Question

[Audio] Question: Mr. 'X' an active partner of a X company resigned from 'X' company. Afterwards he has decided to start a New Business Competing with 'X' company. Can he do so? Decide. Answer: Fact of the Case: Mr. 'X' is an active partner of a X company. 'X' has resigned from X company. Afterwards he has decided to start a new Bussiness Competing with X company. Issue: Whether Mr.'X' can start a new business competing with X Company? Rule: Partnerships are dynamic entities, and partners may join or leave a firm over time. When a partner decides to leave, they become an "outgoing partner." Section 36 of the Indian Partnership Act outlines the rights of such outgoing partners, particularly regarding their ability to engage in competing business..

[Audio] Right to Carry On Competing Business An outgoing partner has the right to carry on a business that competes with that of the firm they are leaving. This means they can venture into a similar line of business independently. However, there are certain restrictions: No Use of Firm Name: The outgoing partner cannot use the name of the original partnership firm. They must establish their own identity without relying on the firm's reputation. No Representation as Firm Business: While they can advertise their competing business, they cannot represent themselves as continuing the business of the original firm. This prevents confusion among customers and stakeholders..

[Audio] 2. Agreement in Restraint of Trade Section 36(2) allows an outgoing partner to make an agreement with the remaining partners. This agreement may stipulate that the outgoing partner will not carry on any business similar to that of the firm within a specified period or geographical limits. Such agreements are common to protect the interests of both parties. Application: The present case is related to the Section 36 of the Indian Partnership Act (Right to Carry On Competing Business). Whether Mr.'X' can start a new business competing X company? There can be 2 instances, Yes. According to the Section 36(1) (Right to Carry On Competing Business) Mr.'X' can start a new business competing X company subject to the following conditions:.

[Audio] a) Mr.'X' should not use the credentials of the X company such as name of the company. He must establish their own identity without relying on the X Company's reputation. b) While Mr.'X' can advertise their competing business, he cannot represent himself as continuing the business of the X company. This prevents confusion among customers and stakeholders. c) Mr. 'X'can not deal with the clients or persons having business dealing with X company immediately after ceasing the X company..

[Audio] Whether Mr.'X' can start a new business competing X company? 2) No. According to Section 36 (2) Agreement in Restraint of Trade , if Mr.'X' has executed any Agreement with the X company that he may not start any competing business after exiting the X company for a specific time period or within a specific geographical area then Mr.'X' can not start a new competing business. Conclusion: Mr'X' can start a new competing business with X company subject to adhering to the conditions set forth in Section 36 (1) of the Indian Partnership Act. Mr. 'X' can not start a new competing business with X company, if he has made a Agreement with the X company as per Section 36 (2) of the Indian Partner. If Mr. 'X' does not comply with either part of Section 36, he may face legal consequences..