Case Background

The applicants were partners in a partnership firm named M/s K.D. Overseas, formed by a deed dated 01.05.2016. They claimed to be sleeping partners, having no involvement in day-to-day business activities. They asserted that since both applicants were women occupied with domestic responsibilities, they had appointed Sahil Verma—husband of applicant no.1 and son of applicant no.2—as the active manager of the firm. A registered Power of Attorney (29.09.2017) authorised him to manage all business and financial affairs, including issuing cheques.

The complainants (Opposite Parties 2 and 3) filed two separate complaints regarding dishonoured cheques allegedly issued by the firm. In both complaints, the firm, its manager, and both applicants were arrayed as accused. Cheques involved amounted to ₹45,00,000/- in one case; the other case concerned different cheques.

Applicants’ Arguments

The applicants argued that:

1. They were not signatories to the dishonoured cheques.

2. They had no role in business operations, which were entirely handled by Sahil Verma.

3. Section 141 NI Act requires specific averments showing how they were “in charge of and responsible for the conduct of business” at the time of the offence.

4. The complaint contained only bald assertions, lacking specific allegations linking them to the offence.

5. In cross-examination, the complainant admitted that the cheques were issued by Sahil Verma, and he did not know who the partners were.

6. Multiple Supreme Court cases—including S.M.S. Pharmaceuticals Ltd., Sunita Palita, Ashok Shewakramani, and Harmeet Singh Paintal—establish that vicarious liability cannot be imposed without specific pleadings and proof.

Opposite Parties’ Arguments

Opposite Parties argued:

1. A partnership firm has no separate legal existence apart from its partners.

2. Unlike directors of a company, partners are jointly and severally liable for acts of the firm.

3. The latest Supreme Court judgment in Dhanasingh Prabhu v. Chandrasekar (2025) directly applies, as it clarifies that:

   • Partners are automatically liable for acts of the firm;

   • There is no concept of vicarious liability in partnership cases—the liability is direct, joint, and several.

Court’s Analysis

After reviewing all case law, the Court held:

• The precedents cited by applicants dealt mainly with companies and directors (Section 141 NI Act) and were not applicable to partners of a partnership firm.

• The Supreme Court’s ruling in Dhanasingh Prabhu (2025) conclusively holds that:

  • A partnership firm has no independent legal existence.

  • When an offence under Section 138 NI Act is committed by a firm, partners are automatically liable, even if not signatories to the cheque.

• Section 25 of the Indian Partnership Act, 1932 also makes every partner jointly and severally liable for acts of the firm.

Conclusion

The High Court upheld the trial court’s summoning order and refused to quash proceedings, ruling that the applicants cannot escape liability merely by claiming to be sleeping partners. Both applications under Section 482 CrPC were dismissed as devoid of merit.