S. 138 NI Act | Cheque Dishonour Complaint Maintainable Against Partners Without Arraigning Parnership Firm : Supreme Court

The Supreme Court held that a complaint under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) for the dishonour of a cheque issued in the name of a partnership firm is maintainable against individual partners of a firm, even when the partnership firm is not arrayed as an accused.

The Court reasoned that “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.”

The bench comprising Justices BV Nagarathna and SC Sharma heard the case where the cheque in question was issued in the name of a partnership firm. However, the statutory notice under Section 138 was sent only to the firm's partners, and the firm itself was neither issued a notice nor made a party to the complaint. The Madras High Court quashed the proceedings on this ground, prompting the complainant to approach the Supreme Court.

Setting aside the High Court's decision, the judgment authored by Justice Nagarathna restored the complaint and granted liberty to the appellant-complainant to implead the partnership firm as an accused.

The Court held that the High Court had erred in declaring the complaint non-maintainable, emphasizing that a partnership firm cannot carry out business independent of its partners. Therefore, any breach committed by the firm would render both the firm and its partners jointly liable for the resulting legal consequences.

The Court distinguished the decision of Aneeta Hada vs. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661 cited by the Respondent, which mandates arraignment of the company before prosecuting its directors under Section 141 of the NI Act. It said that this decision does not apply to partnership firms because directors have vicarious liability, whereas partners have direct and personal liability under partnership law.

“Therefore, even in the absence of partnership firm being named as an accused, if the 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.”, the Court observed.

Accordingly, the appeal was allowed.

Cause Title: DHANASINGH PRABHU VERSUS CHANDRASEKAR & ANOTHER

Citation : 2025 LiveLaw (SC) 708

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Appearance:

For Petitioner(s) Mr. C.B. Gururaj, Adv. Mr. Vishnu Unnikrishnan, Adv. Mr. Sabarish Subramanian, AOR

For Respondent(s) Mr. S. Nagamuthu, Sr. Adv. Mr. M.P. Parthiban, AOR Mr. Bilal Mansoor, Adv. Mr. Shreyas Kaushal, Adv. Mr. S. Geyolin Selvam, Adv. Mr. Alagiri K, Adv. Mr. P.V.K. Deivendran, Adv.