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2020 (4) TMI 552 - HC - Indian LawsInterpretation of statute - Dishonor of cheque - enforcement of legal liability towards in Unregistered partnership firm - complaint filed by an unregistered firm u/s 138 - prosecution of accused under Section 138 of the Negotiable Instruments Act, 1888 - Whether prosecution of accused, is hit by the bar created by sub-section (2) of Section 69 of the Indian Partnership Act, 1932? - HELD THAT:- Section 138 of the N.I. Act is a penal provision, the commission of which entails prosecution and conviction on proving of guilt. Once the offence under Section 138 of the N.I. Act is completed, the prosecution can be initiated for bringing the offender to penal liability. There is no disagreement with the proposition that the 'debt or other liability' as has been referred in Section 138 of the N.I. Act, is a 'legally enforceable debt or other liability' - However, by creating a bar to enforce a right arising out of contract by an unregistered firm, with the object to promote registration of the firms and to exempt the small firms from compulsory registration, the inherent character of enforceability of the 'right' does not get changed and it would still remain as a right enforceable by law. Once the bar is removed, the remedy would be revived. Moreover, even the plaintiff/unregistered firm can withdraw the suit with liberty to file a fresh one after getting the firm registered and section 14 of the Limitation Act, 1963 would be applicable to such proceedings. Thus, there is no point in stretching the bar which is in the nature of temporary bar to the suit to the complaints under section 138 of the N. I. Act, which is in the nature of penal provision with the object to inculcate faith in banking transactions - The prosecution of an accused under Section 138 of the Negotiable Instruments Act, 1888, is not hit by the bar created by sub-section (2) of Section 69 of the Indian Partnership Act, 1932. The matter be placed before the appropriate Bench.
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