Patna High Court
Bablu KumarversusThe State of Bihar
- Decided
- Disposal
- ALLOWED
- Bench
- SOURENDRA PANDEY
Holding
A proprietorship firm is not a "company" under Section 141 of the NI Act, and the proprietor can be prosecuted directly; therefore the revision order quashing cognizance is set aside.
Summary
Petitioner Bablu Kumar sold paddy to Raj Kishor Singh, proprietor of Durga Ji Rice Mills, who issued a Rs.6,00,000 cheque that was dishonoured. After a legal notice went unanswered, the petitioner filed a complaint under Section 138 of the Negotiable Instruments Act. The Judicial Magistrate took cognizance, but the Sessions Judge set aside the order, holding that because the firm was not made a party, the case could not proceed under Section 141. The petitioner appealed invoking the High Court's inherent jurisdiction. The High Court held that a proprietorship firm is not a "company" within the meaning of Section 141, and the proprietor can be prosecuted directly. Consequently, the revision order quashing cognizance was set aside and the magistrate was directed to proceed with the trial.
Issues considered
- Whether Section 141 of the Negotiable Instruments Act requires that a proprietorship firm be made a party when an offence under Section 138 is committed by its proprietor.
- Whether the proprietor of a proprietorship firm can be held liable directly without naming the firm as an accused.
- Interpretation of the term "company" under Section 141 in the context of a proprietorship.
- Whether the Sessions Judge erred in setting aside the magistrate's order taking cognizance.
Legislation cited
- Negotiable Instruments Act, 1881 — s. 138, 141
Subjects
- Negotiable Instruments Act
- Section 138
- Section 141
- cheque bounce
- proprietorship
- vicarious liability
- inherent jurisdiction
- revision
- quashing cognizance
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
CRIMINAL MISCELLANEOUS No.10844 of 2024
Arising Out of PS. Case No.-429 Year-2022 Thana- BHOJPUR COMPLAINT CASE
District- Bhojpur
======================================================
Bablu Kumar, S/o- Sri Ram Sundar Sah Village- Dhanwati Po- Dhanwati Ps-
Charpokhari Dist- Bhojpur,A/p- W.NO- 12, Piro Ps- Piro Dist- Bhojpur
... ... Petitioner/s
Versus
1. The State of Bihar
2. Raj Kishor Singh, son of Moarika Singh R/o- Near Ashok Cinema Hall
Bihiya Road Ps- Piro Dist- Bhojpur
... ... Opposite Party/s
======================================================
Appearance :
For the Petitioner/s : Mr. Binod Kumar Singh, Advocate
For the Opposite Party/s : Mr. Rajendra Singh, APP
======================================================
CORAM: HONOURABLE MR. JUSTICE SOURENDRA PANDEY
CAV JUDGMENT
Date : 23-02-2026
Heard the learned counsel for the parties.
2. The present application has been filed by the
petitioner invoking the inherent jurisdiction of this Hon’ble
Court for quashing the order dated 03.01.2023 passed by the
learned Sessions Judge, Bhojpur, Ara, in Cr. Revision No.92 of
2022 by which the order taking cognizance under Section 138 of
the N.I. Act dated 19.05.2022 by the Court of learned Judicial
Magistrate 1st Class, Ara, in Complaint Case No.429(C) of 2022
was set aside and the revision petition filed by the opposite
party no.2 was allowed.
3. The facts giving rise to the present complaint
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application is that petitioner had sold paddy to the opposite
party no.2, who is the owner of Durga Rice Mill, Hasan Bazar,
Bhojpur and the opposite party no. 2 had given a cheque of
Rs.6,00,000/- to the petitioner on 28.12.2021, but the cheque
was dishonoured by the Bank. It is alleged that when the
petitioner informed the opposite party no.2 about the same, he
did not give a satisfactory reply and then petitioner sent a legal
demand notice through his lawyer on 10.03.2022, complying
with the mandatory provisions of the Negotiable Instruments
Act, 1881 but the opposite party no.2 neither responded to the
notice nor made any payment. In such a situation, the petitioner
filed a Complaint Case No.429(C) of 2022.
