Legal Recognition and Requirements
A partnership firm, though not a separate legal entity, can operate a bank account in its registered or trade name. Banks recognize partnership firms for cheque issuance once proper documentation is submitted.

• The firm must open a current account with the bank using the firm’s name
  
• The account must be backed by a partnership deed and KYC documents
  
• Partners must provide authorization for cheque signing
  
• The firm’s PAN and registration (if any) may be required
  
• Cheques are legally binding instruments issued by the firm
  

Signing Authority and Internal Control
The authority to sign cheques is usually given to one or more partners, as decided in the partnership deed or through a board resolution.

• Authorized signatories must be listed with the bank
  
• Banks accept single or joint signatory modes, depending on instructions
  
• Cheques must be signed as per the signature on the bank records
  
• The firm must maintain internal records for all issued cheques
  
• Unauthorized signing can result in legal and financial complications
  

Legal and Financial Liability
Issuing a cheque creates a legal obligation for the firm. Dishonour of cheques can lead to penalties or prosecution under the Negotiable Instruments Act, 1881.

• The firm is liable to honour the cheque as per the amount and date
  
• Bounced cheques can attract legal action under Section 138
  
• Partners may be personally liable if the firm fails to make the payment
  
• Proper funds must be maintained to avoid cheque dishonour
  
• Legal defence may be needed in case of false or bounced cheque allegations
  

Usage and Benefits in Business
Cheques offer a formal and traceable method of payment for professional dealings.

• Establish trust with vendors and clients
  
• Serve as documented proof of payment or commitment
  
• Useful for audits and financial reconciliation
  
• Provide control and oversight through authorized signatories
  
• Accepted widely in both private and government transactions
  

Best Practices for Cheque Management
Firms should follow responsible banking practices to protect their credibility and financial security.

• Maintain a sufficient balance before issuing a cheque
  
• Record cheque numbers, dates, and payees in a register
  
• Use crossed cheques for secure payments
  
• Reconcile bank statements regularly
  
• Review the signing authority periodically in the partnership deed