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

Mohan and Nisha are partners. They admit Omkar as a new partner on 1 April. A debt of Rs 60,000 was incurred by the firm on 10 February, before Omkar joined. Without any agreement with the creditor, the creditor sues Omkar personally for this debt. What is the position?

Omkar is not personally liable. A newly admitted partner is not liable for debts incurred by the firm before his admission. Liability for earlier debts arises only if he specifically agrees to take it over and the creditor accepts that arrangement.

  1. AOmkar is personally liable for the debt as every partner is liable for all firm debts
  2. BOmkar is not personally liable for the debt incurred before he became a partner, unless he agrees to be liable and the creditor accepts thisCorrect
  3. COmkar is liable for half of the debt
  4. DOmkar is liable only if he is a majority partner

Explanation

A person admitted into an existing firm is not liable for acts of the firm done before he became a partner. He can become liable only by a new agreement with the creditor, such as a novation. No such agreement exists here, so Omkar is not personally liable.

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