- 1 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 19TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE K. V. ARAVIND CRIMINAL REVISION PETITION No.100218 OF 2019 C/W CRIMINAL REVISION PETITION No.100219 OF 2019 IN CRL. RP No.100218/2019 BETWEEN: M.N.VASU PROP: VASU AND COMPANY, AGE: 69 YEARS, OCC: BUSINESS, R/O: PLOT No.14, GROUND FLOOR, SHAIKH COMPOUND, CLUB ROAD, BELAGAVI-590001. ...PETITIONER (BY SRI SHRIPAD J. JOSHI, ADVOCATE FOR SRI RAVI C. PATIL, ADVOCATE) AND: SMT.VEENA VINOD BALASE, AGE: 46 YEARS, OCC: HOUSEWIFE, R/O: PLOT No.14, GROUND FLOOR, SHAIKH COMPOUND, CLUB ROAD, BELAGAVI-590001. …RESPONDENT (BY SRI SACHCHIDANAND B. PATIL, ADVOCATE AND SRI BUNTY RAJKUMAR KAPAHI, ADVOCATE) THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397(1) R/W 401 OF CR.P.C. PRAYING TO SET ASIDE THE ORDER DATED PASSED BY THE IV-ADDITIONAL DISTRICT - 2 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 & SESSIONS JUDGE, BELAGAVI VIDE ORDER DATED 01.06.2019 IN CRL.A.No.226/2018 AND IN THE COURT OF III- ADDL. CIVIL JUDGE & JMFC COURT, BELAGAVI, IN C.C.No.1688/2007 VIDE ORDER DATED 29.05.2018 THEREBY ACQUITTING THE PETITIONER HEREIN FOR OFFENCES P/U/S 138 OF NI ACT. IN CRL. RP No.100219/2019 BETWEEN: M.N.VASU., PROP: VASU AND COMPANY, AGE: 69 YEARS, OCC: BUSINESS, R/O: PLOT No.14, GROUND FLOOR, SHAIKH COMPOUND, CLUB ROAD, BELAGAVI-590001. ...PETITIONER (BY SRI SHRIPAD J. JOSHI, ADVOCATE FOR SRI R. C. PATIL, ADVOCATE) AND: SMT.VEENA VINOD BALASE, AGE: 46 YEARS, OCC: HOUSEWIFE, R/O: PLOT No.14, GROUND FLOOR, SHAIKH COMPOUND, CLUB ROAD, BELAGAVI-590001. …RESPONDENT (BY SRI SACHCHIDANAND B. PATIL, ADVOCATE AND SRI BUNTY RAJKUMAR KAPAHI, ADVOCATE) THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397(1) R/W 401 OF CR.P.C. SEEKING TO SET ASIDE THE ORDER DATED PASSED BY THE IV-ADDL. DIST. & SESSIONS JUDGE, BELAGAVI VIDE ORDER DATED 01.06.2019 IN CRL.A.No.227/2018 AND IN THE COURT OF III-ADDL. CIVIL JUDGE & JMFC COURT, BELAGAVI, IN C.C.No.1214/2010 VIDE ORDER DATED 29.05.2018 THEREBY ACQUITTING THE PETITIONER HEREIN FOR OFFENCES P/U/S 138 OF NI ACT. - 3 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 THESE CRIMINAL REVISION PETITIONS HAVING BEEN HEARD AND RESERVED ON 25.07.2025, COMING ON FOR ‘PRONOUNCEMENT OF ORDER’, THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: CORAM: THE HON'BLE MR. JUSTICE K V ARAVIND C.A.V. ORDER (PER: THE HON'BLE MR. JUSTICE K. V. ARAVIND) Heard Sri. Shriprasad J. Joshi, learned counsel for Sri. R.C. Patil, learned counsel for the petitioner-accused and Sri. Sachidanand B. Patil, learned counsel along with Sri. Bunty Rajkumar Kapahi, learned counsel for the respondent- complainant. 2. The accused in C.C.No.1688/2007 and C.C.No.1214/2010 on the file of III Additional Civil Judge and J.M.F.C., at Belagavi, (for short, 'the trial Court') is before this Court challenging the order of conviction dated 29.05.2018 and common order dated 01.06.2019 in Criminal Appeal Nos.226/2018 and 227/2018 on the file of IV Additional District and Sessions Judge, Belagavi (for short, 'the appellate Court'). 3. The accused approached the complainant for a loan of Rs.2,50,000/- in August 2004 with a promise to repay the same and the same was paid by account withdrawal. Towards repayment of the loan, issued Cheque bearing No.991665 - 4 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 dated 19.04.2007 drawn on ICICI Bank Ltd., Margao Branch in favour of the complainant. Similarly, the accused requested a loan of Rs.2,00,000/- in August 2005 and issued a Cheque bearing No.991664 dated 08.05.2007 drawn on ICICI Bank Ltd., Margao Branch in favour of the complainant. Both cheques, when presented, were returned with a bank endorsement stating 'account closed'. The complainant issued a legal notice. The accused failed to reply to the notice. 4. The complainant preferred complaints under Section 200 of the Code of Criminal Procedure (Cr.P.C). In support of her case, the complainant examined herself as PW.1 and marked Exhibits P1 to P5 and P1 to P7. The statement of the accused was recorded under Section 313 of Cr.P.C. The trial Court, under two different judgments, convicted the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'N.I. Act') and sentenced the accused to pay a fine of Rs.2,55,000/- and Rs.2,05,000/-. In default of payment of the fine amount, the accused would undergo imprisonment for a period of six months. - 5 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 5. The accused preferred an appeal before the appellate Court in Criminal Appeal Nos.226/2018 and 227/2018 against the order of conviction and penalty. The appellate Court dismissed both the appeals while confirming the order of conviction and sentence. 6. These two appeals arise between the same parties regarding two cheques and a common order by the appellate Court. Hence, heard together and disposed of by this common judgment. 