Chapter IV - RELATION OF PARTNERS TO THIRD PARTIES

(i) When the Registrar has reason to believe that a registered firm is not carrying on business, or is not in operation, or that it has been finally dissolved, but the prescribed intimation has not been given, he shall send by post to every partner of the firm at its last known address a letter enquiring whether the firm is carrying on business or is in operation. ii) If the Registrar receives an answer from any of the partners to the effect that the firm is not clarrying on business or is not in operation or if he does not receive any answer within one month from the date of the posting of the letter, he shall publish in the " Madhya Pradesh Gazette" and send to all the partners by registered post, a notice that at the expiration of three months from the date of that notice the name of the firm mentioned therein shall, unless cause is shown to the contrary,be struck off and the firm shall be dissolved and the registration shall be deemed cancelled. iii) At the expiration of the time mentioned in the notice the Registrar shall, unless cause is shown previously by the partners strike the name of the firm off the register, and shall publish notice of the factin the " Madhya Pradesh Gazette" , and on such publication the firm shall be considered to be dissolved.

(1) subject to the provisions of Sec. 22, the act of a partner which is done to carry on , in the usual way, business of the kind carried on by the firm, binds the firm, The authority of a partner to bind the firm conferred by this section is called his implied authority" (2) In the absence of any usage or custom of trade to the contract, the implied authority of a partner does not empower him to - a) Submit a dispute relating to the business of the firm to arbitration. b) open a banking account on behalf of the firm in his own name. c) Compromise or relinquish any claim or portion of a claim by the firm, d) Withdraw a suit or proceeding filed on behalf of the firm. e) admit any liability in a suit or proceeding against the firm f) acquire immovable property on behalf of the firm. g) transfer immovable property belonging to the firm or h) enter into partnership on behalf of the firm.

The partners in a firm may, by contract between the partners, extend or restrict the implied authority of any partner. Notwithstanding any such restriction, any act done by a partner on behalf of the firm which falls within his implied authority binds the firm, unless the person with whom he is dealing knows of the restriction or does not know or believe that partner to be a partner.

In order to bind a firm, an act or instrument done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm name or in any other manner expressing or implying an intention to bind the firm.

An admission on representation made by a partner concerning the affairs of the firm is evidence against the firm, if it is made in the ordinary course of business.

Notice to a partner who habitually acts in the business of the firm of any matter relating to the affairs of the firm operates, as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.

Every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner.

Where by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority, of his partners, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefor to the same extent as the partner.

Where - a) a partner acting within his apparent authority receives money or property from a third party and misapplies it or, b) a firm in the course of its business receives money or property from a thirty party, and the money or property is misapplied by any of the partners while it is in the custody of the firm. the firm is liable to make good the loss.

(1) Any one who by words spoken or written or by conduct represents himself, or knowingly permits himself to be represented, to be a partner in a firm, is liable as a partner in the firm to any one who has on the faith of any such representation given credit to the firm, whether the person representing himself or represented to be a partner does or does not know that the representation has reached the person so giving credit. (2) Where after a partner's death the business continued in the old firm name, the continued use of that name or of the deceased partner's name as a part thereof shall not of itself make his legal representative or his estate liable for any act of the firm done after his death.

(1) A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a charge on such interest, does not entitle the transferee, during the continuance of the firm, to interfere in the conduct of the business or to require accounts, or to inspect the books of the firm, but entitles the transferee only to receive the share of profits of the transferring partner' and the transferee shall accept the account of profits agreed to by the partners. (2) If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled and for the purpose of ascertaining that share, to an account as from the date of the dissolution.

(1) A person who is a minor according to the law to which he is subject may not be a partner in a firm, but with the consent of all the partners for the time being, he may be admitted to the benefits of partnership. 2) Such minor has a right to such share of the property and of the profits of the firm as may be agreed upon, and he may have access to and inspect and copy any of the accounts of the firm. 3) Such minors share is liable for the acts of the firm, but the minor is not personally liable for any such act. 4) Such minor may not sue the partners for an account or payment of his share of the property or profits of the firm, save when severing his connection with the firm, and in such case the amount of his share shall be determined by a valuation made as far as possible in accordance with the rules contained in Sec. 48. Provided that all the partners acting together or any partner entitled to dissolve the firm upon notice to other partners may elect in such suit to dissolve the firm , and thereupon the Court shall proceed with the suit as one for dissolution and for settling accounts between the partners, and the amount of the share of the minor shall be determined along with the shares of the partners. (5) At any time 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, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm.