NEGOTIABLE INSTRUMENT ACT, 1881

Section 138

Dishonuor of cheque - Appeal against judgment of acquittal of partners - Partners retired from firm prior to institution of suit - Whether retirement from firm will exonerate partners from responsibility on existing debts

Lender filed a complaint under section 138 against firm and its partners, wherein Trial Court passed an order of conviction against the borrowers. The partners filed an appeal against the order of conviction on the ground that they were retired from the firm prior to institution of the complaint and as per retirement deed, they were not liable for the offence. Sessions Court passed judgment of acquittal of the partners as the cheque in question was issued to another person, not to the lender for discharge of liability. The lender filed an appeal against the judgment of acquittal as the partners failed to rebut the statutory presumption through reliable evidence. Held: The partners failed to produce any documents which proved that they had given the cheques to another person, who was authorized to deal with the cheques. Retirement from the partnership firm subsequent to presentation of cheque would not exonerate the partners who had given the cheque when they were at the helm of affairs of the firm on the date of presentation of cheque. The cheque was issued by the partners and they failed to prove rebuttal of statutory presumption under section 139 which was in favour of the cheque holder. Thus, the judgment of the Sessions Court was set aside and the order of conviction of the Trial Court was restored.

REFERRED :

FAVOUR : In favour of the appellant

A.Y. :

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