4. On the basis of the aforesaid complaint and the
documents on record and after examination of the inquiry
witnesses, the learned Judicial Magistrate by order dated
19.05.2022, took cognizance under Section 138 of the
Negotiable Instrument Act, 1881 (hereinafter referred to as “NI
Act”).
5. The said order taking cognizance was challenged
before the learned Sessions Judge in Cr. Rev. NO.92 of 2022
and the learned Sessions Judge by the order impugned set aside
the order of cognizance and allowed the revision application on
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the ground that the concerned firm, Durga Ji Rice Mill, has not
been made a party by the complainant/petitioner and in the
absence of the said party, this case cannot be proceeded.
6. Learned counsel for the petitioner submits that the
present application challenging the said revisional order is
primarily on the ground that the learned Revisional Court has
erred in holding that “if the person committing an offence under
Section 138 is a company, every person who, at the time of the
offence was committed, was in-charge of and was responsibe to
the company for the conduct of the 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”.
7. Learned counsel for the petitioner submits that the
learned Sessions Judge, who was hearing the revision
application, has quoted Section 141 of the NI Act in coming to
the finding that the order taking cognizance was bad, as the
same was taken against the person and the complainant has not
made Durga Ji Rice Mills as a party and as the mill itself has not
been made a party, the case would not proceed.
8. Learned counsel for the petitioner submits that
Durga Ji Mills is a proprietorship firm and the opposite party
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no.2 is the owner of the said firm and this firm does not operate
under the company act. It has further been submitted that the
opposite party no.2 is the only person who is accountable that
for all types of transactions, but this fact has been misread by
the learned Revisional Court. It has been submitted that the
gross illegality has been committed by the learned Revisional
Court by going on to quash the cognizance and the summoning
order, taking recourse to Section 141 of the NI Act.
9. Learned counsel for the petitioner has referred to
the cheques, which were issued in favour of the petitioner by the
opposite party no.2 against the price of paddy and the two
cheques were presented before the Bank and the same was
dishonoured by the Bank on 01.03.2022 and from perusal of the
said cheque, which has been brought on record by way of
Annexure P2, it is evident that the opposite party no.2 had
issued the cheque as the proprietor of Shri Durja Ji Rice Mills.
Learned counsel for the petitioner has relied upon a judgment
rendered by the Hon'ble Supreme Court in the case of Raghu
Lakshminarayanan vs. M/s Fine Tubes reported in 2007 (5)
SCC 103 wherein the Hon'ble Supreme Court has very clearly
observed as under: -
“……..A proprietary concern,
however, stands absolutely on a different
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footing. A person may carry on business in the
name of a business concern, but he being
proprietor thereof, would be solely responsible
for conduct of its affairs. A proprietary concern
is not a company. Company in terms of the
Explanation appended to Section 141 of the
Negotiable Instruments Act, means any body
corporate and includes a firm or other
association of individuals. Director has been
defined to mean in relation to a firm, a partner
in the firm. Thus, whereas in relation to a
company, incorporated and registered under the
Companies Act, 1956 or any other statute, a
person as a Director must come within the
purview of the said description, so far as a firm
is concerned, the same would carry the same
meaning as contained in the Partnership
Act……”.
10. It has, thus, been submitted that in view of the
observations made by the Hon'ble Supreme Court setting aside
of the cognizance order by the Revisional Court is palpably
illegal and against the mandate of Hon'ble Supreme Court as
referred to hereinabove and thus, impugned order is fit to be set
aside.
11. Per contra, learned counsel for the opposite party
no.2 submits that there is no illegality in the order impugned and
in fact the learned Magistrate had passed the order taking
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cognizance in a mechanical way without applying its judicial
mind. It has further been submitted that Durga Ji Rice Mills was
a firm and therefore, the requirement under Section 141 of the
NI Act ought to have been complied with and since the
petitioner had not made Durga Ji Rice Mills an accused, the
order taking cognizance was bad on this ground alone. Learned
counsel for the opposite party no.2 has referred to Section 141
of the Negotiable Instrumental Act and has submitted that the
learned Magistrate did not consider the provision of the said
Section, which debars prosecution because of the fact that the
company has not been made a party and therefore there is no
illegality in the impugned order.
