Full Judgment Text
2025 INSC 729
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 4363 OF 2024
SHIVAPPA REDDY … APPELLANT
VERSUS
S. SRINIVASAN … RESPONDENT
J U D G M E N T
AUGUSTINE GEORGE MASIH, J .
1. Present Appeal is challenging the order dated 23.09.2023
passed by the Single Judge of the High Court of Karnataka
at Bengaluru, whereby the petition filed under Section 482
of the Code of Criminal Procedure, 1973 (hereinafter,
“CrPC”) challenging the proceedings arising out of a
complaint filed by the Appellant under Section 200 CrPC
for the offence punishable under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter, “NI Act”) has
Signature Not Verified
Digitally signed by
DEEPAK SINGH
Date: 2025.05.19
16:43:47 IST
Reason:
been allowed at the behest of Respondent-Accused No.4.
Criminal Appeal No. 4363 of 2024
Page 1 of 11
2. In brief, the facts leading to the filing of the petition before
the High Court were that the Appellant had filed a
complaint against M/s AVS Constructions - a Partnership
Firm (Accused No.1), and its partners i.e., S. Yuvaraju
(Accused No.2), S. Sundaraiah (Accused No.3 and S.
Srinivasan (Accused No.4) for dishonouring of twelve
₹
cheques of 50,00,000/- (Rupees Fifty Lakhs) each
aggregating ₹ 6,00,00,000/- (Six Crore) towards the refund
of sale consideration as issued by accused No.1 - M/s AVS
Constructions (hereinafter, “Partnership Firm”) being
signed by Accused No.2, the authorized signatory. The
cheques, upon presentation, stood dishonoured due to
‘stop payment’ instructions issued by the drawee.
3. After duly serving the Statutory notice upon the
Respondent and the other accused, when no amount was
received of the dishonoured cheques, a complaint under
Section 200 CrPC for an offence punishable under Section
138 of the NI Act was preferred. After recording the
preliminary evidence, summons was issued to the accused
Criminal Appeal No. 4363 of 2024
Page 2 of 11
on taking cognizance of the offence under Section 138 of
the NI Act.
4. At this stage, S. Srinivasan (Accused No.4) (Respondent
herein), preferred a petition under Section 482 CrPC before
the High Court, taking the plea that the proceedings
against the Respondent could not be continued as he had
ceased to be a partner of the Partnership Firm (Accused
No.1).
4A. It was asserted therein that in reply to the legal notice
which was served upon the Accused by the Appellant-
Complainant, Respondent-Accused No.4 brought to the
notice of the Appellant the fact that he had retired from
the Partnership Firm on 01.04.2015, and hence the
proceedings could not be sustained against him.
5. Upon notice being issued, the Appellant appeared and
filed his response wherein it was clearly stated that the
Statutory mandates as provided under Sections 32, 62 and
63 of the Indian Partnership Act 1932 (hereinafter,
“Partnership Act”) had not been complied with.
Criminal Appeal No. 4363 of 2024
Page 3 of 11
5A. The Appellant obtained a certified copy of Form-A on
27.08.2020, maintained by the Registrar of Firms, which
depicted that the Respondent is the partner of Partnership
Firm (Accused No.1). It was only after verifying the said
aspect that the legal notice was issued to the Respondent.
Allegations were also made that the Respondent, in an
attempt to escape his liability, had fabricated a backdated
retirement deed in connivance with the other accused and
got an entry made in the ledger of the Registrar of Firms
on 20.10.2020 that he had ceased to be a partner.
5B. It is asserted that this entry in the Register maintained by
the Registrar of Firms is subsequent to the date of
issuance of the cheques as also after the issuance of the
legal notice.
5C. Section 72 of the Partnership Act has also not been
complied with, which mandates and requires a retired
partner to publish a public notice in one of the vernacular
newspapers circulated in the district where the Firm is
located. No such document or publication had been
produced, nor any such public notice mentioned to have
Criminal Appeal No. 4363 of 2024
Page 4 of 11
been published in any newspaper in the reply filed to the
legal notice. The mandate of the Statute has not been
followed, and in the absence of public notice, the
Respondent cannot wriggle out of the liability as a partner
of the Firm.
