arcade' can apply for injunction to restrain the youngest brother who is running the separate business from using the trade name and infrastructure of ' India Auto Arcade' .
1 The trading license of “Jay Auto Accessories” has been cancelled though the partnership agreement is not dissolved,
2. The two brothers formed a partnership firm under the name of “India Auto Arcade” wherein the youngest brother was not a partner,
3. he was allowed to operate his proprietorship business from the counter of India Auto Arcade without any objection,
4. The partners of India Auto Arcade can ask him to vacate their place of business or demand rent from their youngest partner for conducting his business from the premises of India Auto Arcade,
5. Under no circumstances they can claim share of profit from the younger partner.
under circumstances you have to move court and obtain an injunction restraining younger brother from using firm premises for carrying on his sole proprietorship business .
1. The youngest brother has a propietorship firm which has a different identity than the partnership firm who ownes India Auto Arcade from where the proprietorship firm is operating,
2. It is not the main issue weather he is in the same line of business or not. If this issue is taken accepting the right of the proprietorship firm to operate from the same place then the partnership firm will br anserable for not being able to compete with the proprietorship firm and its freedom to conduct business can not be taken away,
3. The main issue to be considered herein should be whether the proprietorship firm has been and/or will be allowed to use the premise of the partnership firm whose profit margin is dwindling because of the same business being conducted by the proprietorship firm,
4. The proprietorship firm can be asked for stopping its business.
The younger partner is running the same line of business as a sole proprietor from the same premises where parent partnership firm was registered and now it belongs to India Auto Arcade.
It is not about the share of profit which he getting it is about the loss of profit to the parent firm and the current firm caused by his business as a sole proprietor from the same counter
Asked 2 years ago