- 1 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF FEBRUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA CRIMINAL PETITION NO. 6532 OF 2024 (482(Cr.PC) / 528(BNSS) BETWEEN: MRS. VIJAYALAKSHMI JOSHI W/O SHRI. LAKSHMIKANT JOSHI, AGED ABOUT 47 YEARS R/O NO. 973, 2ND E CROSS, 3RD STAGE, 3RD BLOCK, BASAVESHWARANAGAR, BENGALURU - 560 079. …PETITIONER (BY SRI. K. DIWAKARA, SR. ADVOCATE FOR MISS. NAMITHA MAHESH B.G., ADVOCATE) AND: SHRI. R.C. JAYARAMA S/O S.R. CHIKKARAJU, Digitally signed by SANJEEVINI J KARISHETTY Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 AGED ABOUT 53 YEARS, R/O NO.245/1, 2ND BLOCK, RAMANJENEYANAGAR, CHIKKALANSANDRA BENGALURU - 560 061. …RESPONDENT (BY SRI. V. KRISHNA MURTHY, ADVOCATE, SRI C. VIJAYA KUMAR, ADVOCATE FOR IMPLEADING APPLICANT) THIS CRL.P IS FILED U/S.482 OF CR.P.C (U/S.528 OF BNSS 2023) PRAYING TO SET ASIDE THE ORDER DATED 19.04.2024 PASSED BY THE 16TH ACMM AT BENGALURU TAKING COGNIZANCE AND REGISTRATION OF A CRIMINAL CASE IN C.C.NO.13326/2024 AND TO CONSEQUENTLY QUASH THE ENTIRE PROCEEDINGS IN PCR NO.4584/2024 AND REGISTERED AS C.C.NO.13326/2024 PENDING ON THE FILE OF THE 16TH ACMM AT BENGALURU. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner is before this Court calling in question proceedings before the concerned Court in C.C.No.13326/2024 registered for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. 2. Heard Sri. K. Diwakara, learned Senior counsel appearing for the petitioner, Sri. V. Krishna Murthy, learned counsel appearing for the respondent and Sri. C. Vijaya Kumar, learned counsel appearing for the impleading applicant. 3. Facts adumbrated are as follows: The petitioner is said to be a partner in the partnership firm. On 08.04.2019, a Memorandum of Understanding is executed between the petitioner, the respondent and another to start a partnership firm. It was reconstituted on 04.02.2021. It is between these two dates the instrument has sprung, instrument i.e., the cheque. The cheque being presented by the respondent - complainant gets dishonoured. The dishonouring of cheque moves the complainant to the concerned Court by - 4 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 registering a private complaint invoking Section 200 of the Cr.P.C. The concerned Court takes cognizance of the offence and issues summons to the petitioner on 03.04.2024. The petitioner is thus before this Court calling in question the taking of cognizance and issuance of summons. 4. Learned Senior counsel, Sri. K. Diwakara, appearing for the petitioner would contend that the petitioner is not the signatory to the cheque. In a collateral proceeding where the house of the petitioner was searched, the instruments, the seal and other contemporaneous things were found, which would infer that the complainant has misused the cheque while he was or his wife was a partner with the petitioner and therefore, would submit that the proceedings must not be permitted to be continued against this petitioner, who has nothing to do with the transaction between the other partner or the complainant. 5. Per contra, learned counsel, Sri. V. Krishna Murthy, appearing for the complainant would submit that the cheque is issued by the petitioner, which bears the signature of the petitioner, all of which are pending consideration before the concerned Court. In a partnership firm, it is not that one - 5 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 partner can escape the liability notwithstanding the fact that whether they are actively involved in the firm or otherwise. 6. I have given my anxious consideration to the respective submissions made by the learned Senior counsel appearing for the petitioner, learned counsel appearing for the respondent and learned counsel appearing for the impleading applicant and have perused the material on record. 7. The afore-narrated facts are a matter of record. The partnership firm being constituted, reconstituted, are all again a matter of record. The issue that is brought before the Court is an instrument that gets dishonoured and the complainant registering the complaint. 8. Learned Senior counsel appearing for the petitioner tries to project a collateral proceeding with regard to the signatures and the cheque being misused at the hands of the complainant, which has lead the complainant to register a crime against the present petitioner. Insofar as the liability of a partner, signatory or otherwise need not detain this Court for long or delve deep into the matter. The Apex Court in its latest - 6 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 judgment in DHANASINGH PRABHU v. CHANDRASEKAR1 has considered the issue whether in a partnership firm, the other partner would be liable for dishonor of a cheque equally like that of the partner who has signed the instrument, unlike in a Company where the Apex Court holds that what is necessary to be seen is the role of every director, their involvement in the day-to-day affairs of the Company as they are sometimes termed as non-executive directors who would not be aware of the day-to-day affairs of the Company. Therefore, the Apex Court holds that cases should be decided on the facts obtaining in each of them with regard to the role of those directors, but in a partnership firm, the Apex Court in DHANASINGH clearly holds that a partner will be equally responsible for the other partner in the cheque/instrument that is issued which becomes the subject matter of proceedings before the concerned Court. The Apex Court in DHANASINGH PRABHU supra, has held as follows: "26. 