2022 (6) TMI 1034 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - proclaimed offender - Section 31(2) of the Partnership Act - HELD THAT - This Court is of the view that when a complaint is filed under Section 138 of Negotiable Instruments Act, primarily the cause of action arises from the issuance and dishonour of the cheque which may be issued by one party to the other party to discharge the liability which it owes to the other party. The issue of the liability if any existing, in lieu whereof the cheque has been issued, is a triable issue which the learned Trial Court decides during the course of the trial. In the present case, though there is no dispute that the petitioners were inducted as partners of the firm on 10th February, 2011, but fact of the matter remains that the cheque, dishonour of which has led to filing of the complaint under Section 138 of the Negotiable Instruments Act bears the date 15th March, 2013, i.e. after the induction of the petitioners as partners of the partnership firm. This Court is of the considered view that the provisions of Section 31(2) of the Partnership Act which provide that a person who is introduced as a partner into a firm does not thereby become liable for any act of the firm done before he became a partner do not come to the rescue of the petitioners for the purpose of quashing of the complaint under Section 482 of the Code of Criminal Procedure because herein the act which led to the filing of complaint under Section 138 of the Negotiable Instruments Act is issuance and dishonour of the cheque which bears the date 15th March, 2013, i.e. post the date on induction of the present petitioners as partners of the partnership firm - This Court is refraining from making any observation with regard to contention of the petitioner that liability for which the cheque was issued was relatable to the period prior to the induction of the petitioners as partners of the firm because this is an issue which has to be decided by the learned Trial Court. This petition is dismissed.

Summary

Issues:
Partnership liability pre and post induction, Quashing of complaint under Section 482 of CrPC, Interpretation of Section 31(2) of Indian Partnership Act, 1932

Partnership Liability Pre and Post Induction:
The petitioners, in this case, were inducted as partners of a partnership firm, and a complaint was filed against them under Section 138 of the Negotiable Instruments Act for a liability of the firm predating their induction. The petitioners argued that they should not be held liable for acts of the firm before their partnership. The respondent contended that the petitioners were actively involved in the firm when the cheque in question was issued. The Court noted that the cheque was dated after the petitioners' induction, and the liability issue was triable. The Court refrained from making observations on pre-induction liability, leaving it for the Trial Court to decide.

Quashing of Complaint under Section 482 of CrPC:
The petitioners sought to quash the complaint against them under Section 482 of the Code of Criminal Procedure. The Court clarified that it would only examine if the petitioners had a case for quashing the complaint, without delving into the merits of the case to avoid prejudicing either party. The Court emphasized that the cause of action in a complaint under Section 138 of the Negotiable Instruments Act arises from the issuance and dishonour of the cheque, a triable issue for the Trial Court.

Interpretation of Section 31(2) of Indian Partnership Act, 1932:
The petitioners relied on Section 31(2) of the Indian Partnership Act, 1932, which states that a person introduced as a partner into a firm is not liable for acts of the firm before becoming a partner. The Court noted that the cheque leading to the complaint was dated after the petitioners' induction, making Section 31(2) inapplicable for quashing the complaint. The Court dismissed the petition, clarifying that its observations were for the petition only and should not influence the Trial Court's proceedings.

This judgment addressed the complex issue of partnership liability concerning acts of a firm pre and post induction of partners. It highlighted the distinction between the cause of action in a complaint under Section 138 of the Negotiable Instruments Act and the applicability of Section 31(2) of the Indian Partnership Act, 1932. The Court's decision to dismiss the petition was based on the timing of the cheque issuance in relation to the petitioners' partnership induction, emphasizing the need for the Trial Court to adjudicate on the liability issue.