Partner liability under cheque dishonour law cannot be quashed on disputed retirement facts and incomplete statutory compliance.

In prosecutions under Section 138 of the Negotiable Instruments Act, the question whether a former partner has ceased to be liable under Section 141 depends on compliance with the statutory requirements for retirement under the Partnership Act, including notice and recording of the change. A mere retirement deed or internal arrangement does not, by itself, defeat liability where the complaint contains specific averments of involvement in the firm's affairs and presence when the cheques were issued. Such disputed facts and mixed questions of fact and law cannot be conclusively resolved in proceedings under Section 482 CrPC, so quashing at that stage was inappropriate and the criminal proceedings were to continue.

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Issues: Whether the High Court was justified in exercising inherent jurisdiction to quash criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 on the ground that the respondent had ceased to be a partner of the firm and, therefore, could not be proceeded against.

Analysis: The complaint contained specific averments that the respondent was involved in the day-to-day affairs of the partnership firm and was present when the cheques were issued. The claim of retirement rested on disputed factual assertions, while the statutory scheme under the Indian Partnership Act, 1932 required compliance with the prescribed steps for retirement and notice to the Registrar of Firms, including the statutory requirements relating to publication and recording of the change. Mere execution of a retirement deed or an internal arrangement between partners did not, by itself, displace liability against a partner in the absence of compliance with the statutory requirements. The question whether the respondent had ceased to be a partner and whether the requirements for fastening liability under Section 141 of the Negotiable Instruments Act, 1881 were satisfied involved mixed questions of fact and law that could not be conclusively decided in proceedings under Section 482 of the Code of Criminal Procedure, 1973.

Conclusion: The High Court ought not to have quashed the proceedings under Section 482; the challenge to the prosecution was liable to fail and the criminal proceedings were to continue.

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