2021 (10) TMI 759 - HC - Indian Laws

Dishonor of Cheque - discharge of existing liability - sufficient averments present or not - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT - In the present case, both A2 and A3 are partners of A1/Firm. When a cheque is issued for a particular transaction on behalf of the Partnership Firm, then both have a co-existing liability with respect to ensuring that the cheque is honoured. If the cheque is dishonoured and the prosecution is launched, then both have a co-existing liability to face such prosecution unless the Partnership Deed specifically excludes a particular partner or includes a partner as a sleeping partner or a minor partner only for the benefit of the Partnership Firm. In all other circumstances, both partners sink together or survive together. With respect to the averments made, the respondent had specifically stated that the petitioner herein is also responsible for the day-t0-day activities of the Firm. It had been very specifically stated that the cheques were signed in her presence. Those are facts to be established and trial is the answer. If the petitioner herein/A2 is able to establish during the course of trial that she never had any direct role in the transactions of A1/Partnership Firm or that she would not gain if the Partnership Firm gets a profit or that she would not suffer a loss if the Partnership Firm ends up in loss over any particular transaction, then, evidence adduced in that regard would certainly be properly appreciated by the learned Magistrate. Inciting the parties to adduce evidence would be the proper course to be adopted to examine the points put forth by the petitioners herein, who is A3 in both the Calendar Cases - Petition dismissed.

Issues Involved:
1. Sufficiency of averments to attract the offence under Section 138 of the Negotiable Instruments Act.
2. Liability of a partner in a partnership firm for dishonoured cheques.
3. Distinction between the roles and liabilities of directors in a company and partners in a partnership firm.

Detailed Analysis:

1. Sufficiency of Averments to Attract the Offence under Section 138 of the Negotiable Instruments Act

The primary contention raised by the petitioner’s counsel was that the averments in the complaint were insufficient to attract the offence under Section 138 of the NI Act. The petitioner argued that she did not sign the cheques and that mere presence during the signing of the cheques by her husband (A2) was not enough to hold her liable. The respondent’s counsel countered that the averments were sufficient to array the petitioner as an accused, emphasizing that these issues should be examined during the trial.

2. Liability of a Partner in a Partnership Firm for Dishonoured Cheques

The court examined the provisions under Section 138 and Section 141 of the NI Act. Section 138 deals with the dishonour of cheques for insufficiency of funds, while Section 141 pertains to offences by companies and extends liability to individuals responsible for the conduct of the business. The court highlighted that a partner in a partnership firm holds a different position compared to a director in a company. A partner shares in both the profits and losses of the firm and is jointly responsible for ensuring that cheques issued by the firm are honoured. The court noted that the petitioner, being a partner, had a co-existing liability with her husband (A2) to ensure the cheques were honoured.

3. Distinction Between the Roles and Liabilities of Directors in a Company and Partners in a Partnership Firm

The court elaborated on the distinction between directors in a company and partners in a partnership firm. Directors may have varying degrees of involvement and liability depending on their specific roles (e.g., whole-time director, managing director). In contrast, partners in a partnership firm are generally equally liable for the firm's transactions unless specified otherwise in the partnership deed. The court emphasized that in the absence of specific exclusions in the partnership deed, both partners (A2 and A3) are equally liable for the dishonoured cheques.

Conclusion

The court concluded that the petitioner did not provide sufficient evidence to demonstrate that she had no direct interest in the partnership firm or that she would not share in the profits or losses. The court held that both partners are liable to answer any complaint regarding dishonoured cheques. The court dismissed the petitions, allowing the trial to proceed to examine the petitioner’s specific role and involvement in the firm’s transactions.

Final Order

The Criminal Original Petitions were dismissed, and the connected miscellaneous petitions were closed, allowing the trial to continue to determine the petitioner’s liability based on evidence presented during the trial.

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