Chapter VI - Dissolution of a Firm
Section 45
Section 45: Liability for acts after dissolution
Section 45 addresses continuing third-party liability after dissolution until public notice, subject to specified exceptions.
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Need advice on Section 45?
This article is for general information. Refer to the Indian Partnership Act, 1932 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolution:
Provided that the estate of a partner who dies, or who is adjudicated an insolvent, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable under this section for acts done after the date on which he ceases to be a partner.
(2) Notices under sub-section (1) may be given by any partner.
Central rule and applicability
Partners remain liable as partners for acts done by any of them that would have been firm acts before dissolution, until public notice of dissolution. Any partner may give that notice. The proviso preserves the stated protection concerning a deceased partner's estate, an adjudicated insolvent and a retired partner not known as a partner to the person dealing with the firm.
Limits and related provisions
The provision is about qualifying later acts and public notice; it does not make every private act a firm act or discharge all earlier debts. Internal agreement on dissolution and public notice are separate matters. Apply the proviso to its exact person, knowledge and timing facts, and check Section 72 and state notice rules.
Hypothetical business example
Hypothetical: Partners agree to dissolve but continue to appear as an operating firm to a supplier. Before assuming later dealings cannot affect them, they check the statutory public-notice position and the nature of the relevant act.
Practical decision flow
Record dissolution and identify any later act that would previously have been a firm act.
Arrange and preserve the applicable public notice, identifying which partner gives it.
Assess the express exceptions and distinguish future-dealing exposure from old debts and winding-up obligations.
Check the applicable state law
This guide explains the central Section 45 baseline. State amendments, notifications and rules can affect its application. Confirm the law applicable to the firm's location and the relevant partnership agreement before acting.
Practical checklist
Do
- Record dissolution and identify any later act that would previously have been a firm act.
- Arrange and preserve the applicable public notice, identifying which partner gives it.
- Assess the express exceptions and distinguish future-dealing exposure from old debts and winding-up obligations.
Avoid
- The provision is about qualifying later acts and public notice; it does not make every private act a firm act or discharge all earlier debts. Internal agreement on dissolution and public notice are separate matters. Apply the proviso to its exact person, knowledge and timing facts, and check Section 72 and state notice rules.
Glossary
- Public notice
- The statutory notice whose proper mode requires Section 72 and applicable state-law review.
- Qualifying later act
- An act that would have been an act of the firm before dissolution.
Frequently asked questions
Is an internal dissolution agreement the same as public notice?
No. The notice requirement must be addressed separately.
Who may give notice under Section 45?
Any partner may give the subsection (1) notice.
Does public notice cancel earlier firm debts?
Section 45 does not provide a blanket cancellation of existing debts.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026