Case No.:

(HC-CS-167-1957)

Court:

The High Court

Issue No.:

1960

Principles

· Partnership—Partnership Act. 1893, S. 25—Expulsion of a partner a9ainst his will in absence of a clause to this effect

A partner cannot be expelled against his will by the majority of the other partners in the absence of a power to that effect in the partnership agreement.

Judgment

(HIGH COURT)

BEDAWI MOHAMED TAHA AND OMARA MAHMOUD BADIEH

v. ALI SAEED SABRA AND OSMAN OMER YACOUB

(HC-CS-167-1957)

Action

Advocates: Mirghani El Nasri ………for plaintiffs

Ahmed Zein El Abdin …...for defendant

February1, 1960.T. Cotran Acting J.: —This is a very peculiar case and I am afraid I am at a loss to understand what is the cause of action, and how the action was allowed in the first place. The relief claimed by the plaintiffs in their statement of claim is completely unknown to the law of partnership and I cannot understand plaintiffs’ advocate’s prayer that defendant’s name be struck off the registration of the partnership; in other words rectification of the register by removing defendant’s name.”

The story in this case begins towards the end of 1952 when defendant was in Gobalein in Kosti District. The three plaintiffs are all cultivators in Gobalein and they had a licence to operate a scheme there. The defendant is himself an engineer and was then in charge of surveying for M. Abdel Moneim and Co., Ltd. He had some experience of cotton schemes and he and plaintiffs got together. There was some discussion between the plaintiffs and defendant about finding suitable financiers and I have no doubt, as is admitted by defendant, that he had in mind a certain El Tayeb Abdel Razik whom he knew or thought he knew to be a man of substance. A meeting was eventually arranged between plaintiffs and defendant and the said El Tayeb Abdel Razik. Shortly afterwards a partnership agreement was entered into between the three plaintiffs, the defendant and the financier El Tayeb Abdel Razik. The contract of partner ship is Exh. D.I. It is dated January 24, 1953. I have already stated that this action will be dismissed because no cause of action is disclosed and because the remedy asked is unknown to the law. I shall therefore refrain frotn deciding whether the defendant had (raudulently-induced plaintiffs to go into partnership with him and Abdel Razik. If plaintiffs thought so, as they obviously do, their remedy is either,

1- Damages for fraud and/or misrepresentation, or

2-an action for dissolution of the partnership, or

3-if the partnership agreement expressly provides, expelling the erring partner.

The agreement between the partners is Exh. D.I. Under Article 14 it is provided that decisiOns shall be by majority, but by Article z decisions concerning the Articles of the agreement must be unanimous. And by Article 33 it is provided that no partner, whilst the partnership subsists, shall retire from the partnership. By virtue of Article 37 the partnership comes to an end at: (i) the expiry of its term, or (2) bankruptcy, or (3) dissolution by agreement of all the members.

After a few months from the date of partnership (January 24, 1953) it transpired that the said Abdel Razik was not a man of means and shortly afterwards, with the agreement of all partners, he retired from the partnership. His retirement was duly published in the Gazette and his name was removed from the Partnership Registration Certificate. O&y four partners remained, the three plaintiffs and the defendant. Defendant himself then tried to run the scheme but obviously he did not have enough resources and had to borrow money from Abdel Moneim & Co., Ltd. Whether the defendant had any right to borrow these sums is open to question in view of Article 30 of the partnership agreement. But it may be that there were circumstances, which did not allow of any delay and he might well, have been :overed by Article 38 of it. Whatever the case may be, all the plaintiffs agreeing to let Abdel Moneim & Co. finance the scheme (Doc. Exh B. dated December 21, 1953) and also by the full and comprehensive agreement subscribed to by all three plaintiffs in Exh. D dated May5, 1954.

Now, three years after this agreement with Abdel Moneim & Co., Ltd., plaintiffs came to court asking the court to expel defendant for his fraud, not in connection with anything he has done as a partner, but on an allegation that they were fraudulently induced to join him way back in January 1953. It is clear from the partnership agreement that there is no express term whereby a majority of partners can expel one of their members. The common law rule, which has been confirmed by section 25 of the Partnership Act, 1890, is that in the absence of an express agreement to that effect, there is no right on the part of any of the members of a partnership to expel any other member. Nor, in the absence of express agreement, can any member of the partnership forfeit the share of any other member, or compel him to quit the firm on taking what is due to him. As there is no method except a dissolution, by which a partner can retire against the will of his co-partners, so there is no method except a dissolution by which one partner can be got rid of against his own will:

Clarke v. Hart, 6 H.L.C. 633; Lindley on Partnership, p. 698.

It is not the duty of this court to consider the question of dissolution when neither the plaintiffs nor the defendant asked for it. Here the plaintiffs asked the court to expel defendant and leave the partnership otherwise intact. The defendant similarly asks the court to expel third plaintiff. The court, I am afraid, has no power to do either. If the plaintiffs have a claim on something defendant did before the partnership they can sue him for damages. If they do not all agree to. a dissolution as provided in section 37 (1) of the partnership agreement, any one partner can apply to the court for dissolution.

For these reasons the plaintiffs’ claim and the defendant’s counterclaim are dismissed with costs. *

(Judgment for defendant)