Allahabad High Court
Nilesh Kumar Varshney vs State Of U.P. And Another on 17 September, 2025
HIGH COURT OF JUDICATURE AT ALLAHABAD
Neutral Citation No. - 2025:AHC:166325
HIGH COURT OF JUDICATURE AT ALLAHABAD
APPLICATION U/S 528 BNSS No. - 21340 of 2025 (Leading Application)
Nilesh Kumar Varshney
.....Applicant(s)
Versus
State of U.P. and Another
.....Opposite Party(s)
Counsel for Applicant(s)
:
Anil Kumar
Counsel for Opposite Party(s)
:
G.A.
with
APPLICATION U/S 528 BNSS No. - 21541 of 2025 (Connected C1 Application)
Nilesh Kumar Varshney
.....Applicant(s)
Versus
State of U.P. and Another
.....Opposite Party(s)
Counsel for Applicant(s)
:
Anil Kumar
Counsel for Opposite Party(s)
:
G.A.
with
APPLICATION U/S 528 BNSS No. - 22409 of 2025 (Connected C2 Application)
Nilesh Kumar Varshney
.....Applicant(s)
Versus
State of U.P. and Another
.....Opposite Party(s)
Counsel for Applicant(s)
:
Anil Kumar
Counsel for Opposite Party(s)
:
G.A.
with
APPLICATION U/S 528 BNSS No. - 22483 of 2025 (Connected C3 Application)
Nilesh Kumar Varshney
.....Applicant(s)
Versus
State of U.P. and Another
.....Opposite Party(s)
Counsel for Applicant(s)
:
Anil Kumar
Counsel for Opposite Party(s)
:
G.A.
Court No. - 75
HON'BLE VIKAS BUDHWAR, J.
1. Heard Shri Anil Kumar, learned counsel for the applicant and Shri S.K. Singh, learned AGA for the State.
2. The facts of the leading application are that a complaint stood lodged by the opposite party no. 2 against the applicant arraigning him as accused no. 2 being Nilesh Kumar Varshney son of Surendra Kumar Varshney proprietor Nilesh and Company and Hemant Singhal while alleging him to be the authorised signatory/ representative of Nilesh and Company with an allegation that for the discharge of the liability, Nilesh and Company, the co-accused Hemant Singhal had drawn a cheque bearing No. 065904 of Rs. 2,18596/- in favour of the opposite party no. 2 which on presentation in the bank, which came to be dishonoured on 11.06.2019, followed by a statutory demand notice was issued on 24.06.2019, followed by a complaint under Section 138 of the N.I. Act on 18.07.2019, pursuant whereto the applicant and the co-accused, Hemant Singhal came to be summoned on 19.10.2019 in Complaint Case No. 1924 of 2019 under Section 138 of the N.I. Act. It is also contended that the applicant obtained bail on 31.10.2020 and thereafter preferred an application on 15.01.2025 for dropping of the proceedings which came to be rejected on 20.03.2025.
3. On 28.07.2025, notices were issued to the opposite party no. 2. There is an office report dated 03.09.2025 that the notice has been served upon the opposite party no. 2 personally. However, till the dictation of the order, nobody is present on behalf of the opposite party no. 2.
4. As regards, the connected C1 application that on 18.07.2019 a complaint stood lodged by the opposite party no. 2 against the applicant arraigning him as accused no. 2 being Nilesh Kumar Varshney son of Surendra Kumar Varshney proprietor Nilesh and Company and Hemant Singhal while alleging him to be the authorised signatory/ representative of Nilesh and Company with an allegation that with respect to discharge of the liability, a cheque bearing No. 065892 of Rs. 2,18596/- came to be drawn in favour of the opposite party no. 2 who happens to be the proprietorship firm and as per the allegations, the said cheque came to be dishonoured on 13.06.2019, followed by a statutory demand notice was issued on 24.06.2019, followed by a complaint under Section 138 of the N.I. Act on 18.07.2019, pursuant whereto the applicant and the co-accused came to be summoned on 19.10.2019 in Complaint Case No. 1925 of 2019 under Section 138 of the N.I. Act. It is also contended that the applicant obtained bail on 31.10.2020 and thereafter preferred an application for dropping of the proceedings which came to be rejected on 20.03.2025.
5. With respect to connected C2 application, the complaint stood lodged by the opposite party no. 2 against the applicant and other co-accused wherein description of the accused is the same as it is in the leading application and the connected application with a slight modification that a cheque bearing No. 065893 dated 22.04.2019 came to be drawn in the name of the sole proprietorship firm of the opposite party no. 2 which on presentation in the bank came to be dishonoured on 31.05.2019, followed by a statutory demand notice was issued on 10.06.2019, followed by a complaint under Section 138 of the N.I. Act on 09.07.2019, pursuant whereto the co-accused, Hemant Singhal came to be summoned on 12.10.2019 in Complaint Case No. 1793 of 2019 under Section 138 of the N.I. Act in which the co-accused, Hemant Singhal came to be summoned against a criminal revision No. 158 of 2019 came to be preferred wherein the matter was directed to be remitted back to the court below and on 21.09.2020, the applicant herein alongwith co-accused, Hemant Singhal were summoned and an application came to be preferred for dropping of the proceedings on 15.01.2025 which came to be rejected on 20.03.2025. It is also contended that the applicant obtained bail.
