Just a moment...

Top
FeedbackReport
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2017 (7) TMI 311

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ents. On reconstruction, respondent was entitled to keep the first and second floor with proportionate right in the land underneath whereas the rest of the portion was to continue in the ownership of the petitioner. After execution of the agreement, the petitioner approached the respondent and requested for payment of Rs. 20 lakhs which in any case the respondent was to make later on, hence the same was paid. However, the petitioner with malafide intention avoided handing-over the vacant peaceful possession of the property which was required to be demolished for reconstruction. Finally the dispute was settled, petitioner agreed to repay the amount and a dissolution deed was entered into between the parties. A cheque bearing No.183141 dated 28th May, 2015 for a sum of Rs. 5 lakhs issued in favour of the respondents was returned as dishonoured vide memo dated 29th May, 2015 on account of 'payment stopped by drawer'. Hence on non-receipt of the payment, respondent issued a notice and filed the complaint under Section 138 NI Act as noted above. 3. Learned counsel for the petitioner submits before this Court that Section 138 NI Act envisages that when a cheque issued in lieu of a legal....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... is well settled and therefore we are not referring to the decisions cited by counsel on this point. It is sufficient to state here, for the purpose of this case, that the right of action available to an indorsee of a cheque who comes to hold the cheque in due course is based upon conferment on him by the statutory provisions the right to sue the maker of the cheque and also the indorser. 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 of a contract and therefore the bar under Section 69(2) of the Partnership Act will not operate in such a case." 6. Following the decision of the Supreme Court in BSI Ltd. Vs. Gift Holdings Pvt. Ltd. in the decision reported as ILR 2003 KAR 4325 Beacon Industries v. Anupam Ghosh it was held: "5. A careful reading of Section 69(2) of the Partnership Act clearly shows that an unregistered partnership firm is barred from filing a civil suit and there is no bar as such to file a private complaint and it is purely criminal liability on the part of the person who has issued the cheque. Even if the cheque issued by a partner of an unregistered firm ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....gal and the same is liable to be set aside." 7. Learned Single Judge of Punjab and Haryana High Court following the Division Bench of Kerala High Court in the decision reported as (2005) 4 RCR (Cri) 330 Capital Leasing and Finance Co v. Navrattan jain held- "25. A bare reading of the above shows that Section 69(2) prohibits the enforcement of rights in respect of an unregistered firm by way of a suit. The same does not relate to a criminal complaint. In Kerala Arecanut Stores v. Ramkishore and Sons and another, AIR 1975 Kerala 144, a Division Bench of the Kerala High Court held that provisions of Section 69(2) of the Partnership Act, provide that the suit by a partner for recovery of money of a dishonoured cheque, interest in favour of the firm is not barred. The following observations in the said case are apposite :   "It is sufficient to state here for the purpose of this case that the right of action available to an indorsee of a cheque who comes to hold the cheque in due course is based upon conferment 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 ar....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of the present case. 10. The Supreme Court in the case of Kamal Pushpa Enterprises v. D.R. Construction Company ((2000) 6 SCC 659 : AIR 2000 SC 2676) has observed that the bar to enforce rights arising from contract under Section 69(2) of the Partnership Act applies only in respect of suits and not applicable to the proceedings before the Arbitrator. In a direct decision of this Court in Beacon Industries, Rep. by its Partners, Bangalore v. Anupam Ghosh (ILR 2003 KAR 4325) the observation of this Court is that an unregistered firm is barred from filing a civil suit, but that there is no bar to initiate a private complaint for the offence punishable under Section 138 of the Negotiable Instruments Act. 11. The words, legally enforceable debt or other liability' used in the explanation to Section 138 of the Negotiable Instruments Act refer to the enforceability in law of the debt or the liability in question and have no reference to the right of the person enforcing ft. 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....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... against the petitioners herein and pending in the Court of the Judicial Magistrate of First Class Madanapalle. Thus, the Criminal Petition is allowed."   10. It is thus apparent that except the Division Bench of Andhra Pradesh High Court the view expressed by the three other High Courts is that the bar applicable under Section 69(2) of the Partnership Act would not operate in proceedings under Section 138 of the Negotiable Instruments Act. 11. Supreme Court in BSI Ltd. (supra) clarifying the distinction between criminal and civil proceedings noted that a criminal prosecution is neither for recovery of money nor for enforcement of any security, Section 138 of the NI Act is a penal provision convicting and sentencing an offender for commission of the offence on proof of the guilt established after a criminal trial. Section 138 of the NI Act notes as under: "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 t....