The implied authority of a partner to act on behalf of the firm is subject to the contract between the partners and can be extended or restricted by agreement.

( 1 ) RESPDT. 4 was a partnership entered on 6-2-65 which carried on business of advancing loans. Appellant, Respdts 2 and 3 executed on 9-6-66 pro-note for Rs. 1,000. 00 in its favour. A partner, Krishn Avtar gave notice of retirement on 15-12-66. Firm was dissolved and he was separated on 15-12-66. Firm owed Rs. 550. 00 to Respdt. 1. Krishan Avtar in lieu of Rs. 550. 00 assigned firm s pro-note of Rs. 1,000. 00 to Respdt. 1. Latter filed a suit for Rs. 1,000. 00 and interest. Trial Court dismissed the same. A. D. J. in 1st appeal allowed additional evidence under 0. 41 Rs. 27, Civil Procedure Code which showed that Krishan Avtar had authority to assign. Appellant filed 2nd appeal. After narrating these facts, Judgement para 6 onwards is :

( 6 ) MR. Bagga contends firstly that section 19 (2) (c) of the Partnership Act prohibits an implied authority of a partner to extend to compromise or relinquish any claim or portion of a claim by the firm. Secondly, the authority, if any, which has been conferred upon the said partner by the dissolution deed was made on 15th December, 1966 and the same could not be used to validate the assignment which had been made earlier on 14th October, 1966 before the deed of dissolution and further that under the law the initial invalid assignment cannot be validated by ratification. He also submits that the defendant appellant can challenge the validity and effect of the assignment.

( 7 ) SECTIONS 19 and 20 of Partnership Act are:. . . . . . . . .

( 8 ) A perusal of the aforesaid provisions shows that the implied authority mentioned in section 19 is subject to the contract between the partners and it is also subject to the usage or custom of the trade The provisions contained in section 19 are, in my opinion a statutory presumption of the terms of the contract between the partners which is rebuttable. The restrictions have been imposed for the benefit of and in the interests of the partners and no absolute legal bar has been imposed by the law against the partners in acting contrary to the provisions of sub-section (2) and it is certainly open to the partners to relax or waive the restrictions.

( 9 ) THE assignment of the promissory note (Ex. P3) has been made by endorsement Ex. P1. The endorsement is clear and unconditional. . . . . . By this endorsement Krishan Avtar, partner of the firm had not compromised or relinquished any claim or portion of claim of the firm. The promissory note in question was an asset or security of the firm. The business of finance company consisted of advancing loans and obtaining security of promissory notes. It would constitute normal business of the firm to advance loans, realise debts and assign or endorse the promissory notes. Should a partner dispose of the goods or stock of the firm in due course of business at a lesser value than its market value (or the value permitted by the other partners), the transfer if otherwise legally valid would legally and effectively bind the firm and should the other partners object, they may be entitled to accounts from the offending partner who disposes of the goods or stock in due course of business at a lesser value. But the transaction between the third parties and the firm would remain binding. There is nothing contained in section 19 of the Partnership Act to prohibit the partner from acting in due course of business and disposing of the goods and stocks at a full or lesser value.

( 10 ) THE contention of the defendant appellant is that had the matter stood merely at the endorsement of Ex. PI, no objection could reasonably be raised against it. But, receipt (Ex. P 2) which accompanies the endorsement shows that Krishan Avtar acting for the finance company has transferred the promissory note of the face value of Rs. 1,000. 00 on receipt of a consideration of Rs. 550. 00 only in full and final settlement of the claim and it entitles the plaintiff assigned to recover from the defendants the entire amount of the pro