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TMI Blog2019 (7) TMI 2041X X X X Extracts X X X X X X X X Extracts X X X X ..... Instruments Act, is not a Suit to enforce a right arising out of a contract, and therefore, the bar under Section 69(2) of the Partnership Act will not operate in such a case. The word Suit envisaged under Section 69(2) of the Indian Partnership Act, cannot be stretched to criminal prosecutions. A criminal prosecution by its very nature is instituted not for recovery of money or for enforcement of any security. Section 138 of Negotiable Instruments Act is a penal provision, the commission of which offence entails a conviction and sentence on the proof of guilt. Chapter XVII of the Negotiable Instruments Act, 1881 is a code by itself which deals with penalties in case of dishonour of cheques. Section 141 of the Negotiable Instruments Act deals with the concept of vicarious liability, wherein for the offence committed by the Company or a partnership firm, the directors or the partners, as the case may, are deemed to be guilty of the offence when it is shown that they are in charge of and responsible for the conduct of the day-to-day affairs of the business or the firm, as the case may be. While interpreting the provision, the Hon'ble Supreme Court has categorically held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have filed this petition to quash the proceedings primarily on the ground that the cheque in question was drawn in favour of the respondent only on behalf of the partnership firm. Therefore, the complaint cannot be maintained without issuing the statutory notice to the partnership firm and making the partnership firm as an accused in the complaint. 5. The learned counsel for the petitioners submitted that the provisions of Section 141 of the Negotiable Instruments Act, which deals with offences by Companies, will equally apply to the partnership firm also by virtue of the explanation given under the said provision. The learned counsel further submitted that the Hon'ble Supreme Court has now settled the law to the effect that the complaint under Section 138 of the Negotiable Instruments Act, cannot be maintained against the directors of the Company, without making the Company as an accused. This law has now been extended to Partnership Firm also. Therefore, the learned counsel submitted that without arraying the firm as an accused in the complaint, the partners cannot be prosecuted by the respondent since admittedly the cheque was issued by the Partnership Firm represented by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be filed straight away against the partners. 12. Section 69(2) of the Indian Partnership Act, 1932 deals with the effect of non registration. Section 69(2) Act, specifically provides for a bar in maintaining a suit where (i) Suit is by an unregistered firm (ii) Suit is to enforce a right arising from a contract (iii) Suit is filed against a third party and (iv) persons suing are not shown in register of firms as partners in firm. It is to be borne in mind that the bar contemplated under Section 69(2) of the Indian Partnership Act will come into play only when the Suit is filed to enforce a right arising from a contract against a third party. 13. This Court had an occasion to deal with a case where this bar Section 69(2) of the Indian Partnership Act, was sought to be invoked while enforcing a common law right. This Court dealt with the issue in detail and held that the bar Section 69(2) of the Indian Partnership Act, will not apply while enforcing a common law right. The relevant portion of the Judgment is extracted hereunder. 46. In M/s. Haldiram Bhujjawala and another v. M/s. Anand Kumar Deepak Kumar and another, AIR 2000 SC 1287, the Hon'ble Supreme Court reiterated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction by the unregistered plaintiff firm with its customers/defendants and the idea is to protect those in commerce, who deal with such a partnership firm in business. Such said third parties, who deal with the partners ought to be enabled to know what the names of the partners of the firm before they deal with them in business . It is evident that Section 69(2) is not attracted to any and every contract. 14. Admittedly, in this case, the Suit is not for enforcement of any right arising out of a contract entered into by or on behalf of the plaintiffs firm with the defendant in the course of business transaction. Moreover, Section 69(2) does not bar a Suit to enforce common law right even if the firm is unregistered on the date of the Suit. Hence, the Suit is not barred by Section 69(2) of the Partnership Act. With the result, all the other substantial questions of law are answered in favour of the Respondents/Plaintiffs. 48. In the above decision, a similar contention as raised by the revision petitioner before this Court has been raised and this Court held that the bar contemplated under Section 69(2) of the Partnership Act will not get attracted if the Suit is being filed e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not qualify the status of a legal entity. It is trite law that when the provisions of criminal law are interpreted, the concept of strict construction will apply. Therefore, this Court cannot read the provisions of Section 69(2) of Indian Partnership Act into the provisions of Section 141 of the Negotiable Instruments Act. 15. It will be relevant to rely upon the judgments cited by the learned counsel for the petitioners. 16. The first judgment that was relied upon by the learned counsel for the petitioners is the case of Abdul Gafoor Vs Abdurahiman reported in 1999(4) Crimes 98, referred supra. The relevant portions in the judgment is extracted here under. 3. The counsel for the revision petitioner submitted that the 1st respondent being an unregistered partnership firm, the above prosecution is not sustainable under Section 69(2) of the Indian Partnership Act. The effect of non-registration of the partnership firm under Section 69 of the Partnership Act is applicable only to cases involving Civil rights and it has no application to Criminal cases. Therefore, the contention of revision petitioner that the prosecution in this case is not sustainable under Section 69(2) of the Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined to such proceedings as, under that description, are directly dealt with in the Code of Civil Procedure, or such as by the operation of the particular Act which regulates them are treated as suits (See Law of Lexicon, 1997 Edition). The word 'suit' in common parlance means a process Instituted in a Court for recovery or protection of a right, enforcement of a claim, or to redress civil injuries. 9. Section 142 of the Act under caption Cognizance of offences provides that cognizance of the offence under Section 138 can be taken upon a 'complaint' in writing made by the payee or the holder in due course of the cheque. The word 'complaint' defined in Section 2(d) of the Code of Criminal Procedure means any allegation made orally or in writing to a Magistrate, with a view to taking action under the said Code, that some person, whether known or unknown, has committed an offence, but does not include a police report. Since Section 138 is a penal provision, that prescribes punishment for bouncing of cheque on any of the grounds mentioned therein, the Legislature in its wisdom has used word 'complaint' and not 'suit' in Section 142 because a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act is applicable only to cases involving civil rights and it has no application to criminal cases. 10. In a recent judgment rendered by the Supreme Court in B.S.I. Ltd. and another v. Gift Holdings Put. Ltd. and another. 2000 (1) ACrR 683 (SC) : 2000 SCC (Cri) 538, the word 'suit' came to be interpreted for deciding maintainability of a proceeding under Section 138 of the Act in view of the ban imposed by the Sick Industrial Companies (Special Provisions) Act. Under Section 22(1) of the aforesaid Act. it is provided that no suit for recovery of money or enforcement of any security against the industrial company or guarantee in respect of any loan or advance granted to the industrial company shall lie if in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending adjudication. It was contended that the ban against maintainability of a suit for recovery of money would encompass prosecution proceedings also. Reliance was placed on the meaning of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X
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