Section 138 of the NI Act – Liability of Accused who ceased to be Partner

The appellant filed complaint against Accused no.1 partnership firm and its partners – accused nos.2 to 4 for dishonour of 12 cheques – total Rs.6 crores.

The respondent – accused no.4 filed section 482 Cr PC complaint for quashing the complaint on the round that he ceased to be a partner due to retirement on 1.4.2015.

The appellant contended that the mandate of Sections 32, 62, 63 and 72 of the Partnership Act 1932, was not complied with.  No public notice in the newspaper in respect of retirement was given.

HELD that section 72 of the Partnership Act requires retirement notice to be given to the Registrar of Firms under Section 63, by public in the Gazette and at least in one of vernacular newspaper.  As per section 63, the Registrar shall make a record of the notice in the Register and file a notice with statement of Firm as provided under Section 59.

None of the requirements mandated by the statute have been fulfilled by respondent no.1.   Merely putting forth a resignation or the partners entering into an agreement accepting resignation is insufficient for discharge of liability of a partner unless proper entry after publication has been given effect to with the same, having been recorded in the Registrar of Firms in the office of the Registrar of Firms as provided in Section 63 of the Partnership Act.

Judgment dated 19.5.2025 of the Supreme Court of India in Criminal Appeal No.4363 of 2024 of Shivappa Reddy Vs.   S. Srinivasan