Kerala High Court
Mohammed Niyas vs State Of Kerala on 19 March, 2026
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Crl.M.C No.1736/2020
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE G.GIRISH
THURSDAY, THE 19TH DAY OF MARCH 2026 / 28TH PHALGUNA, 1947
CRL.MC NO. 1736 OF 2020
IN ST NO.1073 OF 2017 OF JUDICIAL FIRST CLASS MAGISTRATE
COURT, KAKKANAD
PETITIONER/ACCUSED NO.2:
MOHAMMED NIYAS,
AGED 42 YEARS,
M/S.UNIQUE INTERNATIONAL LOGISTICS,
COCHIN OFFICE, WOW WALL DECOR,
GROUND FLOOR, NAKSHTRA BUILDING,
THOUNDAYIL LANE,
PANAMPILLAY NAGAR-682036.
BY ADVS.SHRI.SAIBY JOSE KIDANGOOR
SHRI.BENNY ANTONY PAREL
SMT.S.SIBHA
SRI.P.M.MOHAMMED SALIH
KUM.PARVATHY VIJAYAN
SMT.PRAMITHA AUGUSTINE
SHRI.ANOOP SEBASTIAN
SMT.DEEPA VALENTINE LESLIE
RESPONDENTS/STATE & COMPLAINANT:
1 STATE OF KERALA
REP. BY PUBLIC PROSECUTOR,
HIGH COURT OF KERALA,
ERNAKULAM-682031.
2 M/S.CHOICE LOGISTICS SOLUTIONS DIV. OF CTCPL,
C/O.CHOICE LOGISTICS SOLUTIONS DIV.4/434,
CHOICE HOUSE, P.V.SREEDHARAN ROAD,
NEAR AROOR TOLL BRIDGE,
KUMBALAM, COCHIN-682506,
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Crl.M.C No.1736/2020
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REP. BY AUTHORIZED SIGNATORY AND
REPRESENTATIVE OF THE COMPANY
MR.RAJESHKUMAR E.A.
BY ADVS.SRI.SHERRY SAMUEL OOMMEN FOR R2
SMT.VYDEHI P.
SMT. SNEHA MARIYA JAMES
SMT.ASWATHI MENON C.
SHRI.NAVEEN D. PALAKAL
SRI JAYAKRISHNAN U., PUBLIC PROSECUTOR
THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON
09.03.2026, THE COURT ON 19.03.2026 PASSED THE FOLLOWING:
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ORDER
The second accused in S.T No.1073/2017 on the files of the Judicial First Class Magistrate Court, Kakkanad, has filed this petition under Section 482 of the Code of Criminal Procedure, 1973 (in short, 'Cr.PC'), to quash the proceedings against him in the aforesaid case. The offence alleged against the petitioner is one under Section 138 of the Negotiable Instruments Act, 1881 (in short, ' NI Act').
2. The aforesaid complaint has been instituted arraigning the petitioner herein as the second accused in his capacity as the authorised signatory of a Private Limited Company by name M/s.Unique International Logistics. The first accused in the said case is that company represented by its Vice President, and the third accused is the said company which the first and second accused represented. The allegation is that a cheque for Rs.49,58,641/- which the petitioner herein issued as the authorised signatory of the company which he represented, in discharge of a legally enforceable debt which the said company owed the second respondent company, was dishonoured due to insufficiency of funds, and that the petitioner and the other two accused did not care to make payment of the cheque amount despite statutory notice issued 2026:KER:23934 Crl.M.C No.1736/2020 4 against them. The petitioner herein is said to have received the statutory notice, but as against the other two accused, it was returned undelivered.