5D. Another aspect which has been asserted is that after
cognizance was taken by the Court, an application under
Section 239 of the CrPC had been preferred by the
Respondent seeking discharge on the ground that he had
ceased to be a partner of the Partnership Firm (Accused
No.1). The Appellant had filed detailed objections to this
application.
5E. The Trial Court, after hearing both parties, dismissed the
application on merits vide order dated 01.09.2021. On
these grounds, the petition under Section 482, as
preferred by the Respondent, was opposed.
6. The learned Single Judge, on considering the submissions,
had allowed the petition. The Court observed that the
cheques had not been signed by the Respondent. Rather,
it is S. Yuvaraju (Accused No.2), who had issued the
Criminal Appeal No. 4363 of 2024
Page 5 of 11
cheques in his individual capacity and not as a partner of
the Partnership Firm (Accused No.1). It was held that
there was no legally enforceable debt against the
Respondent for which the cheques were issued. Further,
the High Court accepted the contention that it had been
established that the Respondent had ceased to be the
partner of the Firm on the date of issuance of the cheques,
and therefore could not be prosecuted for an offence under
Section 138 of the NI Act.
7. The Counsel for the Parties have argued their case on the
basis of the above pleadings and factual assertions.
8. On considering the submissions made by the Counsel for
the parties. It is apparent that the plea of the Respondent,
as has been accepted by the High Court vide impugned
order, regarding his claim of not being a partner of the
Partnership Firm (Accused No.1), in whose name and on
whose behalf the cheques have been issued, signed by S.
Yuvaraju (Accused No.2), an authorized signatory, does
not in any manner, foist liability upon the Respondent
Criminal Appeal No. 4363 of 2024
Page 6 of 11
herein needs to be tested on the anvil of the pleadings and
the Statutory requirements.
9. Since the Partnership Firm (Accused No.1) is a Firm
registered with the Registrars of Firms, the provisions of
the Partnership Act need to be referred to. A perusal of
Section 72 of the Partnership Act would show that notice
of retirement must be given to the Registrar of Firms under
Section 63 and by publication in the Official Gazette, and
in at least one vernacular newspaper circulated in the
district where the Firm to which it relates has its place or
principal place of business, such notice needs to be
published. This should relate to the retirement of a
partner, which includes admission, expulsion, or
resignation from the Firm in any manner that is including
or excluding a partner in a partnership Firm. Section 32 of
the Partnership Act deals with the retirement of a partner.
In addition, Section 62 of the Partnership Act deals with
the information to be submitted with regard to the change
in the names and addresses of the partners to the
Registrar of Firms. What, therefore, is mandated under the
Statute is that if any registered Firm intends to include or
Criminal Appeal No. 4363 of 2024
Page 7 of 11
exclude by way of resignation, expulsion or addition of any
partner in the Firm, an intimation to the said effect has to
be forwarded and conveyed to the Registrar of Firms. As
per Section 63, the Registrar shall make a record of the
notice in the entry relating to the Firm in the Register of
Firms and shall file a notice along with a statement
relating to the Firm as provided for under Section 59 of the
Partnership Act.
10. None of these requirements as provided and mandated for
under the Statute, have been adhered to by Respondent
No.1. Merely putting forth a resignation or the partners
entering into an agreement or drafting a deed or/and
accepting the resignation of a partner of the Firm is
insufficient for discharging the liability of a partner of the
Firm unless a proper entry to the said effect after the
publication has been given effect to with the same, having
been recorded in the Register of Firms in the office of the
Registrar of Firms as provided for in Section 63 of
Partnership Act.
Criminal Appeal No. 4363 of 2024
Page 8 of 11
11. Further, simply because the cheques were signed by S.
Yuvaraju (Accused No.2), who was the authorized
signatory of the Partnership Firm (Accused No.1), does not
discharge the liability of the Respondent. This is especially
so when in the complaint filed under Section 200 of the
CrPC by the Appellant, a categorical averment is made that
the Respondent along with the other two partners of the
Partnership Firm (Accused No.1) is involved in day-to-day
affairs of the said Firm. In the complaint, it has clearly
been pleaded that the Respondent-Accused No.4 was
present at the residence of Accused No.2 when the cheques
were signed. Further allegations are there to the effect that
Accused No.3 and Respondent Accused No.4 had stated
that they would ensure that the money is repaid. These
facts collectively demonstrate that the requirements under
Section 141 of the NI Act have been satisfied. Therefore,
the Respondent cannot escape from the liability
concerning the cheques which were issued by the
Respondent.
