Page 179 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes other mutual rights and obligations of the partners continue, so far as may be necessary to;
(a) wind up the affairs of the firm and (b) complete transactions begun but not unfinished
at the time of the dissolution. However, the proviso to s. 47 provides that the firm in
dissolution would not be liable for the act of any partner who has been adjudicated
insolvent. But, if a partner represents himself or knowingly permits himself to be
represented as a partner of the insolvent partner, the firm is liable on the ground of
‘holding out’.
Mode of Giving Public Notice (s.72): A public notice is required to be given when (i) a partner
retires or is expelled from a registered firm; (ii) a registered firm is dissolved; (iii) a minor, on
attaining majority has to elect to become or not to become a partner in a registered firm.
The public notice relating to the above matters is given: (i) by notice to the Registrar of Firms
under s.63 (regarding recording of changes in the constitution of a firm); (ii) by publication in
the official gazette; (iii) by publication in at least one vernacular newspaper circulating in the
district where the firm to which it relates has its place or principal place of business. In other
cases where public notice has to be given, it is given by publication in (i) the official gazette and
(ii) at least one vernacular newspaper circulating in the district where the firm to which it relates
has its place or principal place of business. The consequences of not giving the public notice
where it is required to be given under different provisions of the Act are as follows:
1. If a minor admitted to the benefits of partnership fails to give public notice within six
months of his attaining majority or of his obtaining knowledge that he had been admitted
to the benefits of partnership, whichever date is later, that he has elected to become or not
to become a partner in the firm, he shall become partner in the firm on the expiry of the
said six months and is liable as a partner of the firm [s.30 (5)].
2. If a retiring partner does not give a public notice of his retirement from the firm, 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 act of the firm done before the retirement [s.32 (3)].
3. 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 [s.33 (2)].

4. If on the dissolution of a registered firm, a public notice is not given, the partners shall
continue to be liable to third persons of any act done by any of them which would have
been an act if the firm of done before the dissolution [s.45 (1)].

Task Describe the mode of settling accounts of a firm after dissolution with special
reference to a case where one of the partners has become insolvent and nothing is
recoverable from his estate.
Self Assessment

Fill in the blanks:
13. When the relationship existing between all the partners of the firm comes to an end, it is
called …………………..of the firm.

14. If a partner is guilty of conduct which is likely to affect prejudicially the carrying on of the
business of the firm, the ……………….may order dissolution.

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