Shyamkesh Singh v. Narsingh Bahadur and another), under Section

2. Heard Shri P.K. Singh (A/P 0192/2012) along with Shri Vinod Kumar Tiwari, learned counsel for the applicant and learned AGA for the State as well as Shri Ram Sevak Yadav, counsel for opposite party no. 2.

3. This application under Section 528 BNSS has been filed by the applicant to quash the entire proceedings of Complaint case No. 2010 of 2018, (Shyamkesh Singh Vs. Narsingh Bahadur and another), under Section 138 of N.I. Act, Police Station Line Bazar, District Jaunpur, pending in the court of Civil Judge (S.D.) F.T.C., Jaunpur together with impugned summoning order dated 06.03.2019.

4. The counsel for the rival parties have made a joint statement that they do not propose to file any further affidavits, thus, with the consent of the parties, the application is being decided at the fresh stage.

5. The case of the applicant is that a complaint was lodged by the opposite party no. 2 on 25.08.2018 against the applicant and other another co- accused, Unnat Kumar Singh with an allegation that a cheque had drawn for an amount of Rs. 5 lakhs on behalf of a firm- M/s. Vindhya Shakti by the other co-accused, Unnat Kumar Singh, bearing No. 040649 on 01.06.2018 which on presentation in the bank on 04.06.2018 which came to be with the remark 'insufficient balance' followed by a statutory demand notice was issued on 02.07.2018 and the complaint under Section 138 of the N.I. Act on

25.08.2018 and the applicant came to be summoned on 06.03.2019 in 2 NA528 No. 14765 of 2025 Complaint Case No. 907 of 2024 under Section 138 of the N.I. Act.

6. Learned counsel for the applicant has submitted that though the applicant came to be the partner of the firm in question being M/s. Vindhya Shakti w.e.f. from the partnership dated 25.09.2013, however, the applicant herein was came to be retired as a partner pursuant to the dissolution of the partnership firm deed on 30.01.2018. He submits that once the applicant was not a partner when the said cheque was drawn on 01.06.2018 then no offence under Section 138 of the N.I. Act would be made out. Further submission is that the applicant is non-signatory of the cheque and further in the complaint itself only the applicant and Unnat Kumar Singh were arraigned as an accused and the firm in question was not arraigned thus the complaint itself was not maintainable in view of the provisions contained under Section 141 of the Act. Learned counsel for the applicant has sought to rely upon the decision of the Hon'ble Apex Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another; 2005 (6) Supreme 442 and Himanshu v. B. Shivamurthy and another; 2019 0 Supreme (SC) 76 as well as K.K. Ahuja v. V.K. Vora and another; 2009 (5) Supreme 300.

7. Countering the submissions of the learned counsel for the applicant by AGA for the State as well as Shri Ram Sevak Yadav, counsel for opposite party no. 2 has submitted that the counter affidavit filed today while referring to Annexure-CA1 at page 8 of the counter affidavit, reference has been made in para-5 so as to contend that a deed of partnership came to be entered into between Uday Pal Singh and Shyamkesh Singh on 12.07.2018, pursuant whereto post dissolution of the earlier partnership deed dated

25.09.2013, the applicant herein who happens to be the partners stood retired on 12.07.2018. Submission is that the applicant ceased to be a partner post dissolution of the partnership firm on 12.07.2018 and thus on the date of the drawing of the cheque i.e. on 01.06.2018, the applicant was a partner. He further submits that the principle so mandated under Section 141 of the Act does not apply to partnership firm or sole proprietorship firm and according to him, the partner is not a district legal persona and it is not distinct from the partnership firm in the complaint and non-summoning of the firm would not make the complaint in competent. He seeks to rely upon the decision of the Hon'ble Apex Court in Dhanasingh Prabhu v. Chandraseekar and another; 2025 INSC 831. 3 NA528 No. 14765 of 2025

8. I have heard learned counsel for the parties and gone through the records carefully.

9. The sole question which arises for determination in the present proceedings is to the extent of judicial intervention. Apparently, the complaint came to be lodged on 25.08.2018 by the opposite party no. 2 against the applicant and one Unnat Kumar Singh with an allegation that on

01.06.2018, a cheque came to be drawn on behalf of the partnership firm which post dishonour was followed by statutory demand notice and a complaint and thereafter the applicant came to be summoned on 06.03.2019, under Section 138 of the N.I. Act.