12. The findings, therefore, with regard to the Respondent
being no longer a partner of Partnership Firm (Accused No.
Criminal Appeal No. 4363 of 2024
Page 9 of 11
1) on the date of the issuance of the cheques is
unsustainable, as it is contrary to the mandate of the
Statute and prima facie the factual aspect.
13. All these aspects are mixed questions of fact and law
touching on the anvil of disputed questions calling for
proof by way of evidence, which cannot be gone into and
decided in a proceeding under Section 482 CrPC. Such
matters require the parties to lead evidence as per their
respective stands, and hence, calling for no interference by
the High Court. Without further going into the details of
the pleadings relatable to the facts, we are of the view that
the High Court has erred in law by exceeding its
jurisdiction while exercising its powers under Section 482
CrPC.
14. In view of the above, the present appeal is allowed. The
order dated 23.09.2023 passed by the High Court is
hereby set aside. Proceedings before ACMM, Bengaluru in
CC No.17788/2020 are restored. Trial Court is directed to
proceed in accordance with the law.
Criminal Appeal No. 4363 of 2024
Page 10 of 11
15. Any observations made in this order shall have no bearing
on the merits of the case in the trial, and the same, if any,
are restricted to the decision in the limited compass of the
jurisdictional sphere as exercised by the High Court.
16. Pending application(s), if any, stand disposed of.
……...……….……………………..J.
[ ABHAY S. OKA ]
……..………..……………………..J.
[ AUGUSTINE GEORGE MASIH ]
NEW DELHI;
MAY 19, 2025
Criminal Appeal No. 4363 of 2024
Page 11 of 11
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 4363 OF 2024
SHIVAPPA REDDY … APPELLANT
VERSUS
S. SRINIVASAN … RESPONDENT
J U D G M E N T
AUGUSTINE GEORGE MASIH, J .
1. Present Appeal is challenging the order dated 23.09.2023
passed by the Single Judge of the High Court of Karnataka
at Bengaluru, whereby the petition filed under Section 482
of the Code of Criminal Procedure, 1973 (hereinafter,
“CrPC”) challenging the proceedings arising out of a
complaint filed by the Appellant under Section 200 CrPC
for the offence punishable under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter, “NI Act”) has
Signature Not Verified
Digitally signed by
DEEPAK SINGH
Date: 2025.05.19
16:43:47 IST
Reason:
been allowed at the behest of Respondent-Accused No.4.
Criminal Appeal No. 4363 of 2024
Page 1 of 11
2. In brief, the facts leading to the filing of the petition before
the High Court were that the Appellant had filed a
complaint against M/s AVS Constructions - a Partnership
Firm (Accused No.1), and its partners i.e., S. Yuvaraju
(Accused No.2), S. Sundaraiah (Accused No.3 and S.
Srinivasan (Accused No.4) for dishonouring of twelve
₹
cheques of 50,00,000/- (Rupees Fifty Lakhs) each
aggregating ₹ 6,00,00,000/- (Six Crore) towards the refund
of sale consideration as issued by accused No.1 - M/s AVS
Constructions (hereinafter, “Partnership Firm”) being
signed by Accused No.2, the authorized signatory. The
cheques, upon presentation, stood dishonoured due to
‘stop payment’ instructions issued by the drawee.
3. After duly serving the Statutory notice upon the
Respondent and the other accused, when no amount was
received of the dishonoured cheques, a complaint under
Section 200 CrPC for an offence punishable under Section
138 of the NI Act was preferred. After recording the
preliminary evidence, summons was issued to the accused
Criminal Appeal No. 4363 of 2024
Page 2 of 11
on taking cognizance of the offence under Section 138 of
the NI Act.
