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2004 DIGILAW 384 (MAD)

V. Sundaram v. E. Santhalingam

2004-03-08

S.ASHOK KUMAR

body2004
Judgment :- This Criminal Revision has been filed by the petitioner against the order of the learned Judicial Magistrate in Crl.M.P.No.5307 of 2003 in C.C.No.341 of 2003 dated 09.10.2003. 2. The brief facts of the case are as follows: The respondent has filed a complaint against the petitioner who was a partner of the company for dishonour of cheque dated 21.01.2003 for a sum of Rs.5 lakhs. The revision petitioner filed Crl.M.P.No.5307 of 2003 under section 245 of Cr.P.C., to discharge the petitioner on the ground that ever since 30.11.99 he was not a partner in the firm viz., M/S.Shree Arunachaleswarar Mills and that therefore he is not liable for the liability of the partnership firm. The learned Judicial Magistrate No.2, Coimbatore dismissed the application filed by the revision petitioner. Aggrieved over the same this revision has been filed. 3. Learned counsel for the petitioner would contend that on the date of issue of the cheque which is the subject matter of this case, the petitioner was not partner in the firm and in support of the said contention has produced Form-A dated 4.12.2003. He has not produced any paper publication to show that the partnership was dissolved with effect from 25.10.2002 or he retired from the partnership from 30.11.1999. Learned counsel for the petitioner though did not dispute the signature in the cheque, would contend that in as much as the petitioner was not a partner of the firm, he could not be held liable for the liability of the firm and therefore, he should be discharged from the offence alleged against him under section 138 of Negotiable Instruments act. In the Form-A dated 4.12.2003 the name of the petitioner does not find a place. But the borrowal of the amount was on 27.12.2001 and according to the complaint, after repeated demand the petitioner is said to have issued the cheque only on 21.01.2003 for a sum of Rs.5 lakhs. Section 72 of Indian Partnership Act runs as follows: "A partnership continues, as to third persons who deal with the members thereof as partners, until due notice of dissolution is given even though as between the partners, the firm has been dissolved prior to such notice, especially as to persons who dealt with the firm or extended credit prior to the dissolution as between partners. Accordingly, each member of a former firm is bound, and continues liable for the acts of any partner within the ordinary scope of the business of the firm, until due notice of such dissolution has been given. But, in case of dissolution by operation of law, notice thereof need not be given, nor is notice necessary where a valid partnership has never existed. Wherever a notice is required by law to be given, it ought to be given in such manne as the law deems sufficient. In India notice is regulated by the Act." As per Section-72 of the Partnership Act, a public notice should be given by publication in the official gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place of principal place of business. Admittedly in this case, no publication was made in the official gazette. Therefore the retirement from the partnership by the partner cannot be held legal. In the decision reported in C.Assiamma Vs. State Bank of India (AIR 1990 Kerala 157) a Division Bench has held as follows: "23. In this connection, reference has also to be made to S.23(3) of the Partnership Act, It lays down that: "Notwithstanding the retirement of a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement." Section 45(1) provides that not withstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution until public notice is given of the dissolution. This mode of giving notice has been laid laid down in S.72 of the Partnership Act which says that a public notice has to be given by intimation to the Registrar of Firms under S.63 and by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place of principal place of business. It is not contended that notice was given to the Registrar of Firms of the dissolution of retirement or a publication was effected in the Official Gazette What is relied on the prove the public notice is the publication in the 'Sathyanadam', which is a Sunday Edition of Malayalam Daily, 'Keela Times' as evidenced by Ext.B12. That alone would not satisfy the requirement of public notice is clear from S.72 of the Partnership Act. Further D.W.1 admitted that he is not a reader of "Kerela Times" of 'Sathyanadam'. It is difficult to attribute knowledge of dissolution to the bank from publication Sathyanadam. In any event, as there is no publication in the Official Gazette, or proof of notice to the Registrar, there is no public notice as contemplated in S.45(1w) and 72 of the Partnership Act. In the circumstances the retirement of the 2nd defendant, even if it be true, cannot affect the rights of the plaintiff bank who is a third party in view of S.32(3) of the Partnership Act." In the decision reported in Lakshmi Vilas Bank Ltd., Vs. M/S.Sun Finance &Others (1995 (2) Law Weekly 574) a Division Bench of this court held as follows: "22. The 2nd defendant has examined himself as D.W.1. He has stated in chief examination that the Chairman of the plaintiff bank knew that defendants 2,4 and 5 have retired from the 1st defendant firm recently. He does not say or explain to the Court as to how the Chairman of the plaintiff bank knew about their retirement. He has admitted in cross-examination that no notice was given in writing to the plaintiff about the alleged retirement. In the letter of undertaking Ex.A5 dated 15.4.1970, the partners of the 1st defendant have undertaken to give notice to the plaintiff of any change occurring in the firm in writing and that until receipt of such notice by the bank and the receipt of acknowledgement by them from the bank for the same, the plaintiff shall be entitled to regard all of them as partners of the 1st defendant firm. Since admittedly, no notice was given in writing about the alleged retirement of defendants 2,4 and 5 from the 1st defendant firm to the