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TMI Blog2015 (12) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... as a Chartered Accountant but does not contain any such bar against a partnership firm. Rather, the First and the Second Schedule to the Act while stipulating what is professional misconduct describe expressly what conduct as partner of a firm amounts to misconduct. It appears, that in the said spirit, the Rules of Merger and Demerger aforesaid were framed. - W. P. (C) No. 9698/2015 - - - Dated:- 14-10-2015 - Rajiv Sahai Endlaw, J. For the Petitioner : Mr. Vimal Dubey, Adv For the Respondents : None ORDER 1. The petition impugns the letter dated 10th August, 2015 (wrongly mentioned as 10th July, 2015 in the letter) of the respondent no.1 Institute of Chartered Accountants of India (respondent no.1 Institute) informing M/s Arun Khanna Associates Chartered Accountants that the notice served on 24th July, 2015 by six parteners of M/s Sawhney Verma Co. Chartered Accountants to M/s Arun Khanna Associates Chartered Accountants of demerger w.e.f. 1st July, 2015 satisfies the criteria laid down by the Council and that the firm is eligible to demerge the firm w.e.f. 1st July, 2015. The petitioner also seeks a declaration of restoration of his rights as part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Though the counsel for the petitioner has not placed the Rules of Merger De-merger framed by the respondent no.1 Institute before this Court but has in List of Dates quoted Rule 4 of the said Rules stated to be relevant and which is as under:- Rule 4 (i) The Merger has to precede demerger. The Merger agreement itself shall contain the terms and conditions for demerger. Therefore no concurrence / acceptance is required from continuing partners. The Merger Agreement shall stipulate that in case 75% or more of the continuing partners of one of the erstwhile firm(s) are willing to demerge then they can do so after giving due notice in Form F to the other partners and to the Institute. (ii) In case 75% or more of the continuing partners of one of the erstwhile merging firm have demerged after giving due notice to the other partners, then in such case, merger shall come to an end and if the remaining erstwhile merging firms / partners of the erstwhile merged firm decided to continue, then they should enter into a fresh Merger / Partnership Agreement. (iii) The Demerged firm is entitled to practice in its old trade name, which existed at the time of merger. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, 2015. 9. It is not in dispute that notice given by the original partners of respondent no.2 M/s Sawhney Verma Co. to the respondent no.1 Institute is dated 24th July, 2015. By the said notice, they intimated of the de-merger w.e.f. 1st July, 2015. In the Rule quoted by the petitioner in the paper book, there is nothing prohibiting the same. No case of forgery can thus be said to have been made out. There is nothing to show that the original partners of respondent no.2 M/s Sawhney Verma Co. on 24th July, 2015 were not entitled to notify of the de-merger w.e.f. 1st July, 2015. 10. The challenge in this writ petition, in so far as to the action of the respondent no.1 Institute of accepting the de-merger, therefore has no merit. 11. The petitioner, with respect to the partnership disputes, would have his remedies in accordance with law. 12. The petition is dismissed. 13. I have however before signing this order examined the Rules of NETWORK AND Merger Demerger Amongst The Firms Registered With The Institute Of Chartered Accountants OF INDIA available on the website of Institute of Chartered Accountants of India. The same are divided into two parts i.e. Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. The re-constitution agreement/partnership deed shall be filed with the Registrar of Firms. (ii) Upon the merger of the firms, the Institute will freeze the names of the merging firms and shall not allot the same names to any other firm. 14. Thereafter, is Rule 4 titled Demerger already reproduced above. After Rule 4, are the Council Decision on change in Firm name / Seniority of Firms, the Format of Merger Agreement and the Format of Notice for Demerger. Clauses 1 to 5 of the Format of Merger Agreement are as under: 2.And in case 75% or more of the continuing partners of one or more erstwhile merging firm(s) are willing to demerge, they may demerge after giving due notice and will be entitled to the following benefits : (i) They shall be entitled to the total seniority acquired i.e. their earlier pre-merger seniority and the years during which they were in merged firm. (ii) They are entitled to their old firm‟s name. Provided in case, 75% is a fraction, then the same shall be rounded off to the next number. 3. That the date of establishment of the new demerged firm shall be the date of demerger. 4. That to effectuate such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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