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 1 (2025) 10 SCC 96 - 7 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 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 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. 27. 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 - 8 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 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 also, therefore, the liability is deemed to be on both the partners of the firm. ……. ……. ……. 35. In Section 4 of the Partnership Act, it is clearly stated that persons who have entered into partnership with one another are individually called partners and collectively a firm and the name under which their business is carried out is called a firm name. Thus, while partnership is the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all, the persons are collectively called a firm and the name of the firm is the firm name which is a compendious or collective term of partnership of the partners. The said section also clearly implies that a firm or partnership is not a legal entity, separate and distinct from its partners. 36. As already stated above, the firm is a compendious term not distinct of the individuals who compose the firm. In other words, partnership is merely a convenient name to carry out business by partners. Thus, a firm is not an entity of persons in law but is merely an association of individuals and firm name is only a collective name of those - 9 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 individuals who constitute the firm. In other words, the firm name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership. Thus, a firm may not be a legal entity in the sense of a corporation or a company incorporated under the Companies Act, 1956 or 2013, but it is still an existing concern where business is done by a number of persons in partnership. ……. ……. ……. Separate legal personality 41. A partnership firm, unlike a company registered under the Companies Act, does not possess a separate legal personality and the firm's name is only a compendious reference for describing its partners. This fundamental distinction between a firm and a company rests on the premise that the company is separate from its shareholders. In that context, the words of Lord Macnaghten in Aron Salomon (Pauper) v. Salomon & Co. Ltd. [Aron Salomon (Pauper) v. Salomon & Co. Ltd., 1897 AC 22 (HL)] (“Salomon”) are instructive : (AC p. 51) “… The company is at law a different person altogether from the subscribers … and though it may be that after incorporation the business is precisely the same as it was before and the same persons are managers and the same hands receive the proceeds, the company is not in law, the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by the Act.” 42. This distinction does not, however, continue to hold true for a partnership firm. In the seminal case of Bacha F. Guzdar v. CIT [Bacha F. Guzdar v. CIT, (1954) 2 SCC 563 : (1955) 27 ITR 1 : (1955) 25 Comp Cas 1] , this Court had an opportunity to briefly address this distinction between a partnership firm and a company, wherein it was observed thus : (SCC p. 570, para 13) “13. It was argued that the position of shareholders in a company is analogous to that of partners inter se. This analogy is wholly inaccurate. Partnership is merely an association - 10 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 of persons for carrying on the business of partnership and in law the firm name is a compendious method of describing the partners. Such is, however, not the case of a company which stands as a separate juristic entity distinct from the shareholders.” 43. The partnership name being only a compendious method of describing the partners, it stands to reason that a reference to the partners in their capacity as partners of the firm will be sufficient to impute liability on the partners themselves, whereas Directors of a company are made liable vicariously through the company, upon whom falls the primary liability. Thus, the partners and the partnership firm are one and the same. Unlike a company, a partnership firm has no independent corporate existence and has no distinct legal persona independent of its partners. Similarly, the partners of a firm are co-owners of the property of the firm unlike shareholders in a company who are not co- owners of the property of the company. This principle was also explained by the Calcutta High Court in Kondoli Tea Co. Ltd., In re [Kondoli Tea Co. Ltd., In re, ILR (1886) 13 Cal 43] where the transferors of a tea estate claimed that they were eligible to claim exemption from payment of ad valorem duty because the transferee was a company in which they themselves were shareholders. Negativing this contention, it was held that the company was a separate person and the transfer of the tea estate was a conveyance and in substance, a transfer to another person. ……. ……. ……. 45. Similarly, it was explained that in taking partnership accounts and in administering partnership assets, the law has to some extent, adopted the mercantile view and the liabilities of the firm are regarded as the liabilities of the partners only in case they cannot be met and discharged by the firm out of its assets. 