Negotiable instruments act

Kurian George (Querist) 05 November 2020 This query is : Resolved
Does a Partner of LLP can be liable for the dishonour of Cheque as same as the Designated Partner.

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This discussion clarifies the liability of LLP partners concerning dishonoured cheques under the Negotiable Instruments Act. While partners can be liable for cheque dishonour offences, particularly if they are signatories or involved in daily operations, liability is not automatic for all partners. The Supreme Court has ruled that not all partners are necessarily liable, especially if they are not involved in the specific activities leading to the offence. The complainant must specifically plead the role of each partner involved.

Isaac Gabriel (Expert) 05 November 2020
Yes. He is answerable for the dishonour and cosequences.

P. Venu (Expert) 06 November 2020
You have not posted the complete facts.

Advocate Bhartesh goyal (Expert) 06 November 2020
Yes signatory of cheque with all partners of firm are liable for consequences of offence of sec 138 of N.I.Act.

kavksatyanarayana (Expert) 06 November 2020
Yes. he is liable for the offence under sec.138 of NI act.

H. S. Thukral (Expert) 07 November 2020
If a partner is not taking part in day-to-day activities of firm , he is not liable. Complainant must implead the firm and all the partners and specifically plead the role of each partner in activities of the firm.

Rajendra K Goyal (Expert) 07 November 2020
Every partner of an LLP would be, for the purpose of the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. An obligation of the limited liability partnership whether arising in contract or otherwise, is solely the obligation of the limited liability partnership. The liabilities of LLP shall be met out of the property of the LLP.

Like a limited company, an LLP has a separate legal personality and so the general starting point is that members of an LLP are unlikely to be liable for debts and liabilities of the LLP itself.

Please refer to a news item of Supreme Court appearing in Business Standard (dt. 25.02.2013) news paper:

The Supreme Court held last week that all partners in a firm could not be liable for the offence of issuing a cheque, which was dishonoured. Section 138 of the Negotiable Instruments Act makes dishonour of a cheque an offence punishable with imprisonment or fine or both. Section 141 relates to offences by a company or partnership.
https://www.business-standard.com/article/economy-policy/not-all-partenrs-liable-for-dishonour-of-cheque-104082301023_1.html#:~:text=The%20Supreme%20Court%20held%20last,imprisonment%20or%20fine%20or%20both.

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