cheque bounce,Partnership
In case of cheque bounce, is the partner signing the cheque solely responsible?
I am partner of a Partnership firm, comprising of Seven partners. Two of the partners, are running the business and they are working partners taking care of the day to day affairs of the firm. Other five partners, including my self is not in station and is sleeping partners. The cheques can be signed and issued by the working partners. In case, a cheque bounces and legal action takes place under section 138, are all the seven directors liable for legal action, or only those who have signed the cheque ?
By  Rishabh Kumar  |  22 Apr 2016  |  Upvotes: 0  | 

1 Answer(s)

Rashi Gahlaut
Advocate

The law in case of offence by companies is such that If the person committing an offence under section 138 of the Negotiable Instruments Act is a company, every person who, at the time the offence was committed, was in charge of and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.As such, Every director of the company is not automatically vicariously liable for the offence committed by the company, only such director or directors who were in charge of and responsible to the company for the conduct of the business of the company at the material time shall be deemed to be guilty.And there must be a specific averment in the complaint that at the time the offence was committed, person accused was in charge of and responsible for the conduct of the business of the company.

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