Introduction

This case deals with the liability for acts of partners done after dissolution of firm which is contained in Section 45 of the Indian Partnership Act, 1932 (Act of 1932).

Facts

• An application for execution of a decree on an award which was given in respect of a contract entered between Sew Chand Bagree and Juggilal Kamlapat was made on 25.09.1948.
  • The award was made by the Bengal Chamber of Commerce on a dispute between Juggilal Kamlapat (award holder) and Sew Chand Bagree.
• The business of Sew Chand Bagree was established in the year 1924, as a Joint Hindu Family (JHF) business, and the partnership firm was started in October 1933.
• The three partners shown in the said record were Manik Chand Bagree, Moti Chand Bagree and Jankidas Bagree.
• The application was opposed by Manik Chand Bagree and Moti Chand Bagree whose case is that the firm of Sew Chand Bagree was dissolved in October 1945 by mutual consent of its partners.
• Thereafter their brother Jankidas Bagree started a new business in the name of Sew Chand Bagree with which the other brothers had no concern.
• The Juggilal Kamlapat made an application in Calcutta High Court to execute the decree on the award, against Manik Chand Bagree, Moti Chand Bagree and Jankidas Bagree as partners of the firm of Sew Chand Bagree.
  • He further added that no public notice was made regarding the dissolution of firm adhering to the mandate of Act of 1932, hence all the partners continue to be liable for any act done by any of them.

Issues

• Whether Sub-section (1) of Section 45 of the Act of 1932 is brought into play or the point is covered by the proviso to the said Section?

Observations

• The Court observed that Manik Chand Bagree and Moti Chand Bagree were not known to Juggilal Kamlapat as the partners of the firm, as the firm was dissolved before the contract.
• The Court further held that the proviso of Section 45(1) of the Act of 1932 is attracted to the facts of this case and Manik Chand Bagree and Moti Chand Bagree cannot be made liable for payment of the decretal amount.

Conclusion

The HC dismissed the application, however it imposed costs upon Manik Chand Bagree and Moti Chand Bagree.

Notes

Section 45 of the Act of 1932 states that-

(1) Notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolution: Provided that the estate of a partner who dies, or who is adjudicated an insolvent, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable under this section for acts done after the date on which he ceases to be a partner.

(2) Notices under sub-section (1) may be given by any partner.