3. The challenge in this petition is that the criminal prosecution launched by the second respondent, in S.T No.1073/2017, is against a wrong entity which is not in existence. According to the petitioner, the entity shown as M/s. Unique International Logistics in Annexure-A complaint is not a company, but only a partnership firm. It is further stated that the petitioner is not the Director of a company as contended in Annexure-A complaint. However, it is contended by the petitioner that he is the authorised signatory to the partnership firm which the second respondent mistakenly mentioned in Annexure-A complaint as a company. Thus, it is stated that the second respondent has instituted the complaint against an entity which is not in existence, and that the petitioner herein is not liable to be prosecuted as the representative of such a non-existing entity. It is the further contention of the petitioner that he had not issued the impugned cheque in his personal capacity or as a partner, but merely as a signatory, and hence the offence alleged against the petitioner will not lie. For the above reasons, the petitioner seeks to quash the proceedings against him in the aforesaid case.
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4. Heard the learned counsel for the petitioner, the learned counsel for the second respondent, and the learned Public Prosecutor representing the State of Kerala.
5. A reading of Annexure-A complaint, which the second respondent filed before the Trial Court, would reveal that the petitioner herein has been arraigned in that complaint as the second accused in his capacity as the authorised signatory of the first accused company who issued the cheque dated 03.05.2016 for an amount of Rs.49,58,641/-. It is further stated in the complaint that the second accused (petitioner herein) is responsible for the management and day to day affairs of the company. Now that the petitioner would contend that the entity by name M/s. Unique International Logistics, which the second respondent has mentioned as a company, is actually a partnership firm, and that he is only one of the partners of the said firm. Thus, the question to be resolved in this proceedings is whether the criminal prosecution launched against the petitioner is liable to be terminated in exercise of the powers of this Court under Section 482 Cr.PC. for the reason that the petitioner has been mistakenly arraigned as the authorised signatory of a company by name M/s. Unique International Logistics, while the fact remains that 2026:KER:23934 Crl.M.C No.1736/2020 6 the said entity is only a partnership firm in which the petitioner is one of the partners.
6. It is true that the nature of the status of a Director of a company is totally different from that of a partner of a partnership firm. While a Director of a company is a separate persona in relation to the company, the partner of a partnership firm is not really a distinct legal persona. This is because of the reason that a partnership firm is not actually a legal entity separate and distinct as a company is from its Directors. The legal persona of a partnership firm is only when it is considered along with its partners. Thus, the partnership firm has no separate recognition either jurisprudential or in law apart from its partners. In the case of a partnership firm, when the offence is committed by such a firm, in substance, the offence is committed by the partners of the firm. As far as the company is concerned, a Director can be made vicariously liable for the offence committed by the company, if it is shown that he was in charge of and responsible for the conduct of business of the company at the relevant point of time when the offence was committed. The partners of a firm are liable for the dishonour of a cheque, even though the cheque was issued in the name of the firm and 2026:KER:23934 Crl.M.C No.1736/2020 7 the offence is committed by the firm. Thus, the liability of the partners is not vicarious but joint and several.
7. Though the legal status and liability of the Director of a company and partner of a partnership firm have got marked difference, in a prosecution for the commission of offence under Section 138 of the NI Act, the legislature has placed them under the same footing by virtue of the explanation to Section 141 of the NI Act. As per clause (a) of that explanation, company includes a firm or other association of individuals. Clause (b) of that explanation states that Director, in relation to a firm, means partner in the firm. Thus, it could be seen from the above provision of the NI Act that a partner of a partnership firm has been considered on par with the Director of a company in a criminal prosecution for the commission of offence under Section 138 of the NI Act. That being so, a misquoting of the legal status of the petitioner in the present complaint cannot be said to be one of far reaching consequences capable of vitiating the criminal prosecution irreparably.