7. Learned counsel for the petitioner-accused submits that the cheques in question have been issued on behalf of the partnership firm. The partnership firm and all the partners of the firm are not made parties. Hence, the complaint against the accused is not maintainable. It is submitted that, as the cheque in question is of the firm, the complaint is not maintainable against one of the partner in his individual capacity. Any liability arising from the proceedings, is jointly and severally on all the partners. Learned counsel submits that if a person, who commits an offence under Section 138 of N.I. Act, is a Company, every person, who at the time the offence was committed, was in charge of the company and was responsible - 6 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Learned counsel further relying on the Explanation to Section 141 of N.I. Act submits that the term company includes the firm. Hence, all the partners at the time the offence was committed are necessary parties. In support of his submission, he relies on the judgment of the Hon'ble Supreme Court in the case of Aneeta Hada Vs. Godfather Travels and Tours Pvt. Ltd., [(2012) 5 SCC 661]. 8. On the other hand, learned counsel for the respondent-complainant submits that the firm was not in existence when the cheque was issued. The loan transaction of the complainant is with the accused in his individual capacity. Hence, the cheque was issued in his individual capacity, and the discharge of the amount is his liability. It is further submitted that maintainability of the complaint against the accused was never raised before the trial Court or the appellate Court. Hence, at this stage, it is not permissible. Learned counsel further submits that in the revision petition, the new issues cannot be raised for consideration of this Court. - 7 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 9. Learned counsel supporting his submission, relies on the judgment of the Hon'ble Supreme Court in the case of Dhanasingh Prabhu Vs. Chandrasekar and others (MANU/SC/0889/2025) in Criminal Appeal No.2994/2025 dated 14.07.2025. 10. Having considered the submissions of the learned counsels for the parties, this Court notes a few facts. 11. The complaint is filed against Mr. M.N. Vasu in his individual capacity, describing him as the proprietor of 'Vasu & Company'. Section 138 of the N.I. Act is attracted when any cheque drawn by a person and an account maintained by him with a banker, for payment of amount of money to another person from out of that account for the discharge, in whole or in part, of any legally enforceable debt or other liability is returned by the bank unpaid. To invoke Section 138 of the N.I. Act, the cheque drawn by a person should be of an account maintained by him with a banker. The complainant has made out his case that he had a loan transaction with the accused in individual capacity, and towards repayment of said loan, cheque as per Ex.P1 was issued, which came to be returned, when presented for encashment with an endorsement 'account - 8 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 closed'. The accused specifically contends that the cheque in question is of the firm. To find out the above factual dispute, when the record was examined, this Court found that the cheque is signed as a partner. In the absence of any contrary material, this Court is inclined to accept the contention of the accused-petitioner that the cheque is of the firm. It is not the case of the complainant that he had a loan transaction with the firm. In that view, proceedings under Section 138 of N.I. Act is not maintainable in relation to Exhibit P1. 12. In Aneeta Hada (supra), the Hon'ble Supreme Court, by interpreting Section 141 of N.I. Act, held that when a person, which is a company, commits an offence, then certain categories of persons in charge and the company would be deemed liable for the offences under Section 138 of the N.I. Act. It is further held that in view of statutory intendment, the functionaries and the companies are liable, which is by a deeming fiction. Learned counsel for the petitioner further referring to Explanation under Section 141 of the N.I. Act submits that Section 141 and its required compliance are equally applicable to the firm. It is the submission that in the absence of the firm and its partners being made parties, the - 9 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 complaint in the present form under Section 138 of N.I. Act is not maintainable. Reliance is placed on Dhanasingh Prabhu (supra) rendered by the Hon'ble Supreme Court to contend that even if the firm is not made a party in the complaint, proceedings under Section 138 of N.I. Act is still maintainable. However, this Court is of the view that the judgment in Dhanasingh Prabhu (supra) is not applicable to the present case. The Hon'ble Supreme Court, while interpreting Section 141 of N.I. Act, observed that: "…. 6.6 We are of the view that having regard to the distinct facts in the aforesaid case, relief was granted by this Court but the present case cannot be decided on the basis of the aforesaid judgment. The three significant facts noted in the aforesaid judgment must be contrasted with the facts which arise in the present case, which are as under: i. Notice of the complainant was not issued only to one partner or only to the authorized signatory of the partnership firm. It was issued to both partners in the present case. ii. The cheque was issued in the name of partnership firm “Mouriya Coirs”. However both the partners were issued notice by the complainant which was not so in the aforesaid case, although the partnership firm was not issued any statutory notice. iii. The complaint has been made against both the partners even though the firm - 10 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 has not been made an accused in the complaint in the instant case. 6.8 While holding that Section 141 is a deeming provision, it was also observed that a partnership is a compendious expression to denote the partners who comprise the firm which means that a firm without a reference to its partners has no juristic identity in law. By a deeming fiction, in Explanation (a) to Section 141, the expression “company” has been defined to include a firm. Since the High Court had lost sight of the fact that a partnership firm has to be read within the meaning of Section 141 which uses the expression “company”, the appeal filed by the complainant therein was allowed. 