The Kerala High Court recently ruled that if a partnership firm has not challenged a conviction under Section 138 of the Negotiable Instruments Act, then the managing partner of the firm cannot challenge the findings of the trial court in a cheque bounce case. In a recent case, the partnership firm was convicted and did not challenge the conviction, following which the managing partner issued a challenge.

The Single Judge Bench of Justice Sophy Thomas opined that since the firm had been found guilty and convicted, and the conviction had become final, the managing partner could not escape vicarious liability and could not challenge the findings of the trial court.

The case involved a complaint by M/s. Babin Technologies Pvt. Ltd., a Private Limited Company, against M/s. Fortis Marketing, a partnership firm, for the dishonour of cheques signed and issued by the revision petitioner in his capacity as the managing partner of the firm.

The Trial court found both the accused guilty under Section 138 of the NI Act, and convicted them. The Bench further noted that a complaint alleging the commission of an offence under Section 138 of the NI Act can be presented through the holder of a power of attorney, provided the latter has witnessed the transaction as an agent of the payee.

The Bench also found that the revision petitioner was convicted and sentenced as the managing partner of the first accused, and not in his personal capacity and that he had no personal liability towards the complainant company. The Bench explained that the liability of the revision petitioner was vicarious, co-extensive with that of the first accused, and he could not be prosecuted personally under Section 138 of the NI Act, even though the cheques bore his signature in his capacity as the managing partner.

The High Court dismissed the revision petition, emphasising that the managing partner could not escape from the liability of the firm and could not have a defence more than that of the firm.