# Gurcharan Singh v. State of U.P. and another

- **Citation:** (2002) 2 ILRA 570
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2002-05-23
- **Case number:** Criminal Misc. Application No. 3875 of 2000
- **Bench:** R. K. Dash
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/gurcharan-singh-v-state-of-u-p-and-another-39854
- **Pages:** 6

## Headnote

Sri Satish Trivedi
Sri K. B. Srivastava
Sri Ashish Kumar Singh
Sri R. K. Jain
A.G.A.

Negotiable Instrument Act- Section 138-
complaint made by unregistered firm
whether can be maintained.Held- 'Yes'

Held-Para 9

A criminal prosecution is neither for
recovery of money nor for enforcement
of any security etc. Section 138 of the
act is a penal provision the commission
of which offence entails a conviction and
sentence on proof of the guilt in duly
conducted criminal proceedings. Once
the
offence
under
section
138
is
completed, the prosecution proceeding
can be initiated not for recovery of the
amount covered by the cheque but for
brining the offender to penal liability.
Case law discussed:
2000 SCC (Ga) 538
1999 I.S.J. (Bombay) 701
AIR 1975 Kerala -144 distinguished

Words and phrases-'Suit' -means a
process instituted in a court for recovery
or protection of right, enforcement of a
claim or to redress and civil injuries.
Held-para 7

It is, therefore, desirable to refer to 'Law
of
Lexicon'
and
the
judicial
pronouncements to ascertain the true
meaning of word 'Suit' in the legal
context.
'Suit'
means
a
proceeding
instituted in civil court by presentation
of a plaint. The word 'Suit' ought to be
confined to such proceedings as, under
that description, are directly dealt with
in the code of civil procedure, or suchas
by the operation of the particular Act
which regulates them are treated as
suits (See Law of Lexion) 1997 Edition).
The word 'Suit' in common parlances
means a process instituted in a court for
recovery
or
protection
of
a
right,
enforcement of a claim, or to redress
civil injuries.

## Text

http://www.allahabadhighcourt.nic.in
 INDIAN LAW REPORTS ALLAHABAD SERIES [2002
570
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 23.05.2002

BEFORE
THE HON'BLE R. K. DASH, J.

Criminal Misc. Application No. 3875 of 2000

Gurcharan Singh

...Applicant
Versus
State of U.P. and another
 ...Opposite parties

Counsel for the Applicant:
Sri R.R. Singh

Counsel for the Respondents:
Sri Satish Trivedi
Sri K. B. Srivastava
Sri Ashish Kumar Singh
Sri R. K. Jain
A.G.A.

Negotiable Instrument Act- Section 138-
complaint made by unregistered firm
whether can be maintained.Held- 'Yes'

Held-Para 9

A criminal prosecution is neither for
recovery of money nor for enforcement
of any security etc. Section 138 of the
act is a penal provision the commission
of which offence entails a conviction and
sentence on proof of the guilt in duly
conducted criminal proceedings. Once
the
offence
under
section
138
is
completed, the prosecution proceeding
can be initiated not for recovery of the
amount covered by the cheque but for
brining the offender to penal liability.
Case law discussed:
2000 SCC (Ga) 538
1999 I.S.J. (Bombay) 701
AIR 1975 Kerala -144 distinguished

Words and phrases-'Suit' -means a
process instituted in a court for recovery
or protection of right, enforcement of a
claim or to redress and civil injuries.
Held-para 7

It is, therefore, desirable to refer to 'Law
of
Lexicon'
and
the
judicial
pronouncements to ascertain the true
meaning of word 'Suit' in the legal
context.
'Suit'
means
a
proceeding
instituted in civil court by presentation
of a plaint. The word 'Suit' ought to be
confined to such proceedings as, under
that description, are directly dealt with
in the code of civil procedure, or suchas
by the operation of the particular Act
which regulates them are treated as
suits (See Law of Lexion) 1997 Edition).
The word 'Suit' in common parlances
means a process instituted in a court for
recovery
or
protection
of
a
right,
enforcement of a claim, or to redress
civil injuries.

(Delivered by Hon'ble R.K. Dash, J.)

