Partners of a partnership firm face joint and several liability for dishonored cheques under Section 138 of the Negotiable Instruments Act, 1881, and cannot claim the same vicarious liability protections applicable to directors of a company, as a partnership firm possesses no distinct legal identity.

1. Whether Reporters of Local newspapers may be allowed to see the Judgment? : Yes

2. Whether the copies of judgment may be Marked to Law Reporters/Journals? : Yes

3. Whether His Lordship wishes to see the fair copy of the Judgment? : Yes

Counsel for the petitioners: Mr. A. Chandra Shaker, learned Counsel for the petitioner.

Counsel for respondents: Mr. M.Vivekananda Reddy, learned

Assistant Public Prosecutor, appearing

for respondent No.1 -State.

Mr. Ravinder Sharma, learned counsel for

Respondent No.2.

Cases referred

1. 2013 SCC OnLine SC 522;

2. 2022 SCC OnLine SC 579;

3. 2022 SCC OnLine SC 579;

4. 2026 INSC 324 ; and

5. (2025) 7 SCC 623;

COMMON ORDER:

Since the legal issue arising for consideration in both Criminal Petitions is identical and substantially interconnected, both matters are being heard together and are being disposed of by this common order.

Criminal Petition No.10115 of 2023

2. This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure seeking quashment of the proceedings in S.T.C. No.3717 of 2022 pending on the file of the learned X Metropolitan Magistrate, Hyderabad. The petitioners herein are arrayed as Accused Nos.3 and 4 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, “the N.I. Act”).

Criminal Petition No.10533 of 2023

3. This Criminal Petition seeks quashment of the proceedings in S.T.C. No.3141 of 2022 pending on the file of the learned VIII Metropolitan Magistrate, Hyderabad. The petitioners are similarly arrayed as Accused Nos.3 and 4 for the offence punishable under Section 138 of the N.I. Act.

4. Heard Mr. A. Chandra Shaker, learned counsel appearing for the petitioners, and Mr. M. Vivekananda Reddy, learned Assistant Public Prosecutor appearing for respondent No.1-State. Learned counsel appearing for respondent No.2/complainant was also heard.

Facts in Criminal Petition No.10115 of 2023

5. The case of the complainant is that goods were supplied on credit by the complainant to M/s. Patidar Woodtech Private Limited upon the assurances allegedly given by Accused No.2, Mr. Shantilal Patel, acting on behalf of Accused No.1 firm, namely M/s. Patidar Timber & Plywoods. It is further alleged that a letter of guarantee dated 20.01.2020 was executed on behalf of Accused No.1 firm and that three additional post-dated cheques for Rs.25,00,000/- each were furnished as security, authorising the complainant to present the same in the event of default in payment of the outstanding dues. Upon presentation, the cheques were dishonoured by the banker. Thereafter, the complainant issued the statutory demand notice contemplated under Section 138(b) of the N.I. Act. As the cheque amounts remained unpaid within the prescribed period, a private complaint came to be instituted against the firm and its partners, including the present petitioners.

Facts in Criminal Petition No.10533 of 2023

6. In this case, respondent No.2/complainant alleges that, at the request of Accused No.2, a partner of Accused No.1 firm, a hand loan of Rs.20,00,000/- was advanced through RTGS transactions on 14.03.2019 and 15.03.2019. According to the complainant, Accused No.1 firm agreed to repay the said amount and, towards discharge of the liability, issued four post-dated cheques of Rs.5,00,000/- each dated 20.01.2022. On default and presentment, the cheques were dishonoured on 09.03.2022. A statutory notice was thereafter issued under Section 138(b) of the N.I. Act. Since the accused failed to comply with the demand within the stipulated period, the complainant initiated prosecution under Section 138 of the N.I. Act.

Submissions on Behalf of the Petitioners

7.1. Learned counsel for the petitioners contended that the petitioners are neither the signatories nor the drawers of the dishonoured cheques. It