Ans.
Retirement of a Partner
(Sec. 32)
A partner may retire
(a) with the consent of all the other partners,
(b) in accordance with the terms of the agreement of
partnership or
(c) where the partnership is at will, by giving notice in
writing to all the other partners of his intention to retire.
A retiring partner remains liable for the partnership
debts contracted while he was a partner. He may however be discharged from any
liability to any third party for acts of the firm done before his retirement by
novation, if it is so agreed with the third party and the partners of the reconstituted
firm. Such agreement may be implied from the course of dealing between the firm
and the third party after he had knowledge of the retirement.
The retired partner continues to remain liable to third
parties for all acts of the firm until public notice is given of the
retirement. Such notice may be given either by the retired partner or by any
member of the reconstituted firm. A retired partner is not liable for the debts
of the firm incurred after public notice of his retirement. A sleeping partner
may retire without giving a public notice of his retirement because he is not
known to be a partner to third parties.
PUBLIC NOTICE (SEC. 72)
1. The Partnership Act requires that a public notice must
be given in each of the following cases:
(a) On minor attaining
majority
A minor partner on becoming a major must give public
notice of his intention to remain or not to remain a partner. [Sec. 30(5)]
(b) Retirement of a
partner
When a partner retires from the firm, he must give public
notice to terminate further liability. [Sec. 32(3)]
(c) Expulsion of a
partner
When a partner is expelled from the partnership business
he must give public notice to terminate further liability. [Sec. 33]
(d) Dissolution of the
firm
When a partnership firm is dissolved, the partners of the
dissolved firm must give public notice to terminate further liability [Section
45(1)]
2. Mode of the Public
Notice
According to Sec. 72 the Public Notice becomes effective
when the following steps have been taken:
(a) The notice has been published in the Official
Gazette.
(b) The notice has been published in at least one
vernacular newspaper (ie. which is published in Indian language) circulating in
the district where the concerned firm has its place or principal place of
business.
(c) If the firm is registered, the notice has been sent
to the Registrar of Firms.
3. Consequences of not
giving public notice
(a) On minor attaining
majority
If a minor is admitted to the benefits of partnership
under Section 30 he has to give public notice within 6 months of his attaining
majority or of his obtaining knowledge that he has been admitted to the
benefits of partnership, whichever date is later. If he fails to give notice,
that he has elected to become or not to become a partner in the firm, he shall
become a partner in the firm on the expiry of the said 6 months and is liable
as a partner of the firm.
(b) Retirement of a
partner
If a retiring partner does not give a public notice of
the retirement from the firm under section 32, he and the other partners shall
continue to be liable as partners to third parties for any act done by any of
them which would have been an act of the firm if done before the retirement.
(c) Expulsion of a
partner
If in case of expulsion of a partner from the firm a
public notice is not given, the expelled partner and the other partners shall
continue to be liable to third parties dealing with the firm as in the case of
a retired partner. [Section 33],
(d) Dissolution of the
firm
If a public notice is not given on dissolution of a
registered firm, the partners shall be liable to third persons of any act done
by any of them which would have been an act of the firm if done before the
dissolution (section 45). When public notice is given of the dissolution of a
firm, no partner shall have authority to bind the firm except for certain
specific purposes as given in Section 47. According to this section, after the
dissolution of a firm, the authority of each partner to bind the firm and their
mutual rights and obligations of the partners shall continue:
(i) so far as may be necessary wind up the affairs of the
firm; and
(ii) to complete transactions begun but unfinished at the
time of the dissolution.
