What is doctrine of holding out ?
Partnership by Holding Out is also known as partnership by estoppels. Holding out is merely application of the principle of estoppel which is a rule of evidence wherein a person is prevented or estopped from denying a statement he made or existence of facts that he makes another person believe. In simple terms, if a person represents that he is a partner of a particular firm, he is estopped from denying this representation later on. The doctrine of holding out has been provided under section 28 of the Indian Partnership Act, 1932. Section 28 reads as:
“Holding Out - (1) Anyone who by words spoken or written or by conduct represent himself, or knowingly permits himself to be represented, to be a partner in a firm, is liable as a partner in that firm to anyone who has on the faith of any such representation given credit to the firm, whether the person representing himself or represented to be a partner does or does not know that the representation has reached the person so giving credit.
(2) Where after partner's death the business continued in the old firm-name, the continued use of that name or of the deceased partner's name as a part thereof shall not of itself make his legal representative or his estate liable for any act of the firm done after his death.”
It says that, if a person is held out by the company as its officer, the act of the person falling within the actual or ostensible authority of the officer will be binding on the company
**DOCTRINE OF HOLDING OUT** Doctrine of holding out also known as transfer of ostensible owner. A person who represents himself as a true owner of the property with the consent of the true owner is known as ostensible owner. The ostensible owner has a right to transfer the property for consideration. The above doctrine is an exception to the rule that A person cannot confer a better title than he himself has. Thanks
HI Doctrine of Holding Out makes an exception to the rule that a person cannot confer a better title than he himself has The Doctrine of Holding Out creates an exception to the Doctrine of Constructive Notice. It says that, if a person is held out by the company as its officer, the act of the person falling within the actual or ostensible authority of the officer will be binding on the company for instance In a case the court held a person as partner, and hence liable for repayment of firm’s debt the court went on to say that even though he was not proved to be formal partner – he could still under the doctrine of holding out (which is a species of estoppel) can be held to be a partner for the reason that he “represented as a partner” and at any rate “knowingly permitted himself to be so represented” on faith of which representation bank went on to give credit – now it would be inequitable to let him wriggle out of his liability.