4. At this stage, S. Srinivasan (Accused No.4) (Respondent
herein), preferred a petition under Section 482 CrPC before
the High Court, taking the plea that the proceedings
against the Respondent could not be continued as he had
ceased to be a partner of the Partnership Firm (Accused
No.1).
4A. It was asserted therein that in reply to the legal notice
which was served upon the Accused by the Appellant-
Complainant, Respondent-Accused No.4 brought to the
notice of the Appellant the fact that he had retired from
the Partnership Firm on 01.04.2015, and hence the
proceedings could not be sustained against him.
5. Upon notice being issued, the Appellant appeared and
filed his response wherein it was clearly stated that the
Statutory mandates as provided under Sections 32, 62 and
63 of the Indian Partnership Act 1932 (hereinafter,
“Partnership Act”) had not been complied with.
Criminal Appeal No. 4363 of 2024
Page 3 of 11
5A. The Appellant obtained a certified copy of Form-A on
27.08.2020, maintained by the Registrar of Firms, which
depicted that the Respondent is the partner of Partnership
Firm (Accused No.1). It was only after verifying the said
aspect that the legal notice was issued to the Respondent.
Allegations were also made that the Respondent, in an
attempt to escape his liability, had fabricated a backdated
retirement deed in connivance with the other accused and
got an entry made in the ledger of the Registrar of Firms
on 20.10.2020 that he had ceased to be a partner.
5B. It is asserted that this entry in the Register maintained by
the Registrar of Firms is subsequent to the date of
issuance of the cheques as also after the issuance of the
legal notice.
5C. Section 72 of the Partnership Act has also not been
complied with, which mandates and requires a retired
partner to publish a public notice in one of the vernacular
newspapers circulated in the district where the Firm is
located. No such document or publication had been
produced, nor any such public notice mentioned to have
Criminal Appeal No. 4363 of 2024
Page 4 of 11
been published in any newspaper in the reply filed to the
legal notice. The mandate of the Statute has not been
followed, and in the absence of public notice, the
Respondent cannot wriggle out of the liability as a partner
of the Firm.
5D. Another aspect which has been asserted is that after
cognizance was taken by the Court, an application under
Section 239 of the CrPC had been preferred by the
Respondent seeking discharge on the ground that he had
ceased to be a partner of the Partnership Firm (Accused
No.1). The Appellant had filed detailed objections to this
application.
5E. The Trial Court, after hearing both parties, dismissed the
application on merits vide order dated 01.09.2021. On
these grounds, the petition under Section 482, as
preferred by the Respondent, was opposed.
6. The learned Single Judge, on considering the submissions,
had allowed the petition. The Court observed that the
cheques had not been signed by the Respondent. Rather,
it is S. Yuvaraju (Accused No.2), who had issued the
Criminal Appeal No. 4363 of 2024
Page 5 of 11
cheques in his individual capacity and not as a partner of
the Partnership Firm (Accused No.1). It was held that
there was no legally enforceable debt against the
Respondent for which the cheques were issued. Further,
the High Court accepted the contention that it had been
established that the Respondent had ceased to be the
partner of the Firm on the date of issuance of the cheques,
and therefore could not be prosecuted for an offence under
Section 138 of the NI Act.
7. The Counsel for the Parties have argued their case on the
basis of the above pleadings and factual assertions.
8. On considering the submissions made by the Counsel for
the parties. It is apparent that the plea of the Respondent,
as has been accepted by the High Court vide impugned
order, regarding his claim of not being a partner of the
Partnership Firm (Accused No.1), in whose name and on
whose behalf the cheques have been issued, signed by S.
Yuvaraju (Accused No.2), an authorized signatory, does
not in any manner, foist liability upon the Respondent
Criminal Appeal No. 4363 of 2024
Page 6 of 11
herein needs to be tested on the anvil of the pleadings and
the Statutory requirements.
