Q.Which of the following statements about liability is correct?
(A) Every partner's liability under the Indian Partnership Act, 1932 is always limited to his capital contribution
(B) Under the Indian Partnership Act, 1932, every partner's liability is unlimited; limited liability for partners is available only under the separate Limited Liability Partnership Act, 2008
(C) Only the managing partner has unlimited liability; other partners have limited liability
(D) Liability under the Indian Partnership Act, 1932 depends on whether the firm is registered or not

The Indian Partnership Act, 1932 has no concept of limited liability for a partner — that protection exists only under a wholly separate statute.

Why (B) is correct: Section 25 makes every partner liable jointly and severally, without limit, for all acts of the firm done while he was a partner. A distinct business form with limited liability for its partners — the Limited Liability Partnership — exists only under the separate Limited Liability Partnership Act, 2008, and is not a variant of an ordinary partnership under the 1932 Act.

Why the distractors are wrong: …

This is one of the most commonly confused points in the whole subject — students assume 'partnership' and 'LLP' are simply two names for the same thing. They are governed b …