10. As regards, the contention of the learned counsel for the applicant is that the applicant ceased to be a partner post dissolution of the partnership firm on 30.01.2018 is concerned and no offence under Section 138 of the Act is not convincible for the reason that in a counter affidavit filed by the opposite party no.2, there happens to be a deed of partnership dated 12.07.2018 wherein it has been recited that the applicant along with other partners would not be the partners and they will be ceased to be the partners w.e.f.

12.07.2018. Since there are two different documents showing different dates of the season of the partnership of the applicant, thus, in absence of any convincing material, this Court is not required to go into the factual issues while recording a definite finding.

11. With respect to the other argument of the learned counsel for the applicant that in absence of arraigning the partnership firm as an accused in the complaint it would not be maintainable as it would be infraction of prvisions contained under Section 141 of the Act is concerned, the same is preposterous besides being out of context as the Hon'ble Apex Court in Dhanasingh Prabhu (supra) has the occasion to consider the said aspect and it was observed as under: "9.6 On a conjoint reading of the various clauses of Section 141, what emerges is that the expression “company” has been used in an expansive way to include not just a company incorporated under the provisions of the Companies Act stricto sensu but also any body corporate such as a statutory company as well as other artificial juristic entity such as a partnership firm or other association of individuals. Hence, the expression “director” in sub-section (2) of Section 141 is not restricted to a director of an incorporated company or a statutory body, but also includes a partner of a firm. The expression “director” in sub-section (2) of Section 141 of the Act in relation to a firm means a partner, which is also a legislative device adopted by the 4 NA528 No. 14765 of 2025 Parliament knowing fully well and being conscious of the fact that a partnership firm, jurisprudentially speaking, does not stand on par with a director of a body corporate. Since the Parliament has used the expression “company” encompassing all types of juristic persons, it was necessary to give an expanded definition to the expression “director” in relation to a firm to mean a partner in the firm. Therefore, the inclusion of a firm within the meaning of the expression “company” is by a legal fiction and by way of a legislative device only for the purpose of creating a liability on the partners of the firm, which in any case, they are liable under the law of partnership in India. But the definition of the word company including a partnership firm has been incorporated in the Explanation for the sake of convenience, as otherwise a similar provision would have to be inserted for the very same purposes. Instead of replicating the same definition for different kinds of juristic entities, the Parliament has thought it convenient to add an Explanation to define a company for the purpose of Section 141 of the Act in the context of an offence committed by, inter alia, a company, as understood within the meaning of the Companies Act, and also include a firm or other association of individuals within the definition of company. Similarly, under clause (b) of the explanation, the expression “director”, in relation to a firm, means a partner in the firm.

9.7 This also demonstrates the fact that while a director is a separate persona in relation to a company, in the case of a partnership firm, the partner is not really a distinct legal persona. This is because a partnership firm is not really a legal entity separate and distinct as a company is from its directors but can have a legal persona only when the partnership firm is considered along with its partners. Thus, the partnership firm has no separate recognition either jurisprudentially or in law apart from its partners. Therefore, while a director of a company can be vicariously liable for an offence committed by a company, insofar as a partnership firm is concerned, when the offence is committed by such a firm, in substance, the offence is committed by the partners of the firm and not just the firm per se. Therefore the partners of the firm are liable for the dishonour of a cheque, even though the cheque may have been issued in the name of the firm and the offence is committed by the firm. Therefore, in law and in jurisprudence, when a partnership firm is proceeded against, in substance, the partners are liable and the said liability is joint and several and is not vicarious. This is unlike a company which is liable by itself and since it is an artificial juristic entity, the persons in charge of the affairs of the company or who conduct its business only become vicariously liable for the offence committed by the company.

