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CMA Intermediate · Business Laws and Ethics · Indian Partnership Act, 1932

Anil retires from a partnership firm that is not registered. The remaining partners continue the business, and no public notice of his retirement is given. Later, Kiran, who had always dealt with the firm knowing Anil was a partner, supplies goods on credit to the reconstituted firm. What is Anil's position regarding Kiran's claim?

Anil remains liable to Kiran as a partner. Until public notice of retirement is given, a retired partner continues to be liable to third parties for acts that would have been acts of the firm. Only a third party who did not know he was a partner is excluded.

  1. AAnil is not liable, because he has retired
  2. BAnil is liable as a partner to Kiran, as public notice of retirement has not been given and Kiran knew him to be a partnerCorrect
  3. CAnil is liable only if Kiran obtained the written consent of Anil
  4. DAnil is liable only if the firm is registered

Explanation

Under section 32(3), a retired partner and the continuing partners remain liable as partners to third parties for acts that would have been acts of the firm, until public notice of retirement is given. The proviso protects only a third party who deals without knowing he was a partner. Kiran knew Anil was a partner, so the proviso does not help Anil.

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