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Section 263: Sections 239 to 266 [Repealed by the Indian Partnership Act, 1932]

Indian Contract Act • Official Statutory Text & Practice Guide

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Act 1872
Section 75 All 266 Sections of Indian Contract Act Section 77

Legal Commentary & Landmark Judgments: Section 263

Section 263 historically governed the continuance of partners' mutual rights and obligations after dissolution strictly for the purpose of winding up affairs and completing unfinished transactions, now reenacted as Section 47 of the Indian Partnership Act, 1932.

  • Surviving Authority for Winding Up: Dissolution terminates the mutual agency of partners to initiate new business, but preserves their authority to perform acts necessary to wind up the firm's affairs and complete pending contracts.
  • Completion of Unfinished Transactions: Surviving or erstwhile partners possess continuing legal power to collect debts, realize assets, pay off creditors, and fulfill existing contractual commitments.
  • Prohibition of New Ventures: Any partner who purports to enter into new commercial contracts post-dissolution acts without authority and binds only himself, not his former co-partners.
  • Modern Reenactment in Section 47 IPA 1932: Repealed by Act 9 of 1932 and reenacted with refined clarity as Section 47 of the Indian Partnership Act, 1932.
Key Landmark Precedents:
  • Saligram Ruplal Khanna v. Kanwar Rajnath AIR 1974 SC 1094: The Supreme Court held that after dissolution, the agency of partners continues under Section 47 of IPA 1932 solely for the purpose of winding up the affairs of the firm and completing transactions begun but unfinished at dissolution.
  • Bourne v. Bourne [1906] 2 Ch 427: The Chancery Division affirmed that a surviving partner has the power to sell or mortgage partnership assets to secure a partnership debt incurred prior to dissolution.
  • Addanki Narayanappa v. Bhaskara Krishtappa AIR 1966 SC 1300: The Supreme Court reaffirmed that the legal relationship of partners subsists post-dissolution until the final winding up, taking of accounts, and distribution of assets are completed.
Courtroom Practice & Strategic Litigation Guidance:

When challenging a post-dissolution contract executed by an erstwhile partner, plead Section 47 of IPA 1932 to prove that the transaction was a fresh commercial venture rather than a liquidating act, thereby rendering the contract unenforceable against the firm and other partners.

Section 75 All 266 Sections of Indian Contract Act Section 77