9.8 However, jurisprudentially speaking, the partners of a partnership firm constitute the firm and a firm is a compendious term for the partners of a firm. This is opposed to the position of a director in a company which is a body corporate stricto sensu and such a company is a separate juristic entity vis-à-vis the directors. On the other hand, a partnership firm has no legal recognition in the absence of its partners. If a partnership firm is liable for the offence under Section 138 of the Act, it would imply that the liability would automatically extend to the partners of the partnership firm jointly and severally. This underlying distinction between a partnership firm and a company which is a body corporate has to be borne in mind while dealing with an offence committed by a company or a partnership firm, as the case may be, within the meaning of Section 138 read with Section 141 of the Act. To reiterate, in the case of a partnership firm, there is no concept of vicarious liability of the partners as such. The liability is joint and several because a partnership firm is the business of partners and one cannot proceed against only the firm without the partners being made liable. 9.9 Therefore, even in the absence of partnership firm being named as an accused, if the 5 NA528 No. 14765 of 2025 partners of the partnership firm are proceeded against, they being jointly and severally liable along with the partnership firm as well as inter-se the partners of the firm, the complaint is still maintainable. The accused in such a case would in substance be the partners of the partnership firm along with the firm itself. Since the liability is joint and several, even in the absence of a partnership firm being proceeded against by the complainant by issuance of legal notice as mandated under Section 138 of the Act or being made an accused specifically in a complaint filed under Section 200 of CrPC, (equivalent to Section 223 of the BNSS), such a complaint is maintainable.

9.10 Thus, when it is a case of an offence committed by a company which is a body corporate stricto sensu, the vicarious liability on the categories of persons mentioned in sub-section (1) and sub-section (2) of Section 141 of the Act accordingly would be proceeded against and liable for the offence under Section 138 of the Act. In the case of a partnership firm on the other hand, when the offence has been proved against a partnership firm, the firm per se would not be liable, but liability would inevitably extend to the partners of the firm inasmuch as they would be personally, jointly and severally liable with the firm even when the offence is committed in the name of the partnership firm. 9.11 To reiterate, when the partnership firm is only a compendious name for the partners of the firm, any offence committed under Section 138 read with Section 141 of the Act would make the partners of the firm jointly and severally liable with the firm. If, on the other hand, the Parliament intended that the partners of the firm be construed as separate entities for the purpose of penalty, then it would have provided so by expressly stating that the firm, as well as the partners, would be liable separately for the offence under Section 138 of the Act. Such an intention does not emanate from Section 141 of the Act as the offence proved against the firm would amount to the partners of the firm also being liable jointly and severally with the firm. Therefore, there is no separate liability on each of the partners unless subsection (2) of Section 141 applies, when negligence or lack of bona fides on the part of any individual partner of the firm has been proved.

10. In view of the aforesaid discussion, we hold that the High Court was not right in rejecting or dismissing the complaint for the reason that the partnership firm was not arraigned as an accused in the complaint or that notice had not been issued to it under Section 138 of the Act. In view of the aforesaid discussion, the notice issued to the partners of the firm in the instant case shall be construed to be a notice issued to the partnership firm also viz., ‘Mouriya Coirs’. Permission is granted to arraign the partnership firm as an accused in the complaint."

12. There is another aspect of the matter which needs to be considered at this stage i.e. with regard to the fact that the applicant himself contesting the proceedings as in this regard an objection came to be preferred by the applicant on 12.02.2024 which came to be rejected on 22.01.2025. Once the applicant himself is contesting the trial and the summoning has been passed in the year 2019 and more than 6 years have passed thus it would not be appropriate for this Court to interfere at this stage.

13. Accordingly, the interference is declined, the application stands disposed of. 6 NA528 No. 14765 of 2025

14. Leaving it open to the applicant to take legal recourse to the remedy as available under the Act. September 10, 2025 A. Prajapati (Vikas Budhwar,J.) ASHUTOSH KUMAR PRAJAPATI High Court of Judicature at Allahabad

2. Heard Shri P.K. Singh (A/P 0192/2012) along with Shri Vinod Kumar Tiwari, learned counsel for the applicant and learned AGA for the State as well as Shri Ram Sevak Yadav, counsel for opposite party no. 2.

