Anil Agrawal (Retired) 21 December 2009

Case against partners

A firm with 4 partners (all brothers) was registered in Hyderabad. One partner was looking after the Bombay business. The accounts were consolidated and income return file at Hyderabad.

Two brothers who were managing the firm at Hyderabad siphoned off funds by withdrawing cash regularly in a systematic way over a period of 3-4 years. There are no corresponding entries in the books of a/cs.

The Bombay brother has got certified copies of cheques showing withdrawals. Income Tax Department has also confirmed it.

Can the Bombay brother file a case in BOMBAY of embezzlement against the other two brothers of Hyderabad?

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3 Replies

saurabh (advocate) 22 December 2009

he can apply for first dissolution of firm and then lodge the fir of cheating and fraud

Devajyoti Barman (Advocate) 22 December 2009

The case for dissolution of partnership or for cheating can be filed in Mumbail if the partnership firm has got any branch office in Mumbai or if a part of cause of action is committed there.

Anil Agrawal (Retired) 12 February 2010

Dear friends,

The partnership was dissolved in 2002. The withdrawals took place in the year 2000 and 2001. The firm had a branch office in Mumbai then.

When the IT Dept reopened the case and discovered the tax evasion, it asked the firm to produce the books of accounts. The firm stated that the withdrawals had been reflected in the books of accounts.

The firm had planned the embezzlement to perfection. It replied that the books of accounts had been burned in a fire and produced a police report also to this effect. Discarding this plea, the department levied tax and penalty. Withdrawal cheques certified by the bank, demand notices issued by the IT Dept are in the hands of the Mumbai partner.

What would he require to prove the embezzlement? Is he also responsible to prove where the money has gone?