12. Learned opposite party no.2 has relied upon a
judgment rendered by the Hon'ble Supreme Court in case of
Aneeta Hada vs. M/s Godfather Travels & Tours Pvt. Ltd.
reported in 2012 (5) SCC 661 and has relied upon paragraphs
'57' and ‘58’ which states as under:-
“57. In RBI v. Peerless General
Finance and Investment Co. Ltd. [(1987) 1 SCC
424] it has been laid down that the entire statute
must be first read as a whole, then section by
section, clause by clause, phrase by phrase and
word by word. The same principle has been
reiterated in Deewan Singh v. Rajendra Pd.
Ardevi [(2007) 10 SCC 528] and Sarabjit Rick
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Singh v. Union of India [(2008) 2 SCC 417 :
(2008) 1 SCC (Cri) 449] .
58. Applying the doctrine of strict
construction, we are of the considered opinion
that commission of offence by the company is an
express condition precedent to attract the
vicarious liability of others. Thus, the words “as
well as the company” appearing in the section
make it absolutely unmistakably clear that when
the company can be prosecuted, then only the
persons mentioned in the other categories could
be vicariously liable for the offence subject to
the averments in the petition and proof thereof.
One cannot be oblivious of the fact that the
company is a juristic person and it has its own
respectability. If a finding is recorded against it,
it would create a concavity in its reputation.
There can be situations when the corporate
reputation is affected when a Director is
indicted.”
13. Learned counsel for the opposite party no.2
relying on the aforesaid judgment, has thus submitted that the
opposite party no.2 could not have been solely made an accused
and proceeding ahead by the learned Magistrate, as Durga Ji
Rice Mills was not made a party, is in contravention to the
required Section 141 of the NI Act. Learned counsel for the
opposite party no.2 has relied upon the judgment of the Hon’ble
Supreme Court passed in Anil Gupta vs. Star India Pvt. Ltd.
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reported in (2014) Cri.L.J. 3884 Supreme Court in support of
his arguments.
14. Having heard the learned counsel for the parties
and perused the respective pleadings, it is evident that the
petitioner has filed a complaint making the opposite party no. 2
an accused in a case where a cheque of six lakh was given in
favour of the petitioner and was subsequently dishonoured.
15. It is an admitted fact, which would be evident
from the perusal of Annexure P2 that the opposite party no.2,
namely, Raj Kishore Singh, happens to be the proprietor of Sri
Durga Ji Rice Mills which admittedly is a firm.
16. In such factual background, the judgment
rendered in the case of Raghu Laxmi Narayan (Supra) the
Durga Ji Rice Mills, would not stand in place of a company as
contemplated under Section 141 of the NI Act and therefore the
learned Magistrate was justified in taking cognizance against the
opposite party no.2, who was the sole proprietor of Durga Ji
Rice Mill.
17. In view of the discussions made hereinabove,
finding that the opposite party no.2 was the whole and sole of
Durga Ji Rice Mill, being the sole proprietor of the firm, making
Durja Rice Mills an accused was not mandatory under the NI
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Act and therefore, interference by the Revisional Court taking
recourse to the provision of Section 141 of the NI Act to my
understanding, is wrong and therefore, the order dated
03.01.2023 passed in Criminal Revision No.92 of 2022 could
not be sustained.
18. The order dated 03.01.2023 passed by the learned
Sessions Judge, Bhojpur, Ara, in Cr. Revision No.92 of 2022 is
hereby set aside and the learned Magisterial Court in seisin of
complaint case No.429(C) of 2022 is hereby directed to proceed
ahead from the stage of taking cognizance and issue fresh
summons to the accused to face the trial.
19. Therefore, the present application is allowed.
(Sourendra Pandey, J)
manoj/-
AFR/NAFR NAFR
CAV DATE 10.02.2026
Uploading Date 24.02.2026
Transmission Date 24.02.2026
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