1. M/s Sterling Novelty Products,
Moradabad (U.P.) is a partnership firm of
which Mrs. Jagdish Kaur W/o Gurbaksh
Singh, Mrs. Jasleen Kaur W/o Arvinder
Pal Singh and Master Uvraj Singh are the
partners. The aforesaid firm is engaged in
export business in handicrafts, brass
wares, textiles and aluminum items at
Moradabad since 1992. International Gifts
Ltd is a company at Ontario, Canada and
Gurcharan Singh, petitioner herein is the
President of the said company. M/s.
Sterling Novelty Products through its
partner Uvraj Singh represented by his
natural guardian Arvinder Pal Singh filed
a complaint before the court of Chief
Judicial Magistrate, Moradabad bearing
case no.852/9 of 1999 under Section 138
of
Negotiable
Instruments
Act.
(hereinafter referred to as "the Act") and
Sections 406 and 420 I.P.C. arraying
International Gifts Ltd and its President
Gurcharan Singh as accused.
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2 All] Gurcharan Singh V. State of U.P. and another
571
2. The case of the complainant, in
short is that the firm (M/S. Sterling
Novelty Products) Supplied brass wares
and textiles to the accused persons which
were duly received by them. Towards
payment thereof, they issued post dated
cheques no. 001530 dt. 15.2.1999 of
worth $ 85,959.20 and no. 001531 dated
15.3.1999 of worth $84,208,80 Canadian
Dollar. Both the aforesaid cheques were
issued by Gurcharan Singh, the petitioner
as President of M/S International Gifts
Ltd. The complainant presented the
cheques no.001530 dated 15.2.1999 with
its
banker
Indian
Overseas
Bank,
Moradabad and the same was sent to
Bank of Monteral, Canada. The Cheque
was dishonoured and returned unpaid
since the accused intimated his banker to
stop payment. Similarly the other cheque
No.001531
dated
15.3.1999
which
complainant deposited with its banker,
Indian Overseas Bank, Moradabad was
dishonoured on the very same ground.
The complainant then served notice upon
the accused as provided in the Act asking
for payment of the amount covered under
both the cheques within fifteen days of
the date of receipt of the notice. As the
accused failed to make payment, the
present complaint was filed. However,
after filing of the complaint the amount
covered under cheque no.001530 was
paid.
The
learned
Magistrate
after
recording
the
statement
of
the
complainant and having gone through the
relevant materials and documents was
satisfied that prima-facie offence under
Section 138 of the Act and Section 420
I.P.C. was made out against the accused
persons
and
accordingly.
took
congnizance of the said offence and
issued process to the accused Gurcharan
Singh, President of the International Gifts
Ltd for appearance, the accused has filed
the present case seeking quashing of the
criminal proceeding inter-alia on the
ground that the notice issued after
bouncing of cheques is bad in law and
that the complaint is barred by limitation
as provided in Section 142 of the Act.
Admitting
that
the
cheques
were
dishonoured by his banker on his
intimation, the accused has urged that he
was compelled to take such steps since
the goods supplied by complainant's firm
were sub-standard and therefore, in view
of the nature of the dispute he can not be
imputed with any criminal liability.

3. The complainant on being noticed
filed return refuting the allegation that the
goods supplied by it were sub standard. It
is urged that when the cheques were
returned unpaid by the Bank of Monteral,
correspondence was made with the
accused to explain the reason of the return
of
the
cheques.
He
responded
to
complainant's letter, but did not take such
plea that payment was stopped as the
goods supplied were sub-standard. As
regards the validity of the notice and
period of limitation for filing complaint,
his case is that on being informed by its
banker, Indian Overseas Bank on 23-41999 regarding dishonour of the cheques,
he sent notice on 6.5.1999 to the accused
calling upon him to pay that amount of
the
cheques
and
the
same
was
acknowledged on 10.5.1999. As provided
under law, the accused was required to
discharge his liability within 15 days from
the date of receipt of the said notice that
is, on or before 25th May, 1999. Since the
accused did not discharge his liability and
failed to make payment, the complainant
filed the case on 18.6.1999 which is well
within time as envisaged in Section 142
of the Act. The accused by way of filing
supplementary affidavit has taken two
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 INDIAN LAW REPORTS ALLAHABAD SERIES [2002
572
new
more
grounds
challenging
the
criminal proceeding that the firm of the
complainant
namely,
M/s.
Sterling
Novelty Products being not a registered
firm cannot maintain criminal case and
that the complaint was not a properly
constituted one since the Vakalatnama so
filed does not bear the signature of the
complainant. To this, complainant replied
by way of affidavit denying the allegation
and urged that the firm is a registered firm
and that complaint was filed by one of the
partners, a minor through his natural
guardian.

4. Sri R.R. Singh, learned Counsel
for the petitioner at the commencement of
the argument raised three contentions that
the complaint so filed was not a properly
constituted
one
in
as
much
as,
Vakalatnama filed in the Court is an
unsigned one, that the petitioner was not
liable to pay the amount covered under
the cheque in question, for the goods
supplied were sub-standard and that M/s.
Sterling Novelty Product being not
registered firm under the Partnership Act
cannot maintain the criminal proceeding.
He, however, confined his argument as to
the
maintainability
of
the
criminal
proceeding, in support where of he relied
upon a decision of the Andhra Pradesh
High Court in the case of Mr. Amit Desai
and another Vs. M/s. Shine Enterprises
and another, 2000 Cri. L.J. 2386.

