TMI Blog2018 (9) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... on record the partnership deed can be allowed especially after the learned trial Magistrate has acquitted the respondent for the offence punishable under Section 138 of the Act, only on account of the managing partner of the appellant having failed to establish that he was one of the partners of the complainant-firm and duly authorised by it to file the complaint. (ii) Whether a partner of an unregistered partnership firm can maintain a complaint under Section 138 of the Negotiable Instruments Act. 2. However, before answering these questions, certain facts need to be noticed. 3. The appellant-complainant filed a criminal complaint under Section 138 of the Negotiable Instruments Act (for short NI Act) against the respondent on the allegation that it was a partnership firm having its office at Village Ranghri, Manali and Sh. Aakash Ahuja was a partner of the said firm, who had been duly authorised to present the complaint. It is submitted that the accused/ respondent had purchased construction material i.e. cement, steel etc. from 01.06.2015 to 29.09.2015 from the appellant-firm and having an outstanding liability of ₹ 5,00,000/- for which he issued and handed over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record the partnership deed can be allowed especially after the learned trial Magistrate has acquitted the respondent for the offence punishable under Section 138 of the Act, only on account of the managing partner of the appellant having failed to establish that he was one of the partners of the complainant-firm and duly authorised by it to file the complaint. (ii) Whether a partner of an unregistered partnership firm can maintain a complaint under Section 138 of the Negotiable Instruments Act.. 10. I would firstly like to answer the question No.1, as admittedly the second question would arise for determination only if the first question is answered in favour of the appellant. 11. Section 391of the Code of Criminal Procedure reads thus: 391. Appellate Court may take further evidence or direct it to be taken.- (1) In dealing with any appeal under this Chapter, the Appellate Court, if it thinks additional evidence to be necessary, shall record its reasons and may either take such evidence itself, or direct it to be taken by a Magistrate, or when the Appellate Court is a High Court, by a Court of Session or a Magistrate. (2) When the additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that if a complaint is made in the name of a incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court. It is held that the court looks upon the natural person to be the complainant for all practical purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as de facto complaint to represent the former in court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been held that there may be occasions when different persons can represent the company. It has been held that it is open to the de jure complainant company to seek permission of the court for sending any other person to represent the company in the court. Thus, even presuming, that initially there was no authority, still the Company can, at any stage, rectify that defect. At a subsequent stage the Company can send a person who is competent to represent the company. The complai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Courts below. But, we may notice that a specific averment was made by the appellant- Federation before the learned Judicial Magistrate that the said General Power of Attorney has been filed in connected case being CC No. 1409/1995, which has neither been denied nor disputed by the respondents. In any case, in our opinion, if the Courts below were not satisfied, an opportunity ought to have been granted to the appellant-Federation to place the document containing authorisation on record and prove the same in accordance with law. This is so because procedural defects and irregularities, which are curable, should not be allowed to defeat substantive rights or to cause injustice. Procedure, a hand- maiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use. {See Uday Shankar Triyar Vs. Ram Kalewar Prasad Singh, (2006) 1 SCC 75}. : (AIR 2006 SC 269 : 2005 AIR SCW 5851). 7. In view of the fact that in spite of arbitration award against the respondents, there was non-payment of amount by the respondents to the appellant-Federation, and also in the light of authorisation contained in Annexure P/7, we are of the opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in areas to which, by notification under 3[section 56], this Chapter does not apply, or (b) to any suit or claim of set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882,(15 of 1882) or, outside the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, (9 of 1887) or to any proceeding in execution or other proceeding incidental to or arising from any ch suit or claim. 17. On the issue whether an unregistered partnership firm is entitled to maintain a complaint under Section 138 of the Act, the law is not consistent as different views have been expressed by various High Courts. 18. Learned Division Bench of the Kerala High Court in Kerala Arecanut Stores vs. Ramkishore and Sons, AIR 1975 Ker 144, was ceased of a question whether the suit by a partner of an unregistered firm for recovery of money claimed on dishonour of the cheque endorsed in favour of the firm would be maintainable or would be barred under Section 69 (2) of the Partnership Act, holding the suit to be maintainable. It was held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 vs. Abdurahiman, (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 deffer 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 laid down in explanation (2) of Section 138 of the Negotiable Instruments Act. 16. Considering the above le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Abdurahiman, 1999(4) Crimes 98 (Ker.) the Kerala High Court held that an unregistered Partnership firm can prosecute complaint under Section 138 of the Negotiable Instruments Act and the effect of non-registration of firm under Section 69 of the Partnership Act is applicable only to a case involving civil rights. Further, the Supreme Court in the case of BSI Limited and Anr. v. Gift Holdings Private Limited and Anr., 2000 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on him by the statutory provisions the right to sue the maker of the cheque and also the endorser. If that be the case the right that is sought to be enforced does not arise from a contract. It is not a suit by the indorsee to enforce a right arising out a contract and therefore, the bar under Section 69(2) of the Partnership Act will not operate in such a case. 26. Besides, the Supreme Court in Haldiram Bhujiawala and another v. Anand Kumar Deepak Kumar and another, 2000 (1) Unreported Judgments 603, held that a suit is not barred by Section 69(2) if a statutory right or a common law right is being enforced. 