A, B and C are partners, and their firm owes R Rs 15,000. A wishes to retire. A, B, C and R agree that…
Section 32(2) of the Indian Partnership Act, 1932 lets a retiring partner be discharged from liability to a third party for acts done before his retirement "by an agreement…
Choose your answer
A, B and C are partners, and their firm owes R Rs 15,000. A wishes to retire. A, B, C and R agree that A is discharged from that existing debt and that B and C, as the continuing partners, will be liable for it. After A retires, R sues A for the debt. Under section 32(2) of the Indian Partnership Act, 1932, which statement is correct?
Answer and explanation
Correct answer B
Section 32(2) of the Indian Partnership Act, 1932 lets a retiring partner be discharged from liability to a third party for acts done before his retirement "by an agreement made by him with such third party and the partners of the reconstituted firm". Here A, B, C and R all agreed that B and C alone would be liable, so A stands discharged and R cannot sue him for the whole debt, a share of it, or as an alternative defendant.
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