6. On 17.07.2025, notices were issued to the opposite party no. 2. There is an office report dated 16.09.2025 that the notice has been served upon the opposite party no. 2. However, till the dictation of the order, nobody is present on behalf of the opposite party no. 2.
7. With regard to the connected C3 application, that on 09.07.2019 a complaint stood lodged by the opposite party no. 2 against the applicant arraigning him as accused no. 2 being Nilesh Kumar Varshney son of Surendra Kumar Varshney proprietor Nilesh and Company and Hemant Singhal while alleging him to be the authorised signatory/ representative of Nilesh and Company with an allegation that with respect to discharge of the liability, a cheque bearing No. 065903 dated 12.03.2019 of Rs. 5,00,000/- came to be drawn in favour of the opposite party no. 2 who happens to be the proprietorship firm and as per the allegations, the said cheque came to be dishonoured on 29.05.2019, followed by a statutory demand notice was issued on 10.06.2019, followed by a complaint under Section 138 of the N.I. Act on 09.07.2019, pursuant whereto the applicant and the co-accused came to be summoned on 12.09.2019 in Complaint Case No. 1792 of 2019 under Section 138 of the N.I. Act. The accused, Hemant Singhal was summoned, a criminal revision no. 159 of 2019 was preferred by the opposite party no. 2 wherein summoning was set aside and on 21.09.2020, the applicant and co-accused have been summoned under Section 138A of the Act. It is also contended that the applicant obtained bail on 30.05.2022 and thereafter preferred an application for dropping of the proceedings which came to be rejected on 20.03.2025.
8. This entertained the application, notices were issued to the opposite party no. 2. However, till the dictation of the order, nobody is present on behalf of the opposite party no. 2, despite service as per the office report dated 05.08.2025
9. Challenging the summoning orders, the applicant has been filed the leading and connected C1, C2 & C3 applications.
10. Learned counsel for the applicant has submitted that the summoning orders cannot be sustained for the simple reason that in the leading and connected C1, C2 & C3 applications, cheques have been drawn on behalf of the Nilesh and Company by the co-accused, Hemant Singhal and not by the applicant, thus, no offence is made out against the applicant under Section 138 of the Act, particularly, when the applicant is not the signatory of the said cheques. Submission is that earlier Nilesh and Company was registered with the name of the applicant, however, the registration was cancelled on 28.07.2018 and on 20.09.2018, the same was registered in the name of the co-accused, Hemant Singhal. He further submits that the cheque which has been issued is from the bank account which is opened by Hemant Singhal showing himself to be the proprietor of the Nilesh and Company and further a first information report no. 21 of 2025 has been lodged against the father of the applicant and Hemant Singhal alleging therein that there was a criminal breach of trust committed by M/s. Nilesh and Company in which after investigation the father of the applicant was exonerated on the ground that prior to 18.07.2018, the proprietor was the applicant who was doing business and thereafter the co-accused, Hemant Singhal became the sole proprietor.
11. Learned counsel for the applicant has relied upon the judgment of the Hon'ble Apex Court in Aparna A. Shah Vs. Seth Developers Pvt. Ltd. and Another reported in (2013) AIR (SC) 3210 so as to contend that once the applicant is not the signatory of the cheque then any offences under Section 138 of the Act would lie against the applicant.
12. Learned AGA on the other hand submits that the question whether on the date of the issuance of the cheque the applicant was a sole proprietor of the firm Nilesh and Company or not is a disputed question of fact and the same subject matter of trial.
13. I have heard learned counsel for the parties and gone through the records carefully.
14. The sole question which arises for determination in the present proceedings is to the extent of judicial intervention. Apparently, complaint came to be lodged in the leading application & connected C1 application on 18.07.2019 and in the connected C2 & C3 on 09.07.2018 with respect to dishonour of cheque. In the leading and connected C1 to C3 applications, the cheques have been drawn on behalf of the Nilesh and Company though signed by Hemant Singhal. In the complaint in the leading, connected C1, C2 & C3 applications, the applicant had been arraigned as an accused no. 2 being the propreitor of Nilesh and Company and whereas the Hemant Singhal as the signatory/ representative of Nilesh and Company.
15. Even as per the document appended in the leading application at page 47 happens to be a downloaded under the signature of Commercial Tax Officer, Mahamaya Nagar Sector-02, CTO with the title, order of cancellation of registration address to the applicant herein wherein the cancellation of the registration is dated 28.07.2018 and at page 49, there happens to be a document of letter of Deputy Commissioner Commercial Tax, Khand-02, Hathras dated 29.11.2022 addressed to the Sub-Inspector, police station- Gate Hathras mentioning therein that the owner of the firm is Hemant Singhal and also a document which is at page 51 of the paperbook being a photocopy of the letter written by the IDBI Bank Ltd. to police station- Gate Hathras that the proprietor of M/s. Nilesh and Company is Hemant Singhal and again was opened and transaction was done on 18.09.2019. Further in para-12 & 18 of the leading application, the following has been averred:
"12. That, applicant filed an application on 15.01.2025 stating therein that, opposite party no. 2 with malafide intention made party along with co-accused Hemant Singhal as no cheque was given by the applicant to the opposite party no. 2 and no money due upon him of the opposite party no. 2. It is further stated that, applicant has no concern with Hemant Singhal, it is also relevant to mention here that, there is no signature of the applicant on the cheque or bank account of the applicant. It is also relevant to mention here that, the cheque in dispute is issued by Hemant Singhal, who is alleged proprietor of Bogus firm Nilesh and Company on the name of closed firm of Nilesh and company and aforesaid account in IDBI bank was opened by Hemant Singhal, and GST registration was obtain showing himself proprietor of the firm. A true copy of the application dated 15.01.2025 is being filed herewith and marked as Annexure no. 6 to this affidavit.
18. That, a first information report numbered as Case Crime No. 49 of 2021 is lodged against the father of the applicant and Hemant Singhal, alleging therein that, criminal breach of trust was committed by the M/s Neelesh and Company in which after the investigation, investigating officer exonerated the father of the applicant, on the ground that, from 18.07.2018 its earlier proprietor (applicant) was not doing any business and co-accused Hemant Singhal was doing business. A true copy of the first information report and C.D. 15 and Charge sheet dated 01.12.2021 are collectively being filed herewith and marked as Annexure no. 12 to this affidavit."
16. A bare look of the stand taken by the applicant would reveal that the applicant claims to be the erstwhile proprietor of the firm in question and thereafter according to him, now the co-accused, Hemant Singhal has become the proprietor of the firm. As a matter of fact, this Court in the present proceedings at the stage of issuance of the summoning order is not required to record a conclusive finding as to what is the status of the applicant i.e. whether he is proprietor or not on the date when the cheques stood drawn.
17. In any view of the matter, there is no difference between the sole proprietor and the sole proprietorship, they are one and the same.
18. In Abhishek Jain v. State of U.P. in Application U/S 482 No. 27006 of 2015, decided on 15.12.2023, it was observed as under:
"16. From the aforesaid observations made by the Apex Court, it is crystal clear that if the cheque is issued in the name of a firm, whether proprietorship or partnership firm, the proprietor or the partner as the case may be, becomes the holder in due course and he can sue in his own name and it is not necessary for him to sue in a trading name, though others can sue such firm in the trading name. Therefore, the instant complaint filed by the opposite party no.2, claiming himself to be a proprietor of the said firm in whose name the said cheque is issued by the applicant herein, in the considered opinion of this Court, complaint is maintainable. Even if the contention of applicant be accepted that the said Raj Rajeshwari Enterprises is a partnership and not a proprietorship firm, it will not help the applicant herein as even the partnership firm does not have a different legal identity and is not a juristic person. Therefore, a partner of the firm also becomes the holder in due course of the cheque within the meaning of Section 142 (1) of the N.I. Act. Thus, the complaint even on behalf of the partner of a firm in his own name is maintainable. Otherwise, also in the instant case, the applicant does not dispute that the cheque was issued in the name of the said Raj Rajeshwari Enterprises and the said cheque was dishonoured and demand notice was issued by the opposite party no.2, he has failed to comply with the said notice. Therefore, in view of the presumption under Section 139 of the N.I. Act and as per the law laid down by the Apex Court, this Court does not find any good ground to interfere in the instant case in exercise of jurisdiction under Section 482 Cr.P.C."
19. Further the Hon'ble Apex Court had the occasion to consider the status of the partners in the partnership firm and In Dhanasingh Prabhu vs. Chandrasekar & another, Criminal Appeal No. Nil of 2025 (arising out of Special Leave Petition (Criminal) No.5706 of 2024), in paragraphs-9.6 to 9.11, the Hon'ble Apex Court has observed as under:-
"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 offence committed by, inter alia, a company, as understood within the meaning of the Companies Act, 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--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 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."
20. Importantly, at the stage of summoning this court is not required to throtle the proceedings, particularly, when the summoning orders are dated 19.10.2019 in leading, connected C1, C2 & C3 applications. Once the applicant has already obtained bail then it is for them to contest the matter before the trial court while taking all legal and factual grounds including the grounds that they are associated with the firm on whose behalf the cheque had been drawn. Moreover, it would not be appropriate for this Court post summoning after 5-6 years to interfere.
21. Accordingly, the interference is declined, the application stands disposed of.
22. Leaving it open to the applicant to raise legal and factual grounds while contesting the trial.
(Vikas Budhwar,J.)
September 17, 2025
A. Prajapati
