Improper sub-delegation and prior retirement from partnership defeat criminal liability in cheque dishonour proceedings.

A complaint under Section 138 of the Negotiable Instruments Act was held incompetent where the Board had authorised only the Managing Director to initiate proceedings, and he further delegated that function to the Accounts Manager without express authority; the principle against further delegation applied, so the complaint was not validly instituted. Persons who had retired from the partnership firm before the supply transactions and before issuance of the cheque could not be fastened with criminal liability as partners for that transaction. On those facts, the criminal proceedings were treated as unsustainable and quashed.

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Issues: (i) Whether the complaint under Section 138 of the Negotiable Instruments Act was maintainable when the Managing Director, who was authorised by the Board, further sub-delegated the power to the Accounts Manager to file the complaint. (ii) Whether the prosecution could continue against persons who had retired from the partnership firm before the alleged supply transactions and issuance of the cheque.

Issue (i): Whether the complaint under Section 138 of the Negotiable Instruments Act was maintainable when the Managing Director, who was authorised by the Board, further sub-delegated the power to the Accounts Manager to file the complaint.

Analysis: The Board resolution authorised only the Managing Director to initiate legal proceedings on behalf of the company. The Managing Director, being a delegate of the Board, could not further delegate that authority to the Accounts Manager in the absence of express authorisation. The principle that a delegate cannot further delegate applied, and the institution of the complaint through such sub-delegation was held to be incompetent.

Conclusion: The complaint was not validly instituted and was not maintainable.

Issue (ii): Whether the prosecution could continue against persons who had retired from the partnership firm before the alleged supply transactions and issuance of the cheque.

Analysis: The record showed that the accused had executed a release deed and had ceased to be partners before the goods were supplied and before the cheque was issued. The material further indicated that the cheque was issued after their retirement. On those facts, they could not be fastened with criminal liability as partners for the transaction in question.

Conclusion: The accused were not liable to be prosecuted for the alleged offence on behalf of the partnership firm.

Final Conclusion: The criminal proceedings were held to be unsustainable and were quashed in exercise of inherent jurisdiction.

Ratio Decidendi: A complaint instituted through impermissible sub-delegation of authority is incompetent, and persons who had already retired from the partnership before the transaction and cheque cannot be prosecuted as partners for liability arising from that transaction.

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