Suspension of payments by a managing partner can bind the firm where circumstances show a collective declaration of insolvency.

A managing partner's letter declaring suspension of payments was treated as a valid act of insolvency because the surrounding circumstances, earlier creditor communications, and collective wording showed a genuine firm-level declaration rather than an isolated statement. The Court also held that the relevant debts were already due and payable, so the insolvency provision was attracted. Further, a partner managing the business could bind the other partners where the communication was issued for the firm with their participation or knowledge. On that basis, the suspension of payments was attributable to all partners, the adjudication order was upheld, and the appeal failed.

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Issues: (i) whether the letter issued by the managing partner amounted to a voluntary and effective declaration of suspension of payments constituting an act of insolvency; (ii) whether the debts in question were immediately payable so as to attract the insolvency provision; and (iii) whether the statement of suspension of payments by one partner could be treated as an act on behalf of all partners of the firm.

Issue (i): Whether the letter issued by the managing partner amounted to a voluntary and effective declaration of suspension of payments constituting an act of insolvency.

Analysis: The letters were written against the background of earlier communications to other creditors and disclosed the firm's financial inability to honour its obligations. The surrounding circumstances, the contents of the letters, and the use of collective language showed that the declaration was not a mere isolated or involuntary statement procured by another person. The Court treated the communication as a genuine expression of suspension of payments.

Conclusion: The declaration amounted to a valid act of insolvency.

Issue (ii): Whether the debts in question were immediately payable so as to attract the insolvency provision.

Analysis: The contention that the liability had not yet matured was not accepted. The evidence and the appellants' own stand showed that the relevant instalments had become due before the impugned letters were written. The attempted reliance on a different factual setting was held to be inapplicable.

Conclusion: The debts were treated as due and payable, and the objection failed.

Issue (iii): Whether the statement of suspension of payments by one partner could be treated as an act on behalf of all partners of the firm.

Analysis: A partner carrying on the business of the firm can bind the other partners where the totality of circumstances shows that the act was done for the firm. The letters were issued in the context of the firm's management, were prepared with the participation and knowledge of another partner, and used language indicating a collective declaration. On that basis, the Court held that the act was not confined to the signatory alone.

Conclusion: The suspension of payments was attributable to all the partners.

Final Conclusion: The adjudication order was upheld and the appeal failed, leaving the insolvency adjudication against the appellants undisturbed.

Ratio Decidendi: Where a partner managing the firm issues a communication declaring suspension of payments, and the surrounding circumstances show that it is made for the firm and with the participation or knowledge of the other partners, the declaration constitutes a joint act of insolvency attributable to the partnership.

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