5. Sri Satish Trivedi, Senior
Advocate assisted by Sri K.B. Srivastava
appearing for the complainant- respondent
no.2 on the other hand urged that it is
untrue that the Vakalatnama was not
executed by the father of the minor, one
of the partners of the aforesaid firm. The
Xerox copy of the Vakalatnama which
has been filed by the petitioner is not
legible and properly Xeroxed one. In fact,
it was executed by the complainant's
father.
Even
conceding
that
the
Vakalatnama was not executed by the
minor's father, yet the same cannot be a
ground to dismiss the complaint at the
threshold. With regard to the defence plea
that the goods supplied were substandard, it is submitted that it is false and
after thought. Besides such a plea cannot
be entertained and complaint can not be
quashed on the premise that the dispute
related to commercial transaction. In
answer to the maintainability of the
criminal proceeding as raised by the
learned counsel for the petitioner, he
contended that M/s. Sterling Novelty
Products is a registered partnership firm
and that is the reason why such a plea was
not taken in the petition filed under
Section 482 Cr.P.C. Moreover, assuming
that it is an unregistered firm, what is
barred
under
Section
69,
of
the
Partnership Act is the 'suit' and this being
a
criminal
case
arising
out
of a
'complaint' under Section 138 of the Act,
the said provision cannot be borrowed and
applied to it.

6. The factual aspect of the case that
emerges from the pleadings of the parties
and the submissions made by the learned
counsel appearing for them is that two
cheques in question issued by the
petitioner
as
President
of
M/s.
International
Gifts
Limited
to
M/s.
Sterling Novelty Products, Moradabad
were deposited with its banker namely,
Indian Overseas Bank, Moradabad who in
turn sent the same for encashment to the
banker of the petitioner, but it returned the
cheques unpaid in view of the intimation
by the petitioner to stop payment.
Accordingly,
Indian
Overseas
Bank
informed
the
respondent
regarding
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2 All] Gurcharan Singh V. State of U.P. and another
573
bouncing of cheques on 23-4-1999. The
respondent firm thereupon gave notice in
writing to the petitioner on 6-5-1999
making demand for payment of the
amount covered under the cheques as
provided under Section 138 (b) of the Act.
The notice was served on 10-5-1999 i.e.
within
stipulated
period.
When the
petitioner failed to make payment within
the permissible period of fifteen days of
the receipt of the notice, respondent-firm
through one of its partner filed complaint
on 18-6-1999 which is within the period
of limitation as prescribed under Section
142 of the Act. In that view of the matter,
the sole question posted is whether,
assuming the contention of the petitioner
that the respondent- firm is not a
registered one, the criminal proceeding
would be maintainable in view of the bar
created
by
Section
69(2)
of
the
Partnership Act. Before proceeding to
answer the said question, it may be noted
that the petitioner's assertion that the
respondent firm is unregistered one has
been stoutly denied and disputed. It is
affirmatively pleaded that the firm is
registered firm.

To appreciate the submission, the
relevant part of Section 69 of the
Partnership Act necessary for the purpose
is extracted hereunder:

"69 Effect of non- registration-(1)
xxxxxxxx

(2) No. suits to enforce a right arising
from a contract shall be instituted in any
Court by or on behalf of a firm against
any third party unless the firm is
registered and the persons suing are or
have been shown in the Register of Firms
as Partners in the firm.
(3) xxxxxxxxx
(4) xxxxxxxxx
7. The aforesaid provision postulates
that if a firm is not registered one, it or
anybody on its behalf cannot maintain a
'suit' against a third party to enforce a
right arising from a contract. So, what is
barred is a 'suit' against a third party to
enforce a right arising from a contract. So,
what is barred is a 'suit' that has been
filed to enforce a right arising from a
contract. In other words, the liability of
third person to the firm arising out of a
contract cannot be enforced by way of
suit if the firm is unregistered. The word
'suit' has not been defined in the
aforesaid Act. It is, therefore, desirable to
refer to 'Law of Lexicon' and the judicial
pronouncements to ascertain the true
meaning of word 'suit' in the legal
context. 'Suit' means 'a proceeding
instituted in civil court by presentation of
a plaint. The word 'suit' ought to be
confined to such proceedings as, under
that description, are directly dealt with in
the Code of Civil procedure, or such as by
the operation of the particular Act, which
regulates them are treated as suits (See
Law of Laxicon, 