8. The scope and applicability of the explanation to Section 141 of the NI Act have been dealt with extensively by the Hon'ble Supreme Court in Dhanasingh Prabhu v. Chandrasekar [2025 SCC Online 2026:KER:23934 Crl.M.C No.1736/2020 8 SC 1419]. The relevant paragraphs of the judgment rendered by the Hon'ble Apex Court in the aforesaid case are extracted hereunder:
"9.5 The Explanation to Section 141 has two clauses. Clause (a) defines a company to mean any body corporate and includes a firm or other association of individuals. The expression "company" encompasses, inter alia, a body corporate which refers to a company incorporated under the provisions of the Companies Act or a statutory body. The expression "company" is inclusive inasmuch as it includes a firm, meaning thereby a partnership firm, as per the provisions of the Partnership Act, as well as a limited liability partnership or other association of individuals. Clause (b) of the Explanation defines a director as mentioned in sub-section (2) of Section 141 of the Act in relation to a firm to mean a partner in the firm. Thus by a legislative device an inclusive definition is added by way of an Explanation to Section 141 of the Act inasmuch as in jurisprudence and in law, a company is a distinct body corporate and separate juristic entity as compared to a partnership firm.
9.6 On a conjoint reading of the various clauses of Section 141, what emerges is that the expression "company" has been used in an expansive way to include not just a company incorporated under the provisions of the Companies Act stricto sensu but also any body corporate such as a statutory company as well as other artificial juristic entity such as a partnership firm or other association of individuals. Hence, the expression "director" in sub-section (2) of Section 141 is not restricted to a director of an incorporated company or a statutory body, but also includes a partner of a firm. The expression "director" in sub-section (2) of Section 141 of the Act in relation to a firm means a partner, which is also a legislative device adopted by the Parliament knowing fully well and being conscious of the fact that a partnership firm, jurisprudentially speaking, does not stand on par with a director of a body corporate. Since the Parliament has used the expression "company" encompassing all types of juristic persons, it was necessary to give an expanded definition to the expression "director" in relation to a firm to mean a partner in the firm. Therefore, the inclusion of a firm within the meaning of the expression "company" is by a legal fiction and by way of a legislative device only for the purpose of creating a liability on the partners of the firm, which in any case, they are liable under the law of partnership in India. But the definition of the word company including a partnership firm has been incorporated in the Explanation for the sake of convenience, as otherwise a similar provision would have to be inserted for the very same purposes. Instead of replicating the same definition for different kinds of juristic entities, the Parliament has thought it convenient to add an Explanation to define a company for the purpose of Section 141 of the Act in the context of an off ence committed by, inter alia, a company, as understood within the meaning of the Companies Act, 2026:KER:23934 Crl.M.C No.1736/2020 9 and also include a firm or other association of individuals within the definition of company. Similarly, under clause (b) of the explanation, the expression "director", in relation to a firm, means a partner in the firm.
9.7 This also demonstrates the fact that while a director is a separate persona in relation to a company, in the case of a partnership firm, the partner is not really a distinct legal persona. This is because a partnership firm is not really a legal entity separate and distinct as a company is from its directors but can have a legal persona only when the partnership firm is considered along with its partners. Thus, the partnership firm has no separate recognition either jurisprudentially or in law apart from its partners. Therefore, while a director of a company can be vicariously liable for an offence committed by a company, insofar as a partnership firm is concerned, when the offence is committed by such a firm, in substance, the offence is committed by the partners of the firm and not just the firm per se. Therefore the partners of the firm are liable for the dishonour of a cheque, even though the cheque may have been issued in the name of the firm and the offence is committed by the firm. Therefore, in law and in jurisprudence, when a partnership firm is proceeded against, in substance, the partners are liable and the said liability is joint and several and is not vicarious. This is unlike a company which is liable by itself and since it is an artificial juristic entity, the persons in charge of the affairs of the company or who conduct its business only become vicariously liable for the offence committed by the company. 9.8 However, jurisprudentially speaking, the partners of a partnership firm constitute the firm and a firm is a compendious term for the partners of a firm. This is opposed to the position of a director in a company which is a body corporate stricto sensu and such a company is a separate juristic entity vis-a-vis the directors. On the other hand, a partnership firm has no legal recognition in the absence of its partners. If a partnership firm is liable for the offence under Section 138 of the Act, it would imply that the liability would automatically extend to the partners of the partnership firm jointly and severally. This underlying distinction between a partnership firm and a company which is a body corporate has to be borne in mind while dealing with an offence committed by a company or a partnership firm, as the case may be, within the meaning of Section 138 read with Section 141 of the Act. To reiterate, in the case of a partnership firm, there is no concept of vicarious liability of the partners as such. The liability is joint and several because a partnership firm is the business of partners and one cannot proceed against only the firm without the partners being made liable. 9.9 Therefore, even in the absence of partnership firm being named as an accused, if the partners of the partnership firm are proceeded against, they being jointly and severally liable along with the partnership firm as well as inter se the partners of the firm, the complaint is still maintainable. The accused in such a 2026:KER:23934 Crl.M.C No.1736/2020 10 case would in substance be the partners of the partnership firm along with the firm itself. Since the liability is joint and several, even in the absence of a partnership firm being proceeded against by the complainant by issuance of legal notice as mandated under Section 138 of the Act or being made an accused specifically in a complaint filed under Section 200 of CrPC, (equivalent to Section 223 of the BNSS), such a complaint is maintainable.