6.9 On considering the aforesaid judgments, we observe that even if we have to come to the conclusion that the juristic entity i.e., the partnership firm is the primary Accused in the instant case it would be necessary for us to also state that such a juristic entity, namely, a partnership firm is not distinct from the partners who comprise the partnership. In other words, if the complainant had proceeded only against the partnership firm and not the partners it possibly could have been held that the partnership firm in the absence of its partners is not a complete juristic entity which can be recognised in law and therefore cannot be proceeded against. On the other hand, in the instant case the complainant has proceeded against the two partners. The complainant is aware of the fact that the cheque has been issued in the name of the partnership firm “Mouriya Coirs” and has been signed by one of the partners. The complainant has proceeded against the partners only without arraigning the partnership firm as an accused. It is necessary to reiterate that a partnership firm in the absence of its partners cannot at all be considered to be a juristic entity in law. On the other hand, the partners who form a partnership firm are personally liable in law along with the partnership firm. It is a case of joint and several liability and not vicarious liability as such. Therefore, if the complainant herein has - 11 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 proceeded only against the partners and not against the partnership firm, we think it is not something which would go to the root of the matter so as to dismiss the complaint on that ground. Rather, opportunity could have been given to the complainant to implead the partnership firm also as an accused in the complaint even though no notice was sent specifically in the name of the partnership. 6.10 Alternatively, notice to the partners/accused could have been construed as notice to the partnership firm also. We say so for the reason that unlike a company which is a separate juristic entity from its directors thereof, a partnership firm comprises of its partners who are the persons directly liable on behalf of the partnership firm and by themselves. Therefore, a partnership firm, in the absence of the partners being arraigned as accused would not serve the purpose of the case and would be contrary to law. On the other hand, even in the absence of making a partnership firm an accused in the complaint, the partners being made the accused would be sufficient to make them liable inasmuch as the partnership firm without the partners is of no consequence and is not recognised in law. This is because in the case of a partnership firm, the said juristic entity is always understood as a compendious term namely, the partnership firm along with its partners. Therefore, if the appellant-complainant had proceeded only against the partnership firm and not its partners then possibly the respondents would have been right in contending that the complaint was not maintainable but here the case is reversed. The complainant herein has not arraigned the firm but has arraigned the partners of the firm as accused and has also issued notice to them; therefore, we find that the defect, if any, is not significant or incurable in these circumstances. Permission is therefore to be granted to the complainant to arraign the partnership firm also as an accused in the complaint. Moreover, the cheque was issued in the name of the firm and signed by one of the partners, for and on behalf of the other - 12 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 also, therefore, the liability is deemed to be on both the partners of the firm. 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 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 - 13 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 clause (b) of the explanation, the expression “director”, in relation to a firm, means a partner in the firm. 9.9 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. 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 - 14 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 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 sub- section (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." 