3. This application under Section 528 BNSS has been filed by the applicant to quash the entire proceedings of Complaint case No. 2010 of 2018, (Shyamkesh Singh Vs. Narsingh Bahadur and another), under Section 138 of N.I. Act, Police Station Line Bazar, District Jaunpur, pending in the court of Civil Judge (S.D.) F.T.C., Jaunpur together with impugned summoning order dated 06.03.2019.

4. The counsel for the rival parties have made a joint statement that they do not propose to file any further affidavits, thus, with the consent of the parties, the application is being decided at the fresh stage.

5. The case of the applicant is that a complaint was lodged by the opposite party no. 2 on 25.08.2018 against the applicant and other another co- accused, Unnat Kumar Singh with an allegation that a cheque had drawn for an amount of Rs. 5 lakhs on behalf of a firm- M/s. Vindhya Shakti by the other co-accused, Unnat Kumar Singh, bearing No. 040649 on 01.06.2018 which on presentation in the bank on 04.06.2018 which came to be with the remark 'insufficient balance' followed by a statutory demand notice was issued on 02.07.2018 and the complaint under Section 138 of the N.I. Act on

25.08.2018 and the applicant came to be summoned on 06.03.2019 in 2 NA528 No. 14765 of 2025 Complaint Case No. 907 of 2024 under Section 138 of the N.I. Act.

6. Learned counsel for the applicant has submitted that though the applicant came to be the partner of the firm in question being M/s. Vindhya Shakti w.e.f. from the partnership dated 25.09.2013, however, the applicant herein was came to be retired as a partner pursuant to the dissolution of the partnership firm deed on 30.01.2018. He submits that once the applicant was not a partner when the said cheque was drawn on 01.06.2018 then no offence under Section 138 of the N.I. Act would be made out. Further submission is that the applicant is non-signatory of the cheque and further in the complaint itself only the applicant and Unnat Kumar Singh were arraigned as an accused and the firm in question was not arraigned thus the complaint itself was not maintainable in view of the provisions contained under Section 141 of the Act. Learned counsel for the applicant has sought to rely upon the decision of the Hon'ble Apex Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another; 2005 (6) Supreme 442 and Himanshu v. B. Shivamurthy and another; 2019 0 Supreme (SC) 76 as well as K.K. Ahuja v. V.K. Vora and another; 2009 (5) Supreme 300.

7. Countering the submissions of the learned counsel for the applicant by AGA for the State as well as Shri Ram Sevak Yadav, counsel for opposite party no. 2 has submitted that the counter affidavit filed today while referring to Annexure-CA1 at page 8 of the counter affidavit, reference has been made in para-5 so as to contend that a deed of partnership came to be entered into between Uday Pal Singh and Shyamkesh Singh on 12.07.2018, pursuant whereto post dissolution of the earlier partnership deed dated

25.09.2013, the applicant herein who happens to be the partners stood retired on 12.07.2018. Submission is that the applicant ceased to be a partner post dissolution of the partnership firm on 12.07.2018 and thus on the date of the drawing of the cheque i.e. on 01.06.2018, the applicant was a partner. He further submits that the principle so mandated under Section 141 of the Act does not apply to partnership firm or sole proprietorship firm and according to him, the partner is not a district legal persona and it is not distinct from the partnership firm in the complaint and non-summoning of the firm would not make the complaint in competent. He seeks to rely upon the decision of the Hon'ble Apex Court in Dhanasingh Prabhu v. Chandraseekar and another; 2025 INSC 831. 3 NA528 No. 14765 of 2025

8. I have heard learned counsel for the parties and gone through the records carefully.

9. The sole question which arises for determination in the present proceedings is to the extent of judicial intervention. Apparently, the complaint came to be lodged on 25.08.2018 by the opposite party no. 2 against the applicant and one Unnat Kumar Singh with an allegation that on

01.06.2018, a cheque came to be drawn on behalf of the partnership firm which post dishonour was followed by statutory demand notice and a complaint and thereafter the applicant came to be summoned on 06.03.2019, under Section 138 of the N.I. Act.

