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CA Foundation · Business Laws · The Indian Partnership Act, 1932

Dinesh retires from the firm Dinesh & Co. by giving notice to the partners but does not inform outsiders or publish any public notice. Later, the continuing partners buy goods on credit from Kapoor Ltd, an old customer of the firm who had dealt with Dinesh as a partner and does not know of his retirement. Who is liable to Kapoor Ltd?

Dinesh is also liable along with the continuing partners. A retiring partner stays liable to persons who dealt with the firm earlier and had no notice of his retirement. Without public or personal notice, his liability to Kapoor Ltd continues.

  1. AOnly the continuing partners, as Dinesh has retired
  2. BDinesh is also liable, as no public notice of retirement was given and Kapoor Ltd had dealt with him as a partnerCorrect
  3. CDinesh alone is liable
  4. DNo one is liable until Kapoor Ltd is informed

Explanation

A retired partner remains liable for acts of the firm done after retirement to anyone who dealt with the firm earlier and has no notice of the retirement. A public notice or actual notice is needed to end liability. Neither was given, so Dinesh remains liable along with the continuing partners.

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