13. In the above judgment, the Hon'ble Supreme Court, while considering the scope of Section 141, in the context of a firm, held that when the Cheque has been issued in the name of the partnership firm and signed by one of the partners, the partners who form a partnership firm are personally liable in law along with the partnership firm. It is a case of joint and several liability and not vicarious liability as such. If the complainant has proceeded only against the partners and not against the partnership firm, it will not go to the root of the matter so as to dismiss the complaint on that ground. It is further held that when the partnership firm has two partners and both were issued legal notices and were made parties in the complaint, being jointly and severally liable, the complaint is maintainable. - 15 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 14. In the present case, the cheque in question is issued by the partnership firm, whereas the legal notices and complaints are against one of the partners. In view of the principle laid down in Dhanasingh Prabhu (supra), the partners of a partnership firm are jointly and severally liable. In that view, the complaint under Section 138 of N.I. Act, in the present form is not maintainable. In the case at hand, neither the partnership firm nor all its partners are made parties. In the absence of the firm being made a party along with all of its partners, a complaint under Section 138 is not maintainable in view of Section 141 of N.I. Act. 15. Learned counsel for the respondent-complainant has contended that the issue of maintainability of the complaint was not raised before the trial Court or before the appellate Court, hence, not maintainable before this Court. Such contention cannot be accepted. Learned counsel for the respondent urged that when the maintainability of the complaint is not raised before the trial Court and the appellate Court, it is impermissible to do so in the revision proceedings under Section 397 of Cr.P.C. This Court finds no justification in such contention. If the complaint is not maintainable from the - 16 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 inception under Section 138 of N.I. Act, any order touching upon the jurisdiction, suffers from a fundamental error of jurisdiction. It touches not only correctness but also legality and propriety. In such circumstances, this Court must exercise jurisdiction under Section 397 of Cr.P.C. 16. The Hon'ble Supreme Court in the case of Amit Kapoor vs. Ramesh Chander and another [(2012) 9 SCC 460] analyzed the scope of revisional jurisdiction under Section 397 of Cr.P.C. It is held that where the decision under challenge is grossly erroneous and there is no compliance with the provisions of law, exercise of revisional jurisdiction is permitted. In the case on hand, it is noted that the ingredients of Section 138 of N.I. Act are not satisfied which both the Courts below failed to examine. Further, when the defence is made out that the cheque issued was of the registered firm, both the Courts ought to have examined the compliance of Section 141 of N.I. Act. Failure to examine the above aspects, the order suffers erroneous and non-compliance with the provisions of law. As observed by the Hon’ble Supreme Court, the object of Section 397 of Cr.P.C is to set right a patent - 17 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 defect or an error of jurisdiction or law. Para 12 of the judgment reads as under: "12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error and it may not be appropriate for the court to scrutinise the orders, which upon the face of it bears a token of careful consideration and appear to be in accordance with law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or ince judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes, but are merely indicative. Each case would have to be determined on its own merits. 17. In light of the above legal position, the contention that the maintainability of complaint for the offence under Section 138 of N.I. Act and the requisite compliance of Section 141 of N.I. Act, cannot be considered in a petition under Section 397 of Cr.P.C., as it is unsustainable and is to be noted only for its rejection. 18. The trial Court by applying the presumption under Section 139 of N.I. Act, proceeded to hold that the accused has - 18 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 not raised any probable defense to disprove the presumption. Hence, held that the accused has committed the offence punishable under Section 138 of N.I. Act. Similarly, the appellate Court, on the same line of reasoning and consideration, agreed to the finding of the trial Court. The presumption under Section 139 of N.I. Act will be in the favour of the holder when the holder of the Cheque satisfies the ingredients of Section 138 of the N.I. Act. When the statutory presumption is not attracted in favour of the holder of the Cheque, the question of probable defence is irrelevant. 19. In light of the aforesaid findings, this Court is of the view that complaints under Section 200 of Cr.P.C. are not maintainable in respect of the cheques-in-question for the offence punishable under Section 138 of N.I. Act. Accordingly, the following: ORDER (i) The Criminal Revision Petitions are allowed. (ii) The orders in C.C.No.1688/2007 and C.C.No.1214/2010 on the file of III Additional Civil Judge and J.M.F.C., at Belagavi, dated 29.05.2018 and consequently, the common order dated - 19 - CRL.RP No.100218 of 2019 C/W CRL.RP No.100219 of 2019 01.06.2019 in Criminal Appeal Nos.226/2018 and 227/2018 on the file of IV Additional District and Sessions Judge, Belagavi, are hereby set aside. (iii) The complaints in C.C.No.1688/2007 and C.C.No.1214/2010 on the file of III Additional Civil Judge and J.M.F.C., at Belagavi, are rejected. (iv) The fine amount, if any, deposited before the trial Court, is to be refunded to the petitioner-accused. (v) The bail bonds and sureties, if any, shall stand cancelled. (vi) Registry is directed to return the trial Court records for compliance with this order forthwith. Sd/- (K. V. ARAVIND) JUDGE DDU