10. As regards, the contention of the learned counsel for the applicant is that the applicant ceased to be a partner post dissolution of the partnership firm on 30.01.2018 is concerned and no offence under Section 138 of the Act is not convincible for the reason that in a counter affidavit filed by the opposite party no.2, there happens to be a deed of partnership dated 12.07.2018 wherein it has been recited that the applicant along with other partners would not be the partners and they will be ceased to be the partners w.e.f.

12.07.2018. Since there are two different documents showing different dates of the season of the partnership of the applicant, thus, in absence of any convincing material, this Court is not required to go into the factual issues while recording a definite finding.

11. With respect to the other argument of the learned counsel for the applicant that in absence of arraigning the partnership firm as an accused in the complaint it would not be maintainable as it would be infraction of prvisions contained under Section 141 of the Act is concerned, the same is preposterous besides being out of context as the Hon'ble Apex Court in Dhanasingh Prabhu (supra) has the occasion to consider the said aspect and it was observed as under: "9.6 On a conjoint reading of the various clauses of Section 141, what emerges is that the expression “company” has been used in an expansive way to include not just a company incorporated under the provisions of the Companies Act stricto sensu but also any body corporate such as a statutory company as well as other artificial juristic entity such as a partnership firm or other association of individuals. Hence, the expression “director” in sub-section (2) of Section 141 is not restricted to a director of an incorporated company or a statutory body, but also includes a partner of a firm. The expression “director” in sub-section (2) of Section 141 of the Act in relation to a firm means a partner, which is also a legislative device adopted by the 4 NA528 No. 14765 of 2025 Parliament knowing fully well and being conscious of the fact that a partnership firm, jurisprudentially speaking, does not stand on par with a director of a body corporate. Since the Parliament has used the expression “company” encompassing all types of juristic persons, it was necessary to give an expanded definition to the expression “director” in relation to a firm to mean a partner in the firm. Therefore, the inclusion of a firm within the meaning of the expression “company” is by a legal fiction and by way of a legislative device only for the purpose of creating a liability on the partners of the firm, which in any case, they are liable under the law of partnership in India. But the definition of the word company including a partnership firm has been incorporated in the Explanation for the sake of convenience, as otherwise a similar provision would have to be inserted for the very same purposes. Instead of replicating the same definition for different kinds of juristic entities, the Parliament has thought it convenient to add an Explanation to define a company for the purpose of Section 141 of the Act in the context of an offence committed by, inter alia, a company, as understood within the meaning of the Companies Act, and also include a firm or other association of individuals within the definition of company. Similarly, under clause (b) of the explanation, the expression “director”, in relation to a firm, means a partner in the firm.

9.7 This also demonstrates the fact that while a director is a separate persona in relation to a company, in the case of a partnership firm, the partner is not really a distinct legal persona. This is because a partnership firm is not really a legal entity separate and distinct as a company is from its directors but can have a legal persona only when the partnership firm is considered along with its partners. Thus, the partnership firm has no separate recognition either jurisprudentially or in law apart from its partners. Therefore, while a director of a company can be vicariously liable for an offence committed by a company, insofar as a partnership firm is concerned, when the offence is committed by such a firm, in substance, the offence is committed by the partners of the firm and not just the firm per se. Therefore the partners of the firm are liable for the dishonour of a cheque, even though the cheque may have been issued in the name of the firm and the offence is committed by the firm. Therefore, in law and in jurisprudence, when a partnership firm is proceeded against, in substance, the partners are liable and the said liability is joint and several and is not vicarious. This is unlike a company which is liable by itself and since it is an artificial juristic entity, the persons in charge of the affairs of the company or who conduct its business only become vicariously liable for the offence committed by the company.

