The main legal point established in the judgment is the limitation on a partner's authority to bind the partnership, the principle of apparent authority, and the continuation of partners' rights and obligations after the dissolution of the partnership.

Venkatasubba Rao, J.

1. These appeals raise the question of the extent of the authority of a partner to bind by his acts the partnership of which he is a member. A firm by name Bhagvanji Rasaji consisting of seven partners obtained a decree for about Rs. 4,000. Two persons (i) Sakalchand (ii) Nagappa putting forward rival claims to the decree in question applied to the Lower Court for its execution as transferee decree-holders. Sakalchand alleged an assignment in his favour dated 8th September, 1932 by Jasraj one of the seven partners; Nagappas claim was based on a similar assignment made on 24th September, 1932 by another partner Jovarmul Bhagvanji. The learned District Judge having rejected both the applications, the assignees have filed? the appeals in question.

2. The assignment in favour of Sakalchand was for Rs. 1,300 and that in favour of Nagappa for Rs. 1,701. It is not alleged that either of the sums has been brought into the partnership assets for the common benefit of the partners; the question that arises therefore is, was the transfer in either case within the scope of the apparent or ostensible authority of the partner? The case, it is common ground, is governed by Chapter XI of the Indian Contract Act which has since been repealed by the Indian Partnership Act, 1932. The relevant part of Section 251 runs thus:

Each partner who does any act necessary for, or usually done in, carrying on the business of such a partnership as that of which he is a member binds his co-partners to the same extent as if he were their agent duly appointed for that purpose.

3. The only necessity" observe Pollock and Mulla, which the English authorities recognise, as conferring authority is the necessity of carrying on the business in the usual way. Extraordinary occasions will not confer extraordinary power on a partner or manager.

4. The learned authors go onto observe that the words of the present section necessary for...carrying on the business of such a partnership as that of which he is a member may be read, and it seems the more natural reading, as including what is necessary in the circumstances of the special occasion, and not as confined to what is necessary in the usual course of business (see their Commentaries on Section 251). In other words, under the English law "power to do what is usual does not include a power to do what is unusual, however urgent". But under Section 251 it is open to argument that the powers of a partner are somewhat more extensive than under the English law. With this possible distinction, however, we must at once point out, we are not here concerned. No attempt has been made to show, indeed no argument has been put forward that the transactions in question are justified by the existence of any special or extraordinary circumstances. The question therefore reduces itself to this : was the making of the assignment within the scope of the apparent or ostensible authority of the partner? The principle of apparent authority may be thus stated: Every partner is, in contemplation of law the general and accredited agent of the partnership and may consequently bind all the other partners by his acts in all matters which are within the scope and objects of the partnership, provided, that his acts done in violation of his duty to the firm, will not bind it, when the other party to the transaction is cognisant of, or co-operates in, such breach of duty. Story on Partnership and Agency quoted with approval by the Judicial Committee in Bank of Australasia v. Breillat (1847) 6 Moo. P.C. 152 : 13 E.R. 642. As regards the nature of this firms business, it is described as a firm of money-lenders and commission agents and nothing further appears. The decree for about Rs. 4,000 has been transferred in one case for Rs. 1,300, in the other for Rs. 1,700 odd. The transaction in each case amounts in fact to the compounding of the claim although it has taken the form of an assignment; if the arrangement was with the judgm