plaintiff, they afre, in our view, also liable for the suit claim. Since admittedly, no notice was given in writing about the alleged retirement of defendants 2,4 and 5 from the 1st defendant firm to the plaintiff, they afre, in our view, also liable for the suit claim. Section 45of the Indian Partnership Act says that a partnership continues as to third persons who deal with the members thereof as partners until public notice of dissolution is given, even though, as between the partners the firm has been dissolved prior to such n notice. In other words, a partnership is presumed to continue as to third persons until public notice of dissolution has been given, unless the person dealing with the firm after its dissolution, had actual knowledge of such dissolution. Accordingly, each partner of a former firm is bound by, and continues liable for, the acts of any former partner,if they would have been acts of the firm if dissolution had not taken place. the dissolution of a firm completely breaks the partnership relation between its members and consequently the agency constituted by that relation in regard to dealings with third persons. Thereafter, a partner ceases to have any authority to bind his previous co-partners by any act. The words 'any act done by any of them which would have been an act of the firm if done before dissolution" indicate that notwithstanding the dissolution of the 1st defendant firm, the old partners of the firm continue to be liable as partners although by virtue of the dissolution they have ceased to be partners and are no longer partners for any act done by any of the old partners, provided that fact is of a character that would have been an act of the firm. 22.Section 72 of the Indian Partnership Act deals with the mode of giving public notice. It is useful to extract the following passage in J.P.Singhal's Indian Partnership Act, Fifth Edition, appearing at page 1215: "A partnership continues, as to third persons who deal with the members thereof as partners, until due notice of dissolution is given even though as between the partners, the firm has been dissolved prior to such notice, especially as to persons who dealt with the firm or extended credit prior to the dissolution as between partners. Accordingly, each member of a former firm is bound, and continues liable for the acts of any partner within the ordinary scope of the business of the firm, until due notice of such dissolution has been given. But, in case of dissolution by operation of law, notice thereof need not be given, nor is notice necessary where a valid partnership has never existed. Wherever a notice is required by law to be given, it ought to be given in such manne as the law deems sufficient. In India notice is regulated by the Act." 23. Under Section 32(3) of the Indian Partnership Act, a retired partner continues to be liable until public notice is given of his retirement and what the public notice under the Act is specified by Section 72. Therefore, on a reading of both the sections, it is clear that a retiring partner will be liable for any subsequent act on behalf of the firm which would bind the firm until the public notice as prescribed by section 72 is given. 24. Rule 4 of the Tamil Nadu Partnership (Registration of Firms) Rules, 1951 deals with the form of intimation and notices under Sections 61, 62 and 63 of the Indian Partnership Act, which shall respectively be in Forms III, IV, V and VI annexed to these Rules with such variations as circumstances may require. Form No.V if the form prescribed for giving of notice of change in the constitution or forwarded to the Registrar of Firms for filing under Section 63(1) of the Indian Partnership Act. Three decisions cited by Mr.S.P.Subramaniam, learned counsel for the appellant, may be usefully looked into in this regard. the first is reported in Jwaladutt R.Pillani Vs. Bansilal Motilal ( ILR 53 Bombay 414=A.I.R.1929 P.C.132= 29 L.W.884). This decision deals with the corresponding section under the Indian Contract Act, which was in force before the enactment of the Indian Partnership Act. Three decisions cited by Mr.S.P.Subramaniam, learned counsel for the appellant, may be usefully looked into in this regard. the first is reported in Jwaladutt R.Pillani Vs. Bansilal Motilal ( ILR 53 Bombay 414=A.I.R.1929 P.C.132= 29 L.W.884). This decision deals with the corresponding section under the Indian Contract Act, which was in force before the enactment of the Indian Partnership Act. The Full Bench observed as follows: "Where on the dissolution of partnership, public notice of dissolution is given, but no notice is given to the old customers, the retiring partner is still liable to the old customer if he continues to give credit to the partnership." From the decisions cited above, it is clear that a partner who has retired from the partnership is bound to give notice in a vernacular newspaper of the locality wherein the principal place of business of the partnership situated and also in the official gazette. Further from the judgements referred to above, it is also clear that notwithstanding the dissolution of the partnership firm, a partnership continues as to third persons who deal with the members thereof as partners until public notice of dissolution is given, even though, as between the partners the firm has been dissolved prior to such notice. In other words, a partnership is presumed to continue as to third persons until public notice of dissolution has been given unless the person dealing with the firm after its dissolution had actual knowledge of such dissolution. Section 45 of the Indian Partnership Act says that a partnership continues as to third persons unless the dissolving of the firm is taken to the knowledge of the third persons who deal with the firm. 4. As far as this case is concerned, there is no proper publication as contemplated under section-72 of the Partnership Act. The other contentions of the revision petitioner are not sustainable. Therefore for all the above reasons, the revision is liable to be dismissed and accordingly it is dismissed. No costs. Consequently connected Crl.M.Ps are closed.