46. Most pertinent is that despite noting these relaxations in the rigid rules of procedure, this Court observed in Dulichand [Dulichand Laxminarayan - 11 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 (Firm) v. CIT, (1956) 1 SCC 269 : (1956) 29 ITR 535] that “a firm name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership”. Any relaxations, either aforementioned or not, borne out of commercial convenience or otherwise, do not deviate from the settled position that the name of a partnership firm is a convenient manner of referring to its partners. ……. ……. ……. Liability of partners 51. The liability of partners for the debts of the business is unlimited and they are jointly and severally liable for all business obligations of the partnership firm. Sections 25 and 26 of the Partnership Act are relevant in this regard, which are reproduced as under: “25. Liability of a partner for acts of the firm.—Every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. 26. Liability of the firm for wrongful acts of a partner.—Where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefor to the same extent as the partner.” Section 25 provides that every partner is liable jointly with all the other partners and also severally for all acts of the firm done by the partner. Since a firm is not a legal entity but only a collective name for all the partners, it does not have any legal existence apart from its partners. Therefore, any liability of a firm has the same effect of a liability against the partners. This is because, the partners remain liable jointly and severally for all acts of the firm, vide Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. [Dena Bank v. Bhikhabhai Prabhudas Parekh & Co., (2000) 5 SCC 694 : (2001) 247 ITR 165 : (2000) 120 STC 610 : (2001) 107 Comp Cas 157] 52. Moreover, the partners of a firm have unlimited liability to the creditors of the firm. This is - 12 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 as opposed to a limited company or a limited liability partnership, wherein the liability of the Directors or the shareholders is to the extent of their share in the limited company or limited liability partnership and limited to the nominal value of the shares held by them or the amount guaranteed by the shareholder when it comes to a company. Thus, the debt of the firm is the personal debt of a partner and the debt of the firm has to be incurred by each partner as a financial personal liability. 53. Insofar as criminal liability is concerned, once it is established that an illegal act has been committed by the firm or its partners, then the partners will be jointly liable for it. Moreover, the act constituting an offence will also have to be decided with reference to the statute creating such an offence i.e. the Negotiable Instruments Act, which is the Act under consideration. When Section 25 of the Partnership Act is read together with Section 145 of the Act, in the context of dishonour of a cheque, the partner of a firm who is also liable jointly with a firm, can however rebut the statutory presumption. 54. Conversely, Section 26 states that where by the wrongful act or omission of a partner, acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injuries are caused to any third party, or any penalties are incurred, the firm is liable therefore to the same extent as the partner. The liability of the firm for acts done by the partner would arise when such acts are done in the ordinary course of the business of the firm. 55. Moreover, since the firm by itself cannot transact any business, if a partner of the firm commits any breach, all the partners would become liable for the consequent penalties, just as the firm would be liable. Further, if a penalty is imposed on a partnership firm for contravention of a statute, it amounts to levy of penalty on the partners also and there is no separate or independent penalty on the partners for the said contravention. However, the - 13 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 liability of a shareholder in a company is limited to the nominal value of shares held by them or the amount guaranteed by the shareholder. The separate property of the shareholder is beyond a creditor seeking to enforce its dues against the company. ……. ……. ……. 64. 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. 65. 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 - 14 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 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. 66. 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 200CrPC (equivalent to Section 223 BNSS), such a complaint is maintainable. 67. 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. - 15 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 68. 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, 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 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." (Emphasis supplied) 9. In that light, all the other issues that the learned Senior counsel seeks to project with regard to the misuse of the cheque or the signatures of the complainant to be verified, can be sought at the hands of the concerned Court by filing necessary applications. This Court has no reason to disbelieve that the concerned Court would not permit such an application, if it is projected to be in accordance with law. There is no warrant to keep this petition pending for the reasons of seriously disputed questions of fact, which will have to be thrashed in a full blown trial. - 16 - HC-KAR NC: 2026:KHC:6830 CRL.P No. 6532 of 2024 10. With the aforesaid observations, the petition stands disposed. Sd/- (M.NAGAPRASANNA) JUDGE SJK List No.: 1 Sl No.: 32 CT:BHK