Chapter VI - Dissolution of a Firm
Section 47
Section 47: Continuing authority for winding up
Section 47 preserves limited authority and mutual obligations after dissolution so winding up and unfinished transactions can be completed.
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Need advice on Section 47?
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
After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise:
Provided that the firm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this proviso does not affect the liability of any person who has after the adjudication represented himself or knowingly permitted himself to be represented as a partner of the insolvent.
Central rule and applicability
Partners' authority to bind the firm and their mutual rights and obligations continue only as far as necessary to wind up and complete transactions begun but unfinished when dissolution occurred. The proviso excludes binding the firm through an adjudicated insolvent partner's acts while preserving the identified holding-out liability of another person.
Limits and related provisions
This is not unrestricted authority to start a fresh business after dissolution. The link to necessary winding up or an already begun transaction must be established. The insolvency proviso and post-adjudication representation condition cannot be ignored. State law and the firm's actual unfinished obligations may affect the assessment.
Hypothetical business example
Hypothetical: At dissolution, a firm has an existing customer order partly completed. The partners assess what is necessary to complete that transaction. A new unrelated venture is not justified merely by calling it winding up.
Practical decision flow
List transactions begun but unfinished at dissolution and the steps necessary to wind up.
Check whether the proposed act falls within that limited continuing authority.
Examine any insolvency adjudication and holding-out facts before representing that the firm is bound.
Check the applicable state law
This guide explains the central Section 47 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
- List transactions begun but unfinished at dissolution and the steps necessary to wind up.
- Check whether the proposed act falls within that limited continuing authority.
- Examine any insolvency adjudication and holding-out facts before representing that the firm is bound.
Avoid
- This is not unrestricted authority to start a fresh business after dissolution. The link to necessary winding up or an already begun transaction must be established. The insolvency proviso and post-adjudication representation condition cannot be ignored. State law and the firm's actual unfinished obligations may affect the assessment.
Glossary
- Unfinished transaction
- A transaction begun before dissolution but not completed then.
- Continuing authority
- The limited authority retained for the purposes stated in Section 47.
Frequently asked questions
Does all partner authority end immediately on dissolution?
Not necessarily. Limited authority continues for the specified winding-up and unfinished-transaction purposes.
Can that authority support any new venture?
No. The section expressly limits its continuation.
Does the insolvency proviso remove every person's holding-out liability?
No. It expressly preserves the identified liability of someone representing themselves, or knowingly permitting representation, as partner of the insolvent after adjudication.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026