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

Sunil, Tara and Umesh are partners in a firm. On 1 April, Waseem is admitted as a new partner with the consent of all the partners. A supplier's bill of Rs 40,000 relates to goods bought by the firm in February, before Waseem joined. Under the Indian Partnership Act, 1932, what is Waseem's position regarding this bill?

Waseem is not liable for the Rs 40,000 bill merely because he joined the firm. The Act provides that an incoming partner is not liable for acts of the firm done before his admission, so the February purchase does not burden him personally.

  1. AHe is personally liable for it, as every incoming partner is liable for earlier debts
  2. BHe is not liable for it merely because he joined the firm, since a new partner is not liable for acts done before admissionCorrect
  3. CHe is liable for half of it, because incoming partners share earlier liabilities equally
  4. DHe is liable only if he was told about the bill before joining

Explanation

A person admitted into an existing firm is not liable for any act of the firm done before he became a partner. The February purchase predates his admission, so he has no personal liability just from joining. Liability for earlier debts would arise only through a separate agreement, such as a novation with the creditor.

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