Procedure for Expulsion of a Partner

Lokik Harit

Lokik Harit

Published on: Jun 10, 2025

Priya Gandhi

Updated on: Jun 10, 2025

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Introduction:

Expulsion of a partner is a sensitive and legally significant step that must be carried out strictly in accordance with the provisions of the partnership deed, governing laws, and principles of natural justice. It typically occurs when a partner’s actions or conduct adversely affect the interests of the firm.

As per Section 33 of the Act, a partner can only be expelled if the partnership deed specifically provides or if the expulsion is carried out in good faith citing valid and justifiable reasons for such expulsion.

Expulsion leads to reconstitution of the firm and requires alteration in the partnership deed and compliance with statutory obligations.

Applicable provisions:

Section 33, 37, 63 and 72 of the Indian Partnership Act, 1932

Mandatory Requirements:

1. Ensure partnership deed explicitly grants power to expel a partner
2. Resolution passed by a majority of the partners for expulsion, if allowed by the Partnership Deed.

Procedure:

1. Revision of the Partnership Deed:
   A partner can only be expelled in good faith and if expressly authorized by the partnership agreement. A revised partnership deed must be drafted and duly executed, and notarized, to this effect.
2. Partner Resolution:
   
   • A written notice to the partner explaining the intention to expel, grounds for such proposed expulsion and date of partners meeting, to be served on such partner.
   • A resolution approving the expulsion must be passed by majority of the partners.
3. Settlement of Accounts:
   The financial entitlements of the expelled partners, including their share of capital and profits must be settled.
4. Intimate Registrar of Firms about Expulsion:
   Any change in the firm’s constitution must be notified to the Registrar of Firms within 90 days, in accordance with the procedure outlined in the state-specific Partnership Rules.
5. Public Notice:
   Publication in the Official Gazette, and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business about such expulsion.
6. File Necessary Amendment Application under following Acts
   
   • Goods and Services Act
   • Shops & Establishment Act
   • Factories Act
   • Foreign Exchange Management Act
   • Inter-State Migrant Workmen Act
   • Private Security Agency Act
   • EPF
   • ESI
   • Other Labour Laws
   • Industry Specific Laws.