Retired partners not liable for returned checks: Karnataka High Court

Karnataka High Court found that retired partners of a firm could not be held liable without specific allegations of their continued involvement and liability. This decision was made by Judge M. Nagaprasanna while dismissing the case against former partners of RR Infocom in a case concerning dishonored checks.

The dispute began when Inflow Technologies filed a complaint against RR Infocom’s purchase orders with payments scheduled between September and November 2020. The plaintiffs, Jai Agarwal and Anjana Agarwal, resigned from RR Infocom on October 11, 2021.

Subsequently, the current partner, Renu J. Nair, issued three checks amounting to Rs 3.27 crore to Inflow Technologies between November 30 and December 5, 2022, which were canceled due to insufficient funds. When Inflow Technologies filed a lawsuit against four people, including retired partners, the Agarwals challenged the proceedings, announcing their withdrawal from the partnership long before the checks were issued.

The applicant proposed to resolve the issue of their retirement during the trial.

Justice Nagaprasanna noted that the petitioners had not signed the checks and had retired more than a year before they were issued. The court said, “Since the petitioners had retired as partners a year before the issuance of the cheque, there is no allegation in the complaint regarding the participation of these petitioners even after retirement. Notwithstanding the above facts, allowing further proceedings against these applicants would be an abuse of process and would result in a miscarriage of justice.”