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Even An Unregistered Partnership Firm Can Maintain ‘Cheque Bounce’ Complaint

In M/s Uttam Traders Ranghri vs. Tule Ram alias Tula Ram, an appeal was filed before the Himachal Pradesh High Court solely on the ground that one of the partners of the complainant-firm which is an unregistered partnership concern, had failed to prove that he was one of the partners of the complainant-firm and duly authorised by it to file the complaint and acquitted the respondent.

The High Court decided that two questions arise for consideration in this matter :-

1) Whether acquittal by the magistrate solely on the ground that the managing partner of the appellant having failed to establish that he was one of the partners of the complainant-firm and duly authorised by it to file the complaint was correct
2) Whether a partner of an unregistered partnership firm can maintain a complaint under Section 138 of the Negotiable Instruments Act.

For the first issue, the High Court referred to M/s Haryana State Co.Op., Supply and Marketing Federation Ltd. vs. M/s Jayam Textiles, Samrat Shipping Co. Pvt. Ltd. vs. Dolly George &  M.M.T.C.Ltd. vs. Medchl Chemicals and Pharma (P) Ltd., wherein the Hon’ble Supreme Court held that the only eligibility criteria prescribed by Section 142 for maintaining a complaint under Section 138 is that the complaint must be by the payee or the holder in due course and once this criteria is satisfied as the complaint is in the name and on behalf of the appellant Company. Therefore, even presuming that initially there was no authority, still the company can, at any stage, rectify that defect at a subsequent stage, and the company can send a person who is competent to represent the Company. Based on these judgments, the High Court decided that appellant-applicant ought to be granted one chance to place and prove on record the partnership deed.

For the second issue, the High Court found that the law is not consistent as different views have been expressed by various High Courts. Save and except an isolated authority of the Division Bench of Andhra Pradesh High Court in Amit Desai’s case (supra), all other High Courts in the country, have categorically held that the proceedings under Section 138 of the N.I. Act, are not recovery proceedings. The High Court noted the judgment of the Supreme Court in R Vijayan vs. Baby wherein It provides a single forum and single proceeding, for enforcement of criminal liability (for dishonouring the cheque) and for enforcement of the civil liability (for realization of the cheque amount) thereby obviating the need for the creditor to move two different fora for relief. Therefore, even an unregistered Partnership firm can maintain a complaint under Section 138 of the Act.




Comments

  1. Harish2 June 2020 at 14:06

    Thanks for sharing the information with us.

    ReplyDelete
  2. Harish2 June 2020 at 14:08

    I would like to share my thoughts about partnership firm registration online. Partnership is the relationship between people who have agreed to share the profits of an undertaking carried on by all or any of them acting for everyone. This is one of the easiest ways of creating a legal body in which a party of 2 or more can do business.

    ReplyDelete

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