9.8 However, jurisprudentially speaking, the partners of a partnership firm constitute the firm and a firm is a compendious term for the partners of a firm. This is opposed to the position of a director in a company which is a body corporate stricto sensu and such a company is a separate juristic entity vis-à-vis the directors. On the other hand, a partnership firm has no legal recognition in the absence of its partners. If a partnership firm is liable for the offence under Section 138 of the Act, it would imply that the liability would automatically extend to the partners of the partnership firm jointly and severally. This underlying distinction between a partnership firm and a company which is a body corporate has to be borne in mind while dealing with an offence committed by a company or a partnership firm, as the case may be, within the meaning of Section 138 read with Section 141 of the Act. To reiterate, in the case of a partnership firm, there is no concept of vicarious liability of the partners as such. The liability is joint and several because a partnership firm is the business of partners and one cannot proceed against only the firm without the partners being made liable. 9.9 Therefore, even in the absence of partnership firm being named as an accused, if the 5 NA528 No. 14765 of 2025 partners of the partnership firm are proceeded against, they being jointly and severally liable along with the partnership firm as well as inter-se the partners of the firm, the complaint is still maintainable. The accused in such a case would in substance be the partners of the partnership firm along with the firm itself. Since the liability is joint and several, even in the absence of a partnership firm being proceeded against by the complainant by issuance of legal notice as mandated under Section 138 of the Act or being made an accused specifically in a complaint filed under Section 200 of CrPC, (equivalent to Section 223 of the BNSS), such a complaint is maintainable.

9.10 Thus, when it is a case of an offence committed by a company which is a body corporate stricto sensu, the vicarious liability on the categories of persons mentioned in sub-section (1) and sub-section (2) of Section 141 of the Act accordingly would be proceeded against and liable for the offence under Section 138 of the Act. In the case of a partnership firm on the other hand, when the offence has been proved against a partnership firm, the firm per se would not be liable, but liability would inevitably extend to the partners of the firm inasmuch as they would be personally, jointly and severally liable with the firm even when the offence is committed in the name of the partnership firm. 9.11 To reiterate, when the partnership firm is only a compendious name for the partners of the firm, any offence committed under Section 138 read with Section 141 of the Act would make the partners of the firm jointly and severally liable with the firm. If, on the other hand, the Parliament intended that the partners of the firm be construed as separate entities for the purpose of penalty, then it would have provided so by expressly stating that the firm, as well as the partners, would be liable separately for the offence under Section 138 of the Act. Such an intention does not emanate from Section 141 of the Act as the offence proved against the firm would amount to the partners of the firm also being liable jointly and severally with the firm. Therefore, there is no separate liability on each of the partners unless subsection (2) of Section 141 applies, when negligence or lack of bona fides on the part of any individual partner of the firm has been proved.

10. In view of the aforesaid discussion, we hold that the High Court was not right in rejecting or dismissing the complaint for the reason that the partnership firm was not arraigned as an accused in the complaint or that notice had not been issued to it under Section 138 of the Act. In view of the aforesaid discussion, the notice issued to the partners of the firm in the instant case shall be construed to be a notice issued to the partnership firm also viz., ‘Mouriya Coirs’. Permission is granted to arraign the partnership firm as an accused in the complaint."

12. There is another aspect of the matter which needs to be considered at this stage i.e. with regard to the fact that the applicant himself contesting the proceedings as in this regard an objection came to be preferred by the applicant on 12.02.2024 which came to be rejected on 22.01.2025. Once the applicant himself is contesting the trial and the summoning has been passed in the year 2019 and more than 6 years have passed thus it would not be appropriate for this Court to interfere at this stage.

13. Accordingly, the interference is declined, the application stands disposed of. 6 NA528 No. 14765 of 2025

14. Leaving it open to the applicant to take legal recourse to the remedy as available under the Act. September 10, 2025 A. Prajapati (Vikas Budhwar,J.) ASHUTOSH KUMAR PRAJAPATI High Court of Judicature at Allahabad