Section 47 of IPA : Section 47: Continuing Authority Of Partners For Purposes Of Winding Up

Explanation using Example

Imagine a partnership firm comprising three partners: A, B, and C. They decide to dissolve the partnership. However, they have an ongoing contract with a supplier to deliver raw materials. Under Section 47 of The Indian Partnership Act, 1932, despite the dissolution, A, B, and C are still authorized to act on behalf of the dissolved firm to the extent necessary to receive the final shipment of materials and pay the supplier, thus winding up the unfinished business.

However, if partner A is declared insolvent after the dissolution, he cannot bind the firm for any further transactions. If A, despite his insolvency, continues to conduct business or incur debts claiming to be a partner, the firm will not be liable for his actions. But if the firm, through B or C, knowingly allows A to represent the firm, they could be held liable for the misrepresentation.