27. I n the case in hand the complainant has a statutory claim in terms of Section 138 N.I Act. Even otherwise Section 69 of the Partnership Act is confined to enforcement of a right arising out a contract by instituting a suit or other proceedings by an unregistered firm. The criminal complaint that has been filed cannot be treated as a suit or other proceedings to enforce any rights arising under a contract. Therefore, there is no bar to the criminal complaint that has been filed and the non-registration of the firm would not bar the prosecution of an accused o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing it. If there is no legal impediment for enforceability of a debt or other liability in general, disability of a particular individual or entity to enforce such right to recover such debt or liability does not render such debt or liability not legally enforceable debt or liability. The intention of the legislature is to make non payment of amounts of cheques despite service of notice as per the provisions of the Act an offence only when the cheque has been issued for payment of a legitimate debt or liability. Amount required to be paid as price of articles or goods is a legitimate debt or liability and therefore it is a legally enforceable debt or liability. The disability of an unregistered firm under Section 69(2) of the Indian Partnership Act to file a suit to enforce a right arising out of a contract does not make such debt or liability not a legally enforceable debt or liability. 25. In Dabasree Das Baishnab vs. FI Multimedia Consultants, 2011 (1) Crimes (HC) 131, a learned Single Judge of High Court of Gauhati, held as under: 8 ...For the purpose of resolving the controversy raised in these petitions, I feel it appropriate to refer to the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a suit by a partner for recovery of money on dishonoured cheques endorsed in favour of the firm is not a bar. This was also the view taken by this Court in the case of Indrajit Gogoi (supra). For the sake of convenience and proper appreciation let me quote the provision of Section 138 of the NI Act as follows: 138. Dishonour of cheque for insufficiency, etc, of funds in the account- Where any cheque drawn by a person on an account maintained by him with a Banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the Bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made out with that Bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing from a contract. This does not debar initiating a criminal prosecution for launching criminal action as prescribed by the special statute. In view of the above, with due respect, I prefer to differ with the views expressed in the case of Amit Desai (supra) and agree with the decision held in the case of Indrajit Gogoi (supra) and in the case of Kerala Arecanut Stores (supra). I 12. n the light of the above discussion, I am of the considered opinion that the criminal prosecution initiated by the complainant against the present petition is not hit by Section 69 of the Partnership Act. Therefore, I find no sufficient ground to interfere with the impugned, order passed by the learned Magistrate, First Class. 26. From the discussion so far, it is abundantly clear that an unauthorised partnership firm cannot approach the Court for enforcement of any right arising from a contrat, hence civil proceedings for recovery of money would be barred by virtue of sub Section (2) of Section 69 of the Partnership Act. However, proceedings under Section 138 of the NI Act cannot be treated as civil suit for recovery of cheque amount with interest as was held by the Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act, a civil suit is seldom filed to recover the amount of the cheque. This is because of the provision enabling the court to levy a fine linked to the cheque amount and the usual direction in such cases is for payment as compensation, the cheque amount, as loss incurred by the complainant on account of dishonour of cheque, under section 357 (1)(b) of the Code and the provision for compounding the offences under section 138 of the Act. Most of the cases (except those where liability is denied) get compounded at one stage or the other by payment of the cheque amount with or without interest. Even where the offence is not compounded, the courts tend to direct payment of compensation equal to the cheque amount (or even something more towards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary. 27. The judgments in Abdul Gafoor vs. Abdurahim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 30. That apart, it would further be noticed that the view taken by the Andhra Pradesh High Court, in fact, is contrary to the ratio of the judgment laid down by the Hon ble Supreme Court in R. Vijayan s case (supra). Therefore, in the given facts and circumstances, I am of the considered view that the criminal prosecution initiated by the complainant against the respondent is not hit by Section 69 of the Partnership Act. 31. Consequently, I find merit in this appeal and the same is allowed. The order/judgment dated 12.3.2018 passed by learned Judicial Magistrate 1st Class, Manali, District Kullu, H.P. in Criminal Case No.1630I/2015/31-III/2017 is set-aside and the matter is remitted back to the learned trial Magistrate, who shall afford an opportunity to the appellant to lead evidence with regard to the factum of partnership as also due authorisation, if any, in favour of Sh. Aakash Ahuja. Needless to say that the respondent shall have corresponding right of not only cross-examining the appellant witnesses, but shall also have a right to lead evidence. 32. The parties through their counsel(s) to appear before the learned trial Magistrate on 24.9.2018. 33. The appe ..... 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