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Section 264: Sections 239 to 266 [Repealed by the Indian Partnership Act, 1932]

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 75 All 266 Sections of Indian Contract Act Section 77

Legal Commentary & Landmark Judgments: Section 264

Section 264 historically regulated the requirement of notice of dissolution to relieve partners from continuing apparent authority and liability to third parties, now modernized and reenacted as Sections 45 and 72 of the Indian Partnership Act, 1932.

  • Termination of Apparent Authority: Until public notice of dissolution is given, all partners remain liable for any act done by any of them which would have been an act of the firm had it been done before dissolution.
  • Bifurcated Notice Standard: Modern law distinguishes between old customers (who are entitled to actual personal notice) and third parties dealing for the first time (who are bound by public notice in the Official Gazette and press).
  • Statutory Mechanics of Notice under Section 72: Repealed by Act 9 of 1932 and expanded into Section 45 (liability for acts after dissolution) and Section 72 (mode of giving public notice in Official Gazette and vernacular newspapers).
Key Landmark Precedents:
  • Central United Bank Ltd. v. B.A. Venkatarama Iyer AIR 1963 Mad 302: The Madras High Court held that failure to give public notice under Section 45 of IPA 1932 renders erstwhile partners liable for post-dissolution borrowings executed by a continuing partner.
  • Scarf v. Jardine (1882) 7 App Cas 345: The House of Lords established that without notice of change in the firm, customers have the right to assume that the old members continue to be partners and are liable on holding out principles.
  • Sharad Vasant Kotak v. Ramniklal Mohanlal Gokuldas (1998) 2 SCC 171: The Supreme Court reiterated the vital statutory necessity of notifying the Registrar of Firms and publishing gazette notices upon dissolution or reconstitution.
Courtroom Practice & Strategic Litigation Guidance:

Upon dissolution of a firm or retirement of a partner, immediately execute statutory notices under Section 72 of IPA 1932: (1) publish in the Official Gazette, (2) publish in at least one vernacular newspaper circulating in the district, and (3) issue registered letters to all existing banking and commercial creditors to cut off liability.

Section 75 All 266 Sections of Indian Contract Act Section 77