1. Can an unregistered firm, which consists of two or more partners, prosecute, under section 138 read with section 142 of the Negotiable Instruments Act (`the NI Act'), a person, whose cheque has been dishonoured, due to insufficiency of fund, by the drawers bank? Or, whether such a prosecution, on the basis of a complaint made by an unregistered firm is, by virtue of the provisions of sub-section (2) of section 69 of the Indian Partnership Act, 1932 (`the Partnership Act'), impermissible in law? These are the principal questions, which this criminal petition, made under section 482, Cr.P.C., has raised.
2. I have heard Mr. B.D. Konwar, learned counsel for the petitioner, and Mr. A.K. Goswami, learned senior counsel, appearing on behalf of the opposite party.
3. Let me, in brief, set out the facts leading to this petition. The opposite party herein filed, as complainant, a complaint, in writing, in the court of the Chief Judicial Magistrate, Jorhat, seeking prosecution of the present petitioner as accused for offences allegedly committed under section 138 read with section 142 of the NI Act, the case of the complainant being, in brief, thus:
The accused issued a cheque, on 25.12.2006, for a sum of Rs. 2,21,217.00, drawn on Bank of Boroda, Jorhat Branch, in the name of M/s. Auto Sales and Services Station, which is an unregistered firm, as payee. This cheque, on being presented to the bank, in question, was dishonoured, on 27.12.2006, on the ground of insufficiency of fund. The said firm, then, sent a notice to the accused demanding payment of the amount, covered by the said cheque, within a period of 15 days from the date of the receipt of the notice. As the demand had not been met, the complaint aforementioned was filed. This complaint gave rise to CR Case No. 59/2007. Having recorded the statement of the complainant under section 200, Cr.PC, learned Judicial Magistrate, Jorhat, passed an order, on 27.2.2007, taking cognizance of offence under section 138 of the NI Act and directing, accordingly, issuance of summons to the present petitioner as accused.
4. By making this application under section 482, Cr.PC, the petitioner has sought to get aside and quashed not only the order, dated 27.2.2007, aforementioned, but the complaint, in question, as a whole.
5. Appearing, on behalf of the accused-petitioner, Mr. B.D. Konwar, learned counsel, has, by referring to the provisions of section 69 of the Partnership Act and, particularly, sub-section (2) thereof, submits that section 69(2) bars enforcement of a right arising from a contract by or on behalf of the firm against any third party if the firm is unregistered and the persons suing are not shown in the Register of Firms as partners in the firm. In short, thus, what is contended, on behalf of the petitioner, is that an unregistered firm cannot initiate a criminal prosecution against a person for an offence committed by such a person. Yet another ground of challenge, posed to the validity of the complaint, is that since the debts of an unregistered firm cannot be recovered by instituting a suit by, or in the name of, the unregistered firm, a criminal prosecution, at the instance of an unregistered firm as complainant, is also not permissible.
6. Resisting the submissions so made on behalf of the petitioner, Mr. A.K. Goswami, learned senior counsel, submits that section 69(2) relates to institution of suit by an unregistered firm for enforcement of its rights arising from a contract and not to a criminal prosecution at the instance of an unregistered firm. This apart, points out Mr. Goswami, there is no bar under the law to prosecute a person, whose cheque gets dishonoured by the bank due to insufficiency of fund, even if the cheque, so issued, is in the name of a firm, which is not registered by the Registrar of Firms.
7. In order to effectively resolve the controversy raised in this criminal petition, it is appropriate to take note of the provisions of section 69(2) of the Partnership Act, which is reproduced herein below: -
"69. Effect of non-registration. –
(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court 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 suing is or has been shown in the Register of Firms as a partner in the firm.
(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 the Firms as partners in the firm."
8. What section 69 prohibits is institution of suit by an unregistered firm in its own name or against an unregistered firm in the name of the unregistered firm for enforcement of the rights arising from a contract. Nothing, contained in section 69, bars the partners, constituting an unregistered firm, from either suing or from being sued for enforcement of the rights arising from a contract. More importantly, nothing, contained in section 69, prohibits prosecution, in terms of section 138 of the Act, by an unregistered firm, of a person, who may have issued a cheque addressed to such a firm, when such a cheque is dishonoured and, upon notice of demand for payment having been received by the drawer, the drawer fails to make payment. Considered, thus, it is clear that there was no bar, on the part of the present unregistered firm, to institute criminal prosecution against the petitioner, as accused, for dishonour of the said cheque.
9. Because of what have been discussed and pointed out above, this court is firmly of the view that when the complaint discloses commission of an offence under section 138 read with section 142 of the NI Act, such a complaint cannot be quashed and the learned court below has acted wholly within its jurisdiction in taking cognizance of the offence, as was disclosed by the complaint, and in directing issuance of process against the present petitioner, as accused.
10. In the result and for the reasons discussed above, this Criminal petition fails and the same shall accordingly stand dismissed.
11. In order to avoid unnecessary delay in the disposal of the case, the parties to this criminal
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petition are hereby directed to appear, on 1.4.2008, in the learned court below and, upon their appearance, the learned court below shall proceed with the matter in accordance with law. 12. Before parting with this criminal petition, it is made clear that nothing observed hereinabove shall be construed to mean that this court has expressed any opinion on the veracity or legality of the accusations made in the complaint. It would, therefore, remain open to the learned trial court to determine, in accordance with law, if the debt was enforceable in law in respect whereof the cheque, in question, was issued. 13. With the above observations and directions, this criminal petition is disposed of.