A complaint under Section 138 of the Negotiable Instruments Act, 1881, can be maintained against individual partners of a firm even if the firm itself is not named as an accused, says the Supreme Court (SC) in Dhanasingh Prabhu v Chandrasekar & Another [2025 INSC 831].
This is because the partners of a partnership firm are jointly and severally liable. Proceedings against them are valid in law when the offence is related to their partnership firm. Such liability does not depend on the firm being separately arraigned.
A partnership firm has no separate recognition either jurisprudentially or in law apart from its partners. The partners and the partnership firm are one and the same. The liability is joint and several, not vicarious.
The concept of vicarious liability is not applicable to partnership firms in the same way as it is applicable to companies. Unlike a company which is a separate juristic entity from its directors, a partnership firm comprises its partners, who are the persons directly liable on behalf of the partnership firm and by themselves. Therefore, notice to the partners/accused could have been construed as notice to the partnership firm also.
While a director of a company can be vicariously liable for an offence committed by the company, in regard to a partnership firm, when the offence is committed by such a firm, the offence in essence is committed by the partners of the firm and not by the firm per se.
When the partnership firm is only a collective name for the partners of the firm, any offence committed under Section 138 read with Section 141 of the NI Act would make the partners of the firm jointly and severally liable with the firm.
Reference
- Dhanasingh Prabhu v Chandrasekar & Another [2025 INSC 831]
