Now Even an Unregistered Firm can filed Complaint u/s 138 of NI Act, 1888.

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Title of the Case – Now Even an Unregistered Firm can filed Complaint u/s 138 of NI Act, 1881.

Name of the case – Narendra vs. Balbirsingh., Crl.A. No. 748 of 2018 (Bombay High Court)

Date of Judgment – February 07, 2020

Judges: Justice P.N. Deshmukh and Justice Pushpa V Ganediwala

Subject and sections involved – Section 69 (2) of the Indian Partnership Act, 1932

Issue:

  1. Whether unregistered partnership firm can maintain a complaint under section 138 of the Negotiable Instrument Act?
  2. Whether prosecution of accused under section 138 of the Negotiable Instrument Act, 1881, is hit by the bar created by sub-section (2) of Section 69 of the Indian Partnership Act, 1932?

Fact of the Case:

The single judge bench of the Bombay High Court in it’s previous judgment namely, Sai Accumulator Industries, Sangammer vs. Sethi Brothers, Aurangabad, (2016) 5 Mh. LJ. 936, took the view that the complaint filed by an unregistered firm under Section 138 of the Negotiable Instrument Act, 1881, is not tenable in law in view of the bar under Section 69 (2) of the Indian Partnership Act, 1932.

The judgment of the single judge bench of this court has been challenged in this case.

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Ratio of the Case:           

The division bench of Bombay High Court observed that section 69 (2) of the Indian Partnership Act, 1932, cannot be stretched for securing immunity from criminal prosecutions under Section 138 of the Negotiable Instrument Act, 1881. Thus, the bar under Section 69 (2) of the Act, 1932 is liable to be confined only to the enforcement of contractual obligations.

The bench further observed that when a plaint is rejection being barred by Section 69 (2) of the Act, 1932, the same shall not preclude the plaintiff from presenting a fresh plaint in respect of the same cause of action, in view of Order 7 Rule 13 of the Code of Civil Procedure.

Furthermore, by way of simple endorsement, the cheque can be negotiated in the name of any person or registered firm and in this way, the effect of bar can be neutralised by an unregistered firm and in such an eventuality, there won't be a privity of contract between the drawer of the cheque and its holder.