Section 141 NI Act: Company Includes Partnership Firm Or Other Association Of Individuals [Read Judgment]

The Supreme Court has observed that the expression "company" used in Section 141 of the Negotiable Instruments Act includes a partnership firm or association of persons.

In this case (G. Ramesh vs. Kanike Harish Kumar Ujwal), the first accused was a partnership firm named Vainqueur Corporate Services which was dealing in data entry work and and the other accused were its partners. The High Court had quashed the complaint against one of the partners on the ground there was no averment in the complaint that he was in-charge of and was responsible to the "company" for the conduct of the business. The high court was of the view that the averments contained in paragraph 5 of the complaint were not sufficient to implicate criminal liability upon the partner for an offence punishable under Section 138 NI Act.

Disagreeing with this view, the bench comprising Justice DY Chandrachud and Justice Hemant Gupta, perusing the complaint observed:

"It is evident from the relevant paragraphs of the complaint which have been extracted above that the complaint contains a sufficient description of (i) the nature of the partnership; (ii) the business which was being carried on; (iii) the role of each of the accused in the conduct of the business and, specifically, in relation to the transactions which took place with the complainant. At every place in the averments, the accused have been referred to in the plural sense. Besides this, the specific role of each of them in relation to the transactions arising out of the contract in question, which ultimately led to the dishonour of the cheques, has been elucidated."

The court said that the High Court proceeded on the basis that the first accused was a company in which the other two accused were directors. Allowing the appeal, the bench said:

"Section 141 undoubtedly uses the expression "company" so as to include a firm or association of persons. The fact that the first accused, in the present case, is a partnership firm of which the remaining two accused are partners has been missed by the High Court."

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