Unregistered partnership firm not a bar to cheque dishonour prosecution, but the firm must be arraigned for partner liability.

Section 69(2) of the Indian Partnership Act does not bar a criminal complaint under Section 138 of the Negotiable Instruments Act merely because the drawer is an unregistered partnership firm, because that bar is confined to suits enforcing contractual rights. However, where the cheque is issued on behalf of a partnership firm, the firm itself must be arraigned as an accused before vicarious liability can be fastened on the partners under Section 141. A complaint against the partners alone is therefore unsustainable, and proceedings may be quashed on that basis.

---

---

Issues: (i) Whether the bar under Section 69(2) of the Indian Partnership Act, 1932 prevents a complaint under Section 138 of the Negotiable Instruments Act, 1881 when the drawer is an unregistered partnership firm; (ii) Whether, for an offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, the partnership firm must be arrayed as an accused along with the partners.

Issue (i): Whether the bar under Section 69(2) of the Indian Partnership Act, 1932 prevents a complaint under Section 138 of the Negotiable Instruments Act, 1881 when the drawer is an unregistered partnership firm.

Analysis: The bar in Section 69(2) is confined to suits to enforce a right arising from a contract. A prosecution under Section 138 of the Negotiable Instruments Act is a criminal proceeding based on a penal provision, not a civil suit for enforcement of contractual rights. The strict construction applicable to penal statutes does not permit importing the Partnership Act bar into criminal liability under the Negotiable Instruments Act.

Conclusion: The complaint is not barred merely because the partnership firm is unregistered.

Issue (ii): Whether, for an offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, the partnership firm must be arrayed as an accused along with the partners.

Analysis: Section 141 embodies vicarious liability for offences committed by a company or firm, and the settled rule is that the principal juristic entity must be impleaded as an accused before liability can be fastened on those in charge of its affairs. That principle applies equally to partnership firms. The firm's registration status does not dilute the requirement of arraigning the firm where the cheque was issued on its behalf.

Conclusion: The firm had to be made an accused, and the complaint against the partners alone was unsustainable.

Final Conclusion: The proceedings under Section 138 were quashed because the complaint failed to implead the partnership firm and could not be sustained against the partners alone.

Ratio Decidendi: Section 69(2) of the Partnership Act does not bar a criminal prosecution under Section 138 of the Negotiable Instruments Act, but where the cheque is issued on behalf of a partnership firm, the firm must be arraigned as an accused before vicarious liability can be fastened on the partners under Section 141.

---