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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

Meera retired from a partnership firm, but no public notice of her retirement was given. Sunil, who knew that Meera had been a partner, later supplied goods on credit to the firm after her retirement. Under Section 32(3) of the Indian Partnership Act, 1932, what is Meera's position?

Meera remains liable to Sunil as a partner. Under Section 32(3), a retired partner continues to be liable for acts of the firm until public notice of retirement is given. The exception applies only to a third party who did not know she was a partner, and Sunil knew.

  1. AShe is not liable, because she retired before the supply
  2. BShe is liable to Sunil as a partner, because public notice of retirement was not givenCorrect
  3. CShe is liable only if Sunil proves that she had consented to the supply
  4. DShe is liable only if the firm was registered

Explanation

Under Section 32(3), a retired partner continues to be liable to third parties for acts that would have been acts of the firm, until public notice of retirement is given. The proviso protects her only against a third party who deals with the firm without knowing she was a partner. Sunil knew she was a partner, so the protection fails. Registration of the firm is irrelevant to this rule.

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