Retired partners incur no Section 138 liability for post-retirement debts absent specific Section 141 averments.

The petitioner, Shreya Banerjee, was formerly a partner of M/s Steakalicous Restauranteur, which entered into a lease agreement and utility agreement with the opposite party on 9 March 2018 for occupation of premises at 192A, Sarat Bose Road.

The firm allegedly paid occupational charges until April 2024, but charges amounting to ₹16,93,000, plus GST, remained outstanding for May to August 2024. The firm subsequently issued three cheques, dated 1, 9 and 15 September 2024, which were dishonoured for insufficiency of funds. Following statutory notice, the opposite party initiated proceedings under Section 138 of the Negotiable Instruments Act, 1881, against the firm and its partners, including the petitioner.

The petitioner contended that she had retired from the firm pursuant to a deed of retirement dated 27 March 2023, effective from 3 April 2023; that she was not a cheque signatory; and that she was not involved in the firm’s day-to-day affairs.

The opposite party relied on Sections 25, 26 and 32(3) of the Indian Partnership Act, 1932, contending that the petitioner remained liable to third parties because no public notice of her retirement had allegedly been issued.

Whether the petitioner, a non-signatory and retired partner of the partnership firm, could be prosecuted under Sections 138 and 141 of the Negotiable Instruments Act for cheques issued after her retirement in respect of liabilities arising for a subsequent period?

Whether the absence of a public notice under Section 32(3) of the Indian Partnership Act, 1932, continued the petitioner’s liability for the dishonoured cheques despite her retirement from the firm?

Whether the complaint contained the requisite specific averments showing that the petitioner was in charge of and responsible for the conduct of the firm’s business at the time of commission of the alleged offence?

The Court applied Section 138 of the Negotiable Instruments Act, 1881, under which criminal liability arises when a cheque drawn by a person on an account maintained by that person is dishonoured towards discharge of a legally enforceable debt or liability.

Section 141 of the Act imposes vicarious liability on persons who, at the time of commission of the offence, were in charge of and responsible to the company or firm for the conduct of its business; because it is a penal provision, it must be strictly construed and requires specific pleadings.

Sections 25 and 26 of the Indian Partnership Act, 1932, concern the joint and several liability of partners for acts of the firm, while Section 32(3) generally continues a retired partner’s liability to third parties for acts of the firm until public notice of retirement is given, subject to its proviso protecting a retired partner dealing with a third party who was unaware that he or she was a partner.

Reliance was placed on Siby Thomas v. Somani Ceramics Ltd., (2024) 1 SCC 348, for the requirement of specific averments under Section 141; Dhana Singh Prabhu v. Chandra Sekhar, (2025) 10 SCC 96, on the liability of partners of a firm; and Syndicate Bank v. R.S.R. Engineering Works, (2003) 6 SCC 265, concerning the effect of Section 32(3) of the Partnership Act.

The Court found that the dishonoured cheques related to occupational charges for May to August 2024, approximately one year after the petitioner’s retirement became effective on 3 April 2023.

Although the opposite party relied on the absence of a public notice under Section 32(3), the Court noted that the complainant itself admitted that payments under the lease and utility agreements had continued until April 2024. This conduct indicated knowledge of dealings by the reconstituted firm after the petitioner’s retirement and supported the conclusion that the subsequent liability was attributable to the reconstituted firm.

The complaint merely stated that the firm was accused no. 1 and that the remaining accused were its partners; it did not explain how the petitioner, who had retired before the relevant transactions and was not the cheque signatory, was in charge of or responsible for the firm’s affairs when the alleged offence occurred.

The Court held that criminal vicarious liability could not be inferred merely from the petitioner’s previous status as a partner or from her participation in executing the 2018 agreements. In the absence of specific pleadings linking her to the subsequent debt and the dishonoured cheques, Section 141 could not be invoked against her.

The complaint lacked the necessary specific averments establishing that she was in charge of and responsible for the firm’s business at the relevant time, and her liability could not be presumed merely because she had formerly been a partner.

Accordingly, CRR 782 of 2026 was allowed, and the proceedings in C. Case No. 75 of 2025 pending before the Judicial Magistrate, 2nd Court, Alipore, were quashed qua Shreya Banerjee.