RIAA Barker Gillette has secured a first-of-its-kind Lahore High Court judgment on the duties of the Registrar of Firms. The Court held that the Registrar performs a purely ministerial function and must record notified changes to a firm’s constitution. That duty extends to a partner’s expulsion, even when contested. Accordingly, the Court set aside the Registrar’s refusal and ordered the change recorded.
Background
Our client, a chartered accountancy partnership firm, expelled a partner under its deed. It then notified the Registrar of Firms under Section 63(1) of the Partnership Act, 1932 read with Rule 4 of the Punjab Partnership Rules. The partner objected, saying he had already challenged the expulsion in court. On that basis, the Registrar declined to record the change until the courts resolved the dispute. As a result, his name stayed on the official record. The firm then needed his consent to open bank accounts or alter its composition. In effect, one partner could hold the whole firm hostage.
Arguments before the Court
We argued that Section 63 is mandatory and the Registrar’s role purely ministerial. Rule 7, moreover, entitles a disputing party only to a recorded protest. It does not let the Registrar refuse registration or adjudicate the merits of an expulsion. Pakistani case law was largely silent on the point. We therefore relied on persuasive judgments of the superior courts of India on analogous provisions.
Significance
The judgment is due to be reported. It clarifies that the Registrar of Firms cannot treat a partner-level dispute as grounds to withhold a notified change. Instead, a partner must pursue any challenge to the expulsion through separate proceedings. Crucially, it stops a contested entry from freezing a firm’s record.
“An expelled partner cannot hold a firm hostage merely by contesting his expulsion,” said Shahbakht Pirzada, Partner at RIAA Barker Gillette. “That clarity matters for any business that depends on promptly recording changes to its constitution.”
Shahbakht Pirzada (Partner) led the matter, with support from Saffi Hassan, Ahmad Nisar Khan and Syed Hassan Dawood.
For more information on partnership disputes, please contact Shahbakht Pirzada today.
This article is not legal advice; it provides information of general interest about current legal issues.
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RIAA Barker Gillette is Pakistan’s premier law firm, with an on-the-ground presence in three major cities in Pakistan: Karachi, Islamabad and Lahore, and affiliated offices in Dubai (DIFC) and London.
The firm practices in all areas of corporate, commercial and dispute resolution law. Leading international legal directories consistently recognise the firm as a top-tier law firm in Pakistan.
