Which of the following Sections defines the doctrine of holding out, creating the liability of a 'Non-partner' under Indian Partnership Act ?

Haryana Judicial Service (Civil Judge) Prelims 2010 Previous Year Question Papers with MCQ Answers

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56.

Which of the following Sections defines the doctrine of holding out, creating the liability of a 'Non-partner' under Indian Partnership Act ?

A: Section 28

B: Section 29

C: Section 30

D: Section 31

The answer is: A

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Explanation

The correct answer is A: Section 28.

The doctrine of holding out is a special application of the law of estoppel, which prevents a person from denying his previous representation that he is a partner in a firm.

According to Section 28 of the Indian Partnership Act, 1932, anyone who by words or conduct represents himself or knowingly permits himself to be represented as a partner in a firm, is liable as a partner in that firm to anyone who has given credit to the firm on the faith of such representation. This section also provides some exceptions for the cases of deceased, insolvent, or dormant partners. The purpose of this doctrine is to protect the interests of the third parties who rely on the apparent authority of the person who holds himself out as a partner.