Expulsion of a Partner under Indian Partnership Act, 1932

Under the Indian Partnership Act, 1932, a firm has the power to expel a partner. The process of expulsion is governed by certain rules and conditions outlined in the Act.

1. Reconstitution of the Firm
- The correct answer to the question is option 'A', which states that the firm is reconstituted after the expulsion of a partner.
- Reconstitution refers to the process of restructuring or rearranging the partnership firm after the removal of a partner.
- Expulsion of a partner leads to a change in the composition of the firm, and therefore, it needs to be reconstituted.

2. Expulsion of a Partner
- Expulsion of a partner occurs when the other partners in the firm decide to remove a particular partner from the partnership.
- The Indian Partnership Act allows for the expulsion of a partner under certain circumstances.
- The grounds for expulsion may vary depending on the terms of the partnership agreement, but common reasons include misconduct, breach of partnership agreement, incapacity, or willful violation of partnership duties.

3. Procedure for Expulsion
- The procedure for expulsion of a partner is usually outlined in the partnership agreement or can be agreed upon by the partners.
- Typically, a meeting is held where the partners discuss and vote on the expulsion of a partner.
- The decision to expel a partner requires the consent of the majority of the partners, as specified in the partnership agreement.
- Once the decision is made, the partner is deemed to be expelled from the firm.

4. Reconstitution of the Firm
- After the expulsion of a partner, the firm needs to be reconstituted to reflect the new partnership arrangement.
- The reconstitution involves updating the partnership agreement, financial accounts, and legal documentation to reflect the change in the partnership composition.
- The remaining partners may decide to admit a new partner or continue operating as a smaller partnership, depending on their business requirements.

In conclusion, under the Indian Partnership Act, 1932, a firm is reconstituted after the expulsion of a partner. Expulsion involves the removal of a partner from the partnership due to various reasons, and the process requires the consent of the majority of the partners. After expulsion, the firm is restructured to reflect the new partnership arrangement.