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TMI Blog2017 (7) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court, Karnataka High Court and Punjab & Haryana High Court as noted above lay down the correct law. Thus the issue raised by learned counsel for the petitioner that since the complainant respondent is not a registered firm it cannot maintain a complaint under Section 138 of the NI Act is rejected. - CRL.M.C. 3474/2016 & Crl.M.A. 14666/2016 (stay) - - - Dated:- 7-7-2017 - MS. MUKTA GUPTA J. Petitioner Represented by: Mr. Sermon Rawat, Mr. Shivang Rawat, Mr. Jagmeet Randhawa, Advs. MS. MUKTA GUPTA J. 1. By the present petition the petitioner seeks quashing of complaint case No. 2009/1 titled as M/s. Silvermount Vs. Mrs. Rani Kapoor wherein the petitioner has been summoned as an accused for offence punishable under Section 138 of the Negotiable Instruments Act, 1981 (in short the NI Act) by the learned Metropolitan Magistrate (West), Tis Hazari, Delhi. 2. Allegations in the complaint filed by the respondent are that it is a partnership firm carrying on business of building construction and had entered into a collaboration agreement with the petitioner for reconstruction of property No. 4/16, West Patel Nagar, New Delhi admeasuring 200 sq. yds. approximate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w taken by the Division Bench of Andhra Pradesh High Court is that the bar under Section 69(2) of the Indian Partnership Act is also applicable to a complaint under Section 138 of the NI Act. 5. In the decision reported as AIR 1975 Ker 144 Kerala Arecanut Stores v. Ramkishore and Sons it was held: 10. Reference has been made to these provisions to indicate that the obligation of the drawer of a cheque as well as the indorser to the indorsee who is the holder in due course arises by virtue of statutory provisions. It is not as if there is any privity of contract between the maker of a cheque and the holder in due course. Any right of action available to such holder is not under any contract, for he would be a third party to the contract and would not come within one of the exceptions enabling a third party to a contract to sue. But he is entitled to sue on his cheque by reason of the right conferred upon him by the statute. In fact, in the case of an indorsement of a pronote or of a cheque it is not an assignment of the debt as such but only of the property in the note or the cheque and it is by virtue of obtaining such property in the note or the cheque that the indorse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 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. [ 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 Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the non-registration of the firm would not bar the prosecution of an accused on the ground that the firm was not registered. 8. In Gowri Containers v. S.C. Shetty 2007 SCC OnLine Kar 624 : 2008 Cri LJ 498 Division Bench of Karnataka High Court held: 9. Now coming to the contention of the respondents that in view of the provisions of Section 69(2) of the Indian Partnership Act. The amount under the transaction was not legally enforceable debt, reliance has been placed by the respondents learned advocate on a Division Bench decision of Andhra Pradesh High Court in Amit Desai v. Shine Enterprises (2000 Cr LJ 2386) wherein in respect of an unregistered partnership firm, on the ground that the suit cannot be instituted by an unregistered firm, it was held that the debt against the accused was not a legally enforceable debt. That was the case in which, the second consignment received by the complainant could not be sold and it had been returned to the accused by dispatching through a lawyer and the accused had sent a credit note to the amount and promised to return the value of the stock returned to them. In those circumstances, the accused had issued a cheque and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a ruling reported in Kerala Arecanut Stores v. Ramkishore and Sons, AIR 1975 Kerala 144 . Their Lordships of Kerala High Court were pleased to hold that a suit by a partner for recovery of money on dishonour of cheque endorsed in favour of the firm is not barred. The learned counsel further relied upon a ruling reported in Abdul Gafoor v. Abdurathiman, (1999) 2 Andh LT (Cri) 196. The learned single Judge of Kerala High Court was pleased to hold 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. With due respect to the learned single Judge of Kerala High Court, we prefer to differ with the views expressed by him. Explanation to Section 138 of the Negotiable Instruments Act specifically laid down that the debt or other liability means a legally enforceable debt or other liability. Enforcement of legal liability has to be in the nature of civil suit because the debt or other liability cannot be recovered by filing a criminal case and when there is a bar of filing a suit by unregistered firm, the bar equally applies to criminal case as lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. 12. It is thus apparent that on finding of the guilt arrived at by the criminal Court the accused is liable to a sentence of imprisonment which may extend to two years, or fine or with fine which may extend to twice the amount of cheque, or with both. Thus discretion is granted to the criminal Court to either award imprisonment or fine or both. Thus proceedings under Section 138 of the NI Act are not recovery proceedings and in a given case the criminal Court may only award sentence of imprisonment. Irrespective of a complaint proceeding under Section 138 of the NI Act, a creditor has the right to institute civil suit for recovery of his debt in which case the same would be recoverable only if it is a legally enforceable debt or other liability. 13. Following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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