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

Under the Indian Partnership Act, 1932, when a partner retires from a firm, his liability to third parties for acts done by the remaining partners which would have been acts of the firm before retirement continues until:

The retired partner remains liable to third parties until public notice of his retirement is given. Under Section 32(3), the liability continues for acts that would have bound the firm before retirement, so neither time passing nor preparing accounts ends it.

  1. Apublic notice of the retirement is givenCorrect
  2. Bthe next annual accounts of the firm are prepared
  3. Cthe firm is registered with the Registrar
  4. Done year passes from the date of retirement

Explanation

Section 32(3) provides that, despite retirement, the retired partner and the partners continue to be liable to third parties until public notice of the retirement is given. Passage of time or preparation of accounts does not end the liability, and registration is not the test.

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