Cheque dishonour liability requires arraignment of the firm, and settlement with one partner ends the firm's complaint exposure.

Section 69 of the Partnership Act, 1932 does not bar a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 merely because the partnership firm is unregistered, as the provision restricts certain civil suits, not cheque dishonour prosecutions. For Section 141 liability, the partnership firm must be arraigned as an accused before vicarious liability can be fastened on partners, and omission to prosecute the firm is fatal to proceedings against a partner alone. Where the offence is compounded or settled with one partner in respect of the firm's debt, the settlement operates for the firm as a whole and the complaint cannot continue against another partner on the same liability.

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Issues: (i) whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 against an unregistered partnership firm was barred by Section 69 of the Partnership Act, 1932; (ii) whether, for prosecution under Section 141 of the Negotiable Instruments Act, 1881, arraignment of the partnership firm as an accused was imperative; and (iii) whether compounding of the offence with one partner could leave the complaint surviving against the other partner.

Issue (i): whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 against an unregistered partnership firm was barred by Section 69 of the Partnership Act, 1932

Analysis: Section 69 of the Partnership Act, 1932 bars certain civil suits to enforce contractual rights, but the proceeding under Section 138 of the Negotiable Instruments Act, 1881 is a criminal complaint and not a suit. The bar on suits therefore does not extend to a prosecution for dishonour of cheque. Non-registration of the firm does not affect criminal liability under the penal provision.

Conclusion: The complaint was not barred on the ground that the partnership firm was unregistered.

Issue (ii): whether, for prosecution under Section 141 of the Negotiable Instruments Act, 1881, arraignment of the partnership firm as an accused was imperative

Analysis: Section 141 of the Negotiable Instruments Act, 1881 fastens vicarious liability on persons in charge of and responsible for the conduct of the business of the firm, but such liability arises only when the firm itself is prosecuted. The firm is included within the expression "company" in the Explanation to Section 141, and the statutory scheme requires the principal offender to be before the Court before vicarious liability can attach to its partners.

Conclusion: The absence of the partnership firm as an accused was fatal to continuation of the prosecution against the petitioner alone.

Issue (iii): whether compounding of the offence with one partner could leave the complaint surviving against the other partner

Analysis: Under Section 25 of the Partnership Act, 1932, each partner is jointly and severally liable for the acts of the firm. A settlement entered into by one partner in respect of the firm's liability is treated as settlement on behalf of the firm, and the liability cannot be split or apportioned only to one partner while proceeding against another for the same debt. Withdrawal of the complaint against one partner effectively extinguished the complaint founded on the firm's liability.

Conclusion: Partial compounding with one partner ended the matter against the firm and did not permit continuation against the petitioner.

Final Conclusion: The prosecution could not survive against the petitioner after the settlement and compounding, and the complaint was quashed with the petitioner acquitted.

Ratio Decidendi: In a cheque dishonour prosecution founded on the liability of a partnership firm, the firm must be arraigned as an accused for Section 141 liability to operate, and a settlement with one partner in respect of the firm's debt compounds the firm's liability as a whole rather than only that partner's share.

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