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Ashish Singla 098140 76600 (Cheque Victim's Lawyer. LUDHIANA (PB))     18 October 2013

No claim against proprietor u/s 138


In on of my case complainant made out party to authorized signatory of cheque (only signing authority on behlf of firm) in his individual name as well as same authorized signatory on behalf of firm also. Court also summoned  same person on behalf of both. original proprietor is not involved anywhere by complainant or by court.

1. What is fate of actual accused(signatory) ?

2. What is the fate of actual proprietor?

3. Any supreme court decision on same situation?



 8 Replies

H. S. Thukral (Lawyer)     18 October 2013

A complaint under section 138/142 of NIA against a partner or director is not maintainable without impleading the firm or the company because their liability is vicarious. ( Aneeta Hada  SC  of 2012)  However a complaint against a proprietor is maintainable either in the name of proprietor  or the proprietorship firm. If the complaint is in the name of proprietor, it should be mentioned as proprietor of the firm.   

T. Kalaiselvan, Advocate (Advocate)     18 October 2013

Advocate Mr. Thukral is right. U/s 138 of NI Act, the complaint is to be made against the company or the proprietor of the company.  A mere signature in the cheque leaf by the company's representative/authorised signatory cannot be made him to be responsible for the offence committed by the company.

R Trivedi (     18 October 2013

S.141 is applicable for companies, partnership firms etc but not to proprietorship firm.


So with due pleadings in case of companies etc along with the company, almost everyone can be made accused that means directors, partners, managers, secretary etc..


But in case of proprietorship firm, even if the cheque is signed by some authorized signatory, the proprietor has to be made as accused, no one other than proprietor can be made accused. 

1 Like

Ashish Singla 098140 76600 (Cheque Victim's Lawyer. LUDHIANA (PB))     20 October 2013

Trivedi Ji,

Can you please advice me some judgement of SC in regard to your above said opinion (In proprietorship firm's authorized signatory case) 

R Trivedi (     21 October 2013

There is a small catch since accused signed the cheque on behalf of the firm, under such circumstances the proprietor must have given some authority letter to the Bank to give this power to some one else (that is accused).


S.141 clearly not applicable to proprietorship firms, there are many orders on these lines, please see the Andhra High Court order in "Dr. V. Bala Raju vs 1.M/S Pashak Feeds Pvt Ltd., on 1 October, 2004" if this can be of any help.


You may have to refer to The Indian Contract Act also, which makes the granter liable for the acts of agent, so ideally above ruling coupled with the Indian Contract Act, rules out accusation to non proprietor signatory of the cheque.


But other party can argue that Bank account is managed by the accused, on behalf of proprietor, you can cite above two and also the fact that account is infact managed by accused but it is not his account and prop should be solely responsible for the same as vicarious liability does not come into picture. Your case would have been simple if he was just managing the affairs, signing the cheque is more than that.


There are few orders in which proprietorship firm is removed from the accused as being no legal entity, so ideally only proprietor should be the accused, the name of agent or manager comes only after non juristic accused. These are few argument lines which may support you, approach HC under S.482, as I am afraid trial court may not grant any relief.

B.N.R.Sheshu (Advocate)     02 February 2018

hellow every body,

can propritor individually and propritoryship are the same. amount lent in individual capacity and complainat U/s 138 of NI Act on behalf of his properitry firm as the cheque is in favour of firm. is there any privity of contract. please clarify.   

Vikas Hedau (Advocate)     04 February 2018

I dont have upreme court judgement but have high court judgemnt on same legal question

Dinesh (advocate)     23 July 2019

I would like to know what would be the case in vice versa, where the proprietor firm on record gives a loan to an individual but the individual files a 138 not shown as a proprietor against the accused. Will the 138 lie against the accused when the proprietor files a complaint as an individual and not as a proprietor firm ?

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