Beacon Industries, Rep. By Its Partner, Bangalore v. Anupam Ghosh

Ramanna, J.:—

This revision petition is filed by Beacon Industries against the order dated 18.11.2001 passed by the XII Addl. C.M.M, Bangalore, in a private complaint under Section 200 Cr. P.C for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

2. The case of the revision petitioner is that the it is a partnership firm, represented by its partner, filed a complaint against the respondent for bouncing of a cheque. After receipt of the complaint filed by the revision petitioner the Trial Court, after hearing the arguments, dismissed the complaint by holding that there is a bar under Section 69 of the Partnership Act and that an unregistered firm cannot prosecute any person or a firm.

3. Heard the arguments of both parties and perused the records. In this behalf the learned Counsel for the revision petitioner submitted that filing of a complaint by the partner of an unregistered firm is not a bar but it cannot file a civil suit. Therefore, the dismissal of the complaint at the threshold by the Trial Court is totally illegal and incorrect. In this regard the learned Counsel for the revision petitioner relied on a decision reported in Kerala Arecanut Stores v. Ramkishore and Sons . AIR 1975 KERALA 144. wherein the Division Bench of that Court held that “the right of action available to an indorsee of a cheque who comes to hold the cheque in due course is based upon conferment on him by the statutory provisions contained in the Negotiable Instruments Act the right to sue the make of the cheque and also the indorser. The right sought to be enforced does not arise from a contract therefore the bar under Section 69(2) will not operate in such a case.”

4. On the other hand the learned Counsel for the respondent submitted that there is a specific bar under Section 69 of the Partnership Act that a private complaint filed by the partner of the unregistered firm is not at all maintainable and that the Trial Court has rightly dismissed the complaint. In support of his contention the learned Counsel for the respondent relied a decision reported in Mr. Amit Desai v. Shine Enterprises . 2000 CRI. L.J 2386. wherein the Division Bench of Andhra Pradesh High Court held that:

“Negotiable Instruments Act (26 of 1881) Section 13(2) Partnership Act (9 of 1932), Section 69(2) — Dishonour of cheque — Complainant partnership firm having business dealings with accused — Firm not registered under Partnership Act as required under Section 69(2) — Suit cannot be instituted by it — Debt against accused is not legally enforceable debt — Complaint not maintainable.”

In order to appreciate the contention of both parties it is proper to cull out Section 69(2) of the Partnership Act, 1932, which reads as under:

“69. Effect of non-registration (1) …..

(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.”

Even by plain reading of Section 69(2) of the Partnership Act leaves no scope for doubt that what is barred by the said section is the institution of a suit to enforce a right arising from a contract or conferred by the Partnership Act by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person in suit is or has been shown as a partner in the Register of Firms.

5. A careful reading of Section 69(2) of the Partnership Act clearly shows that an unregistered partnership firm is barred from filing a civil suit and there is no bar as such to file a private complaint and it is purely criminal liability on the part of the person who has issued the cheque. Even if the cheque issued by a partner of an unregistered firm for legally recoverably debt or otherwise and if such cheque dishonoured when it was presented for encashment, it amounts to a criminal liability. Therefore the dismissal of a complaint by the Trial Court by relying on the decision of the Andhra Pradesh High Court referred to above is incorrect. Whenever a complaint is presented under Section 138 of the Negotiable Instruments Act it is the duty of the learned Magistrate to take note of the cognizance and record the sworn statement of the complainant and his witnesses and after hearing if there is any prima facie case then it is the duty of the Court to issue summons to the accused.

6. In the case of Abdul Gafoor v. Abdur Rehman . 1999 4 Crimes 1998. the Kerala High Court held that an unregistered firm can prosecute a complaint under Section 138 of the Negotiable Instruments Act and the effect of non-registration of a firm under Section 69 of the Partnership Act is applicable only to a case involving civil rights.

Further, the Supreme Court in the case BSI Ltd. v. Gift Holdings Pvt. Ltd . 2000 SCC Cri 538. has held that:

“…. A criminal prosecution is neither for recovery of money nor for enforcement of any security etc. Section 138 of the Negotiable Instruments Act is a penal provision the commission of which offence entails a conviction and sentence on proof of the guilt in duly conducted criminal proceedings. Once the offence under Section 138 is completed the prosecution proceedings can be initiated not for recovery of the amount covered by the cheque but for bringing the offender to penal liability.”

Again in the case of Gurcharan Singh v. State Of U.P & Anr. . 2002 4 Crimes 165. the Allahabad High Court has followed the above said judgment of the Supreme Court.

Therefore, in view of the above decisions of the Supreme Court as well as of the other High Courts, the contention of the respondent that filing of a criminal complaint by a partner of an unregistered firm is hit by Section 69(2) of the Partnership Act cannot be accepted. The said section has no application to the criminal cases. Under these circumstances it could be said that Section 69(2) of the Partnership Act is applicable only where the civil rights are invoked and not in criminal cases. Non-registration of the firm has no legal bearing on the criminal case. Hence the finding recorded by the Trial Court is totally incorrect and illegal and the same is liable to be set aside.

7. Accordingly the revision petition is allowed. The order under challenge is set aside. The matter is remitted back to the Trial Court with a direction to record the sworn statement of the complainant and its witnesses, if any, and after hearing dispose of the complaint in accordance with law.