{"id":268324,"date":"2022-06-13T18:00:13","date_gmt":"2022-06-13T12:30:13","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=268324"},"modified":"2022-06-16T12:04:24","modified_gmt":"2022-06-16T06:34:24","slug":"dishonour-of-cheque-partner-partnership-vicarious-liability-negotiable-instruments-act-section-141-section-138-supreme-court-judgments-legal-research-updates-news","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/06\/13\/dishonour-of-cheque-partner-partnership-vicarious-liability-negotiable-instruments-act-section-141-section-138-supreme-court-judgments-legal-research-updates-news\/","title":{"rendered":"Dishonour of cheque| Partner cannot be held to be vicariously liable when partnership firm is not tried as primary offender: SC"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>Supreme Court:<\/strong> Explaining the law on vicarious liability under the Negotiable Instruments Act, 1881, the bench of Ajay Rastogi and <strong>Sanjiv Khanna*,<\/strong> JJ has held that while Section 141 of the NI Act extends vicarious criminal liability to officers associated with the company or firm when one of the twin requirements of Section 141 has been satisfied, which person(s) then, by deeming fiction, is made vicariously liable and punished, <em>such vicarious liability arises only when the company or firm commits the offence as the primary offender<\/em>.<\/p>\n<p style=\"text-align: justify;\">The Court explained that the provisions of Section 141 NI Act impose vicarious liability by deeming fiction which presupposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-section (1) or (2) would not be liable and convicted as vicariously liable.<\/p>\n<p style=\"text-align: justify;\">Sub-section (2) to Section 141 of the NI Act does not state that the persons enumerated, which can include an officer of the company, can be prosecuted and punished merely because of their status or position as a director, manager, secretary or any other officer, unless the offence in question was committed with their consent or connivance or is attributable to any neglect on their part. <em>The onus under sub-section (2) to Section 141 of the NI Act is on the prosecution and not on the person being prosecuted<\/em>.<\/p>\n<p style=\"text-align: justify;\">It was further observed that the Partnership Act, 1932 creates civil liability. Further, the guarantor&#8217;s liability under the Contract Act, 1872 is a civil liability. The Partner may have civil liability and may also be liable under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, vicarious liability in the criminal law in terms of Section 141 of the NI Act cannot be fastened because of the civil liability.<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cVicarious liability under sub-section (1) to Section 141 of the NI Act can be pinned when the person is in overall control of the day-to-day business of the company or firm. Vicarious liability under sub-section (2) to Section 141 of the NI Act can arise because of the director, manager, secretary, or other officer&#8217;s personal conduct, functional or transactional role, notwithstanding that the person was not in overall control of the day-to-day business of the company when the offence was committed. Vicarious liability under sub-section (2) is attracted when the offence is committed with the consent, connivance, or is attributable to the neglect on the part of a director, manager, secretary, or other officer of the company.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">In the case at hand, even the Bank of Baroda had admitted that the appellant had not issued any of the three cheques, which had been dishonoured, in his personal capacity or otherwise as a partner. Hence, in the absence of any evidence led by the prosecution to show and establish that the appellant was in charge of and responsible for the conduct of the affairs of the firm, the conviction of the appellant had to be set aside.<\/p>\n<blockquote>\n<p style=\"text-align: justify;\">\u201cThe appellant cannot be convicted merely because he was a partner of the firm which had taken the loan or that he stood as a guarantor for such a loan.\u201d<\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">[Dilip Hariramani v. Bank of Baroda, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/ceoePELj\"><b>2022 SCC OnLine SC 579<\/b><\/a>, decided on 09.05.2022]<\/p>\n<hr \/>\n<p style=\"text-align: justify;\"><strong>*Judgment by: Justice Sanjiv Khanna<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court: Explaining the law on vicarious liability under the Negotiable Instruments Act, 1881, the bench of Ajay Rastogi and Sanjiv Khanna*, <\/p>\n","protected":false},"author":121,"featured_media":268329,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[2862,23564,30606,45836,43129,43128,36936,20481],"class_list":["post-268324","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-dishonour_of_cheque","tag-negotiable-instruments","tag-ni-act","tag-partner","tag-partnership-act","tag-partnership-firm","tag-section-141-ni-act","tag-vicarious-liability"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Dishonour of cheque| Partner cannot be held to be vicariously liable when partnership firm is not tried as primary offender: SC | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, 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Tis Hazari Court decodes","author":"Bhumika Indulia","date":"February 