• Dispute in unregistered partnership firm

Hello Everyone,
                       Ours is a Partnership Firm,involving 3 Partners. My share is 30% and Other 2 Partners Having 30% and 40% share accordingly.  Our Partnership Firm has been alloted an Industrial Plot by the State Industrial Corporation in 2011. After allotment we did paid initial down payment equally( Total : 20 Lakhs and I paid 6.5 lakhs)  and we have to pay balance amount in 16 quarterly Installment. After paying down payment there is a dispute amongst us and I was at one end and others 2 partners were on another side. Since Bank account operation mode was decided any 2 partners jointly , to stop others  partners from getting unfair advantage I did write to bank and instruct bank to change the bank operation mandate to  3 partners jointly. Other 2 partners oppose it so bank freeze the account. I have just paid initial down payment and after that I did not paid any quarterly installment,While other 2 Partners are paying quarterly Installment regularly ( including my share). Now my query is that, since ours is an Unregistered partnership can other 2 partners remove me from Partnership and take total control of the property . It is written in a Partnership deed that if any dispute arise then it has to be resolved by arbitrator.
Asked 1 year ago in Business Law from Mumbai, Maharashtra
1. The disputes among the partners inter se can be governed by Partnership Act and for this the partnership need not be registered. Unregistered partnership deed is perfectly enough as far as disputes among the partners is concerned.

2. Since there is an arbitration clause the dispute can not be resolved by civil court.However beofre they pass any resolution to oust you from the partnership business file an application u/s 9 of the Arbitration Act in the local District Court or in High Court under Original Jurisdiction and apply fr injunction against your ouster from the partnership firm.

3. Thereafter refer the matter for arbitrator. if no name of any arbitrator is there then apply for such appointment.

4. Before the arbitrator you can apply for dissolution of firm and rendition of accounts.
Devajyoti Barman
Advocate, Kolkata
5248 Answers
54 Consultations
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1. The bank cannot alter the operation of account mode from 2 to 3 partners o your request alone. 

2. A dispute between the partners is to be governed entirely according to the provisions of the partnership deed executed between them. If the partner ship deed has not mentioned about the rights and liabilities of partners then civil court can be moved. 

3. In your case the clause for arbitration has been incorporated in the partnership deed, in view whereof you cannot move the court for the redressal of your grievance. 

4. You should invoke the arbitration clause and move the court for appointment of an arbitrator for the redressal of your grievance  and seek an injunction and rendition of accounts.
Ashish Davessar
Advocate, Jaipur
18259 Answers
450 Consultations
5.0 on 5.0
1) in partnership deed it is mentioned that bank operation mode will be any 2 partners . you cannot arbitrarily without consent of other partners change it to 3 partners . 

2) since there is clause in deed that disputes between partners have to be resolved by arbitration invoke arbitration clause for resolving your disputes 

3) you cannot move court for resolution of disputes 

4) it is better you resolve disputes amicably among partners rather than invoking arbitration clause
Ajay Sethi
Advocate, Mumbai
23389 Answers
1229 Consultations
5.0 on 5.0
Dear Querist
First of all try to settle the matter amicably.

if not possible then you may file an application u/s 9 of Arbitration act before district court or high court of the jurisdiction, if any particular person's name is mentioned as arbitrator then contact him and resolved the matter.

without due process of law they can not remove from you
Nadeem Qureshi
Advocate, New Delhi
3537 Answers
130 Consultations
4.9 on 5.0
1. The matter/dispute  between the partners will be dealt with as per the clauses mentioned in the partnership deed,

2. Since there is an arbitration deed in your partnership deed, you can not approach Civil Court for resolution of your didpute,

3. You shall have to file an application u/s9 of Arbitration Act before the District Court or High Court with an application praying for an order restricting the other partners from outsting from the firm by passing a resolution,

. You alone can not change the mandate given to the Bank earlier for Basnk operation. It has to come from the said firm.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
1) you have to reproduce arbitration clause to enable us to advice you . if the clause provides appointment of sole arbitrator with consent of the parties and parties are unable to decide on name of sole arbitrator  you have to move court for appointment of sole arbitrator . 

2) you have to make application under section 9  of Arbitration act before the HC for appointment of arbitrator 

3) in said application seek an order restraining other partners from ousting you as partner of the firm
Ajay Sethi
Advocate, Mumbai
23389 Answers
1229 Consultations
5.0 on 5.0
1. What has been mentioned in the Arbitration Clause soecified in your partnership deed?

2. Has sole arbitrator has been mentioned to be selected with mutual consent?

3. If there is no mutual consent for selecting an arbitrator for resolving your dispute, file an application before the Court to select an arbitrator for the purpose,

4. In your said application you should pray for a direction for not ousting you from the partnseship firm by passing resolution till the arbitration order is passed,

5.  However, your contention "I don't want to resolve  our dispute", may not be fulfilled since the other two partners will press hard to get the dispute resolved through appropriate order.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
1. The name of the arbitrator need not be mentioned. What may be mentioned is that an arbitrator will be appointed, which if done, the dispute can be resolved only by an arbitrator.

2. You can move the court for the appointment of an arbitrator if there is no consensus on the name.

3. Seek a stay order against any action to your detriment by the other partners.
Ashish Davessar
Advocate, Jaipur
18259 Answers
450 Consultations
5.0 on 5.0

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