Section 138 Prosecution not hit by bar created by Section 69(2) of Partnership Act

Narendra Vs Balbirsingh (Bombay High Court)

Section 138 of the N.I. Act is a penal provision, the commission of which entails prosecution and conviction on proving of guilt. Once the offence under Section 138 of the N.I. Act is completed, the prosecution can be initiated for bringing the offender to penal liability.

In Sai Accumulator’s case (supra), the learned Single Judge took a view that for the commission of the offence punishable under Section 138 of the N.I. Act, the amount must be the legally enforceable debt, while an unregistered firm could not enforce a debt against the third party due to the bar created by Section 69(2) of the Act of 1932 and in this way, the debt is not the legally enforceable debt.

In this background, there is no point in stretching the bar which is in the nature of temporary bar to the suit to the complaints under section 138 of the N. I. Act, which is in the nature of penal provision with the object to inculcate faith in banking transactions. The term ‘suit’ under Section 69(2) of the Act of 1932 must receive its plain and simple meaning. It cannot be stretched for securing immunity from criminal prosecutions. The bar under Section 69(2) of the Act of 1932 is liable to be confined only to enforcement of contractual obligations.