16, 2022","format":false,"excerpt":"Tis Hazari Courts, New Delhi: While deciding a matter under Section 138 of the negotiable Instruments Act, 1881, Devanshu Sajlan, MM-05 (NI Act) reiterated the settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Tis-hazari","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":273998,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/09\/19\/section-141-ni-act-dishonour-cheque-burden-proof-vicarious-liability-quashment-director-partner-complainant-supreme-court-legal-research-updates-news\/","url_meta":{"origin":268324,"position":1},"title":"Dishonour of Cheque &#8211; S. 141 NI Act| Complainant only supposed to have general knowledge of person(s) in charge of company\/firm; Burden on Director\/Partner to prove their innocence: SC\u00a0","author":"Prachi Bhardwaj","date":"September 19, 2022","format":false,"excerpt":"\u201cQuashing of a complaint is a serious matter. 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For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner.\u201d","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-75-1-1.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-75-1-1.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-75-1-1.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-75-1-1.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-75-1-1.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":364404,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/10\/21\/supreme-court-section-138-ni-act\/","url_meta":{"origin":268324,"position":2},"title":"Stretching the Statute? Supreme Court&#8217;s Bold Take on Section 138 of the Negotiable Instruments Act, 1881","author":"Editor","date":"October 21, 2025","format":false,"excerpt":"by Jugal J. Kanani*","rel":"","context":"In &quot;Op Eds&quot;","block_context":{"text":"Op Eds","link":"https:\/\/www.scconline.com\/blog\/post\/category\/op-ed\/legal-analysis\/"},"img":{"alt_text":"Section 138 Supreme Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Section-138-Supreme-Court.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Section-138-Supreme-Court.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Section-138-Supreme-Court.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/Section-138-Supreme-Court.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":274559,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/09\/27\/supreme-court-calcutta-high-court-section-141negotiable-instruments-act-1881-dishonour-of-cheque-interest-of-justice-managing-director-criminal-liability-vicarious-liability-independent-non-executive\/","url_meta":{"origin":268324,"position":3},"title":"Explained| Dishonour of Cheques: Can non-executive Directors of the accused company be held vicariously liable under Section 141 NI Act?","author":"Editor","date":"September 27, 2022","format":false,"excerpt":"\u00a0 \u00a0 Supreme Court: In an appeal against a judgment passed by the Calcutta High Court dismissing the Criminal Revision Application filed by the appellants for quashing the proceedings under Sections 138 and 141 of the Negotiable Instruments (NI) Act,1881, the division bench of Indira Banerjee* and J.K. Maheshwari has\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/Supreme-Court-1.png?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":243938,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/02\/16\/section-138-ni-act\/","url_meta":{"origin":268324,"position":4},"title":"All HC | Summons sent to Director for dishonour of cheque under S. 138 NI Act, without prosecution against the Company. Is it permissible? Court answers","author":"Bhumika Indulia","date":"February 16, 2021","format":false,"excerpt":"Allahabad High Court: Ravi Nath Tilhari, J., addressed a matter wherein a person being the director of the company signed a cheque on behalf of the company and since the said cheque got dishonoured, he was made liable, without the company being made liable under the offence of Section 138\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":281009,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/01\/04\/compilation-of-important-judgments-of-supreme-court-and-high-courts-regarding-section-138-of-the-negotiable-instruments-act-1881\/","url_meta":{"origin":268324,"position":5},"title":"Compilation of Important Judgments of Supreme Court and High Courts regarding Section 138 of the Negotiable Instruments Act, 1881","author":"Bhumika Indulia","date":"January 4, 2023","format":false,"excerpt":"by Swarnendu Chatterjee\u2020 Anwesha Pal\u2020\u2020 and Yashwardhan Singh\u2020\u2020\u2020 Cite as: 2023 SCC OnLine Blog Exp 11","rel":"","context":"In &quot;Op Eds&quot;","block_context":{"text":"Op Eds","link":"https:\/\/www.scconline.com\/blog\/post\/category\/op-ed\/legal-analysis\/"},"img":{"alt_text":"Negotiable Instruments Act","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/01\/MicrosoftTeams-image141.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/268324","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/121"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=268324"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/268324\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/268329"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=268324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=268324"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=268324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}