9. Since the Partnership Firm (Accused No.1) is a Firm
registered with the Registrars of Firms, the provisions of
the Partnership Act need to be referred to. A perusal of
Section 72 of the Partnership Act would show that notice
of retirement must be given to the Registrar of Firms under
Section 63 and by publication in the Official Gazette, and
in at least one vernacular newspaper circulated in the
district where the Firm to which it relates has its place or
principal place of business, such notice needs to be
published. This should relate to the retirement of a
partner, which includes admission, expulsion, or
resignation from the Firm in any manner that is including
or excluding a partner in a partnership Firm. Section 32 of
the Partnership Act deals with the retirement of a partner.
In addition, Section 62 of the Partnership Act deals with
the information to be submitted with regard to the change
in the names and addresses of the partners to the
Registrar of Firms. What, therefore, is mandated under the
Statute is that if any registered Firm intends to include or
Criminal Appeal No. 4363 of 2024
Page 7 of 11
exclude by way of resignation, expulsion or addition of any
partner in the Firm, an intimation to the said effect has to
be forwarded and conveyed to the Registrar of Firms. As
per Section 63, the Registrar shall make a record of the
notice in the entry relating to the Firm in the Register of
Firms and shall file a notice along with a statement
relating to the Firm as provided for under Section 59 of the
Partnership Act.
10. None of these requirements as provided and mandated for
under the Statute, have been adhered to by Respondent
No.1. Merely putting forth a resignation or the partners
entering into an agreement or drafting a deed or/and
accepting the resignation of a partner of the Firm is
insufficient for discharging the liability of a partner of the
Firm unless a proper entry to the said effect after the
publication has been given effect to with the same, having
been recorded in the Register of Firms in the office of the
Registrar of Firms as provided for in Section 63 of
Partnership Act.
Criminal Appeal No. 4363 of 2024
Page 8 of 11
11. Further, simply because the cheques were signed by S.
Yuvaraju (Accused No.2), who was the authorized
signatory of the Partnership Firm (Accused No.1), does not
discharge the liability of the Respondent. This is especially
so when in the complaint filed under Section 200 of the
CrPC by the Appellant, a categorical averment is made that
the Respondent along with the other two partners of the
Partnership Firm (Accused No.1) is involved in day-to-day
affairs of the said Firm. In the complaint, it has clearly
been pleaded that the Respondent-Accused No.4 was
present at the residence of Accused No.2 when the cheques
were signed. Further allegations are there to the effect that
Accused No.3 and Respondent Accused No.4 had stated
that they would ensure that the money is repaid. These
facts collectively demonstrate that the requirements under
Section 141 of the NI Act have been satisfied. Therefore,
the Respondent cannot escape from the liability
concerning the cheques which were issued by the
Respondent.
12. The findings, therefore, with regard to the Respondent
being no longer a partner of Partnership Firm (Accused No.
Criminal Appeal No. 4363 of 2024
Page 9 of 11
1) on the date of the issuance of the cheques is
unsustainable, as it is contrary to the mandate of the
Statute and prima facie the factual aspect.
13. All these aspects are mixed questions of fact and law
touching on the anvil of disputed questions calling for
proof by way of evidence, which cannot be gone into and
decided in a proceeding under Section 482 CrPC. Such
matters require the parties to lead evidence as per their
respective stands, and hence, calling for no interference by
the High Court. Without further going into the details of
the pleadings relatable to the facts, we are of the view that
the High Court has erred in law by exceeding its
jurisdiction while exercising its powers under Section 482
CrPC.
14. In view of the above, the present appeal is allowed. The
order dated 23.09.2023 passed by the High Court is
hereby set aside. Proceedings before ACMM, Bengaluru in
CC No.17788/2020 are restored. Trial Court is directed to
proceed in accordance with the law.
Criminal Appeal No. 4363 of 2024
Page 10 of 11
15. Any observations made in this order shall have no bearing
on the merits of the case in the trial, and the same, if any,
are restricted to the decision in the limited compass of the
jurisdictional sphere as exercised by the High Court.
16. Pending application(s), if any, stand disposed of.
……...……….……………………..J.
[ ABHAY S. OKA ]
……..………..……………………..J.
[ AUGUSTINE GEORGE MASIH ]
NEW DELHI;
MAY 19, 2025
Criminal Appeal No. 4363 of 2024
Page 11 of 11