9.10 Thus, when it is a case of an offence committed by a company which is a body corporate stricto sensu, the vicarious liability on the categories of persons mentioned in sub-section (1) and sub-section (2) of Section 141 of the Act accordingly would be proceeded against and liable for the offence under Section 138 of the Act. In the case of a partnership firm on the other hand, when the offence has been proved against a partnership firm, the firm per se would not be liable, but liability would inevitably extend to the partners of the firm inasmuch as they would be personally, jointly and severally liable with the firm even when the offence is committed in the name of the partnership firm. 9.11 To reiterate, when the partnership firm is only a compendious name for the partners of the firm, any offence committed under Section 138 read with Section 141 of the Act would make the partners of the firm jointly and severally liable with the firm. If, on the other hand, the Parliament intended that the partners of the firm be construed as separate entities for the purpose of penalty, then it would have provided so by expressly stating that the firm, as well as the partners, would be liable separately for the offence under Section 138 of the Act. Such an intention does not emanate from Section 141 of the Act as the offence proved against the firm would amount to the partners of the firm also being liable jointly and severally with the firm. Therefore, there is no separate liability on each of the partners unless sub-section (2) of Section 141 applies, when negligence or lack of bona fides on the part of any individual partner of the firm has been proved."
9. As far as the present case is concerned, the complaint contains the clear and categoric averment that the petitioner herein, in his capacity as authorised signatory to M/s. Unique International Logistics, had issued the cheque which was later on dishonoured. There is also specific averment in the complaint that the petitioner is responsible for the management and day to day affairs of the above 2026:KER:23934 Crl.M.C No.1736/2020 11 entity. It is true that the complainant has mistakenly referred M/s. Unique International Logistics as a company instead of a partnership firm as contended by the petitioner. But the mistake in the above regard cannot be taken as a reason to terminate the prosecution proceedings against the petitioner in view of the similarity in the status conferred upon the Director of a company and the partner of a partnership firm by virtue of explanation to Section 141 of the NI Act. In this context, it is pertinent to note that the petitioner, who is said to have issued the cheque for and on behalf of M/s. Unique International Logistics, had accepted the statutory notice issued by the complainant under Section 138 (b) of the NI Act. Thus, the offence under Section 138 is made out the moment when the petitioner failed to make payment of the cheque amount within 15 days from the date of receipt of that notice. In that view of the matter, the prayer of the petitioner to quash the proceedings pending before the Trial Court, cannot be allowed.
In the result, the petition is hereby dismissed.
(sd/-)
G. GIRISH, JUDGE
jsr/DST
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APPENDIX
PETITIONER ANNEXURES
ANNEXURE A TRUE COPY OF THE COMPLAINT IN S.T.NO.1073/17
BEFORE HON'BLE JUDICIAL FIRST CLASS
MAGISTRATE COURT, KAKKANAD DATED 04.12.2016.