The main legal point established in the judgment is the application of Section 32(2) of the Partnership Act, which allows a retiring partner to be discharged from liability by an agreement with the reconstituted firm or implied by a course of dealing between the third party and the reconstituted firm.

S.Sankarasubban, J.

Fourth defendant in O.S. No. 89 of 1988 of the Sub Court, Ernakulam is the appellant. Respondent is the plaintiff in the suit, viz., The State Bank of Travancore, Cochin Branch. The suit was filed by the plaintiff for the recovery of a sum of Rs.90,182.05 alleged to the due from the defendants to the plaintiff with interest and costs. The first defendant in the suit is The Queens Engineering Works, which is a partnership Firm with defendants 2 to 5 as partners.

2. The firm was granted an over draft facility for Rs. 40,000/- on 10.6.1982 and a medium term loan of Rs. 50,000/- on 9.2.1983. The necessary security documents were furnished to the respondent/Bank. The defendants executed revival letters in respect of the over draft facility and medium term loan account facility. Since the amount was not paid, the suit was filed.

3. In paragraph 13 of the plaint, the plaintiff stated that the defendants executed the revival letter for the over draft facility on 24.5.1985 and on 10.1.1986 the medium term loan was revived. Hence, the suit is not barred by limitation. It is also stated that notices were sent to all the defendants.

4. The fourth defendant filed a written statement stating that the suit is barred by limitation and that he retired from the Partnership on 10.3.1983. Copy of the retirement deed was duly handed over by the fourth defendant to the plaintiff's then Branch Manager John, who had duly noted this fact in the relevant books. The entire liability of the first defendant was taken over and the business carried on by defendants2,3 and 5 on the basis of the terms and conditions of the retirement deed. The plaintiff also agreed to the same and further agreed not to connect the fourth defendant with any of the affairs of the first defendant. It is also stated that the above facts will be clear from the subsequent conduct of the plaintiff and also from the fact that in none of the documents executed subsequent to 10.3.1983, the fourth defendant was either asked by the plaintiff to be a party or made a party. The fourth defendant denied that he had executed any revival letter. He also denied that lawyer's notice was sent to him. Separate written statement was filed by defendants 2 and 3.

5. The court below raised relevant issues. One of the issues is whether the fourth defendant stands discharged from the plaint liability by reason of his retirement from the partnership? The court below found this issue against the fourth defendant. The suit was decreed and the plaintiff was allowed to realise the entire debt from defendants 2 and 3 and by sale of the plaint schedule property. If the plaintiff is unable to realise the entire debt from defendants 2 and 3 and by sale of the property, the plaintiff can proceed against defendants 4 and 5. As already stated, this appeal is filed by the fourth defendant. According to him, he should be deemed to be discharged from the liability of the Firm by the conduct of the Bank as well as other partners.

6. We heard learned counsel for the appellant Sr. P.K. Joseph and the learned counsel for the respondent Sri. V.R.K. Kaimal.

7. Sri Joseph contended that it is true that normally a retiring partner is made liable for the debts which have been incurred by the Firm while he was a partner. But under Section 32 of the Partnership Act (Hereinafter referred to as the Act), there are certain instances where a partner may be discharged from the liability even with regard to the debts, which were incurred by the Firm at the time when he was a partner. Under Section 32(2) of the Act, discharge may be made by the agreement by the retiring partner to any third party and the partners of the reconstituted Firm and such agreement may be implied by a course of dealing between such third party and the constituted Firm, after he had acknowledge of the retirement. Learned counsel points out the following circumstances to infer that his client has been impliedly discharged from the liabil