shashwat poddar 02 June 2018

Unsecured Loans - Multiples Cheques Issued

A & B entered into partnership in 1989. Later on partnership deed in 1992 & 2002 was executed . None of the deed was registered. As per deed A will look after the day to day business of the firm for which he will be paid working remuneration. B being a housewife had no role in business. Neither she had signed any cheques or balance sheets of the firm nor she was given any share in profit of the firm. As per deed A & B will share profits & losses equally. B's capital which is 35Lacs is standing in the books of the firm. Now, A being the working the partner has taken huge amounts of loan in the name of firm by cheque and has issued post dated cheques to the money lenders as a receipt. B being a silent partnet (housewife) was totally unaware of this. As per deed a partner can leave the firm after giving 3 months notice to the other partner so, B came to know about this from the market and gave a 3 months notice to A that she do not wish to continue as partner anymore as intentions of A has become malafide demanding for her share of capital. Can private money lenders make B a party in cheque bounce case? Is B liable? What is the extent of B's liability if she's liable? Is there any criminal liability of B?

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R.Ramachandran (Advocate) 02 June 2018

You say that "As per deed A & B will share profits & losses equally."

Yet you are asking what is the liability of B? IT IS NOT CLEAR, WHY AND HOW YOU ASK THIS QUESTION AT ALL.

Criminal liability of B may not be there.

shashwat poddar 02 June 2018

My point is B had no role in business, and as per books, firm is in profit as A had made false and frivolous enteries in books but actually firm is in huge losses. And B was totally unaware of it. Will B be liable for the fraud committed by A. And whats the extent of B's liability. Can B be asked to pay more then her share of capital which is already standing in the books?

R.Ramachandran (Advocate) 02 June 2018

Whether that is the requirement?

Once a partner with equal share in profit and loss - how does it matter?

Further, if A has done some mischief, then B has to take appropriate legal action against him. Which she cannot do because the Partnership is not registered. If she is totally unaware of A's activities, then it is her irresponsibility and negligence.

If the Partnership is liable to much more than what is the capital, then yes, the partners are liable. AFTER ALL IT IS NOT A PRIVATE LIMITED COMPANY, where the liability is limited.