What is the ruling on recovering money extorted by a partner by entering into a new project with him?

There is no harm in demanding your right from the debtor. However, it is not permissible to take it secretly from his money if it is possible to reach him otherwise. Rather, you must inform him that you have taken your right in exchange for what he handed over to you, due to Allah’s saying: {And if you punish [an enemy], punish with an equivalent of that with which you were punished} (Quran 16:126), and His saying: {And the retribution for an evil act is an evil act equivalent to it} (Quran 42:40), and His saying: {So whoever has assaulted you, then assault him in the same way that he assaulted you} (Quran 2:194).

It is not permissible to take more than your right, which is what he took from your money without your knowledge, the remaining capital of the company, and your share of the profit, if any.

Regarding the nature of the contract: If you stipulated that he guarantee the capital and a known profit, then the partnership is invalid, and you are entitled to the full profit, and he owes the customary wage. However, if he invested the money without guaranteeing it and the profit was split equally, then the contract is valid.

Regarding the money that is not yours: If they authorized you to pay it for investment, then you are an agent and are not liable for it. However, if they did not authorize you to invest it, then it is a debt upon you, and you must return it to them.