Rights of rescission of partnership contract (Section 52)
When a partner rescinds a contract of partnership and leaves the firm on the ground of fraud or misrepresentation of the other partners are his interest is protected under Section 52. Apart from right of avoiding the contract on grounds of fraud or misrepresentation which is available to him by Section 19 of ICA and also right to claim damages for fraud under law of torts, he is entitled to following rights –
a) He has a right of lien on or right of retention of, surplus assets so far as it may be necessary to return the capital contributed by him and also for any other sum which he may have paid for purchase of share in the firm (payment of premium paid by him).
b) He is to rank as a creditor of the firm in respect of any payment made by him toward the debts of the firm. Being treated as a creditor means priority in the payment of amount as stated in Section 48(2) (i).
c) He has also right to claim indemnity from the partners guilty of fraud or misrepresentation against all debts of the firm.
Right to restrain from use of firm name or firm’s property (Section 53).
– Agreements in restraint of trade or dissolution (Section 54) – Partners may, upon or anticipation of the dissolution of the firm, make agreement that some or all of them will not carry on a business similar to that of a firm within a specified period or specified local limits and notwithstanding anything contained in Section 27 of the ICA such agreement shall be valid if restrictions imposed are reasonable.