Vicarious Liability Under Section 141 NI Act Cannot Be Invoked Against an Authorised Signatory Alone Without Arraigning the Company: Punjab & Haryana High Court
Case Name: Ranjit Singh v. Sezal
Date of Judgment: 24 July 2026
Citation: CRM-M-55369-2023
Bench: Hon’ble Mrs. Justice Manisha Batra
Held: The Punjab & Haryana High Court held that where a cheque is drawn on the account of a Limited Liability Partnership (LLP), the LLP is the principal offender under Sections 138 and 141 of the Negotiable Instruments Act, 1881. Consequently, criminal prosecution against a designated partner or authorised signatory alone is not maintainable unless the LLP itself is arraigned as an accused, except in cases where prosecuting the LLP is legally impossible. Since the complaint neither impleaded the LLP nor disclosed any independent legally enforceable personal liability of the petitioner, the proceedings were held to be legally unsustainable.
Summary: The petition challenged a complaint instituted under Sections 138 and 142 of the Negotiable Instruments Act, 1881, together with the summoning order issued against the petitioner in relation to the dishonour of a cheque for ₹3,25,000. The complainant alleged that the petitioner had borrowed the amount in connection with a business transaction and issued the cheque towards discharge of the liability, which was subsequently dishonoured for insufficiency of funds. The petitioner, however, contended that the cheque had not been issued in his personal capacity but had been drawn on the bank account of Spacium Store LLP, where he functioned merely as a designated partner and authorised signatory. Despite this admitted position, the complainant chose to prosecute only the petitioner without impleading the LLP as an accused.
Examining the statutory scheme under Sections 138 and 141 of the Negotiable Instruments Act, the High Court reiterated that criminal liability of directors, partners or authorised signatories is purely vicarious and can arise only when the company or LLP, being the principal offender, is itself before the Court. Placing reliance upon the three-Judge Bench decision in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., along with National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, K.K. Ahuja v. V.K. Vora, S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, Anil Gupta v. Star India Pvt. Ltd., and Bijoy Kumar Moni v. Paresh Manna, the Court observed that Section 141 creates only a statutory fiction of vicarious liability and does not create an independent substantive offence against officers or signatories.
The Court further found that the complaint itself disclosed that the cheque belonged to the LLP and contained no specific averments establishing any legally enforceable personal liability of the petitioner. In these circumstances, the non-impleadment of the LLP struck at the very root of the maintainability of the complaint, rendering the prosecution against the petitioner alone legally impermissible.
Decision: Allowing the petition under Section 482 Cr.P.C., the Punjab & Haryana High Court quashed Complaint, the summoning order and all consequential proceedings against the petitioner, holding that the prosecution was fundamentally defective as the LLP—the principal offender under Section 141 of the Negotiable Instruments Act—had not been arraigned as an accused.