Under the Indian Partnership Act, 1932, the firm is liable for loss or injury caused to a third party…

Section 26 makes the firm liable for loss or injury caused to a third party, or a penalty incurred, "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". A wrong done in a private dealing or outside the business does not bind the firm merely because of when it was done or whether the others knew of it.