Delhi HC: Non-impleadment of Firm in Cheque Bounce Case is a Curable Defect
In a notable ruling, the Delhi High Court has held that not naming a partnership firm as an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act (NI Act) is a curable defect, not a fatal flaw. The Court permitted the complainant to amend the complaint to include the firm, subject to costs.
Justice Amit Mahajan dismissed a plea by Himanshu, a partner at A & A Enterprises, who sought to quash criminal proceedings initiated against him for two dishonoured cheques issued in favour of TCNS Clothing Co. Ltd.
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The Case Background
The dispute arose from a 2012 Franchisee Agreement between TCNS Clothing and A & A Enterprises. The firm allegedly owed ?38.11 lakh, for which two cheques—?10 lakh and ?27.5 lakh—were issued. Both were dishonoured for “insufficient funds.”
TCNS Clothing sent a legal notice in January 2019, but with no payment made, it filed a complaint against Himanshu, naming him as the proprietor of A & A Enterprises. The trial court took cognizance and issued summons, prompting Himanshu to approach the High Court.
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Petitioner’s Arguments
Himanshu’s counsel argued:
A & A Enterprises is a partnership firm, not a proprietorship.
The firm itself, which issued the cheques, was not made an accused—violating the principle laid down in Aneeta Hada v. Godfather Travels.
The statutory notice was addressed to him personally, not the firm.
He neither signed nor issued the cheques.
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Respondent’s Stand
TCNS Clothing countered that:
Himanshu had represented himself as the sole proprietor.
The demand notice was validly served, including by email.
Non-impleadment of the firm was a technical irregularity, which could be corrected without affecting the case.
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Court’s Reasoning
Justice Mahajan acknowledged that as per Aneeta Hada, a firm/company must ordinarily be arraigned as an accused for liability to extend to its partners/directors. However, relying on UP Pollution Control Board v. Modi Distillery and S.R. Sukumar v. Sunaad Raghuram, the Court held that procedural lapses that are curable should not derail justice.
Since the trial had not yet begun, the Court found no prejudice in allowing the amendment. It stressed that dismissing the case on this ground alone would amount to “defeating the object of Section 138 NI Act on a mere technicality.”
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The Verdict
The Court dismissed Himanshu’s petition but allowed TCNS Clothing to amend its complaint to include the partnership firm as an accused. Given the delay since 2019, the Court imposed ?35,000 costs on the complainant.
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Takeaway: The ruling underscores that while proper impleadment of a firm or company is necessary in cheque dishonour cases, courts may allow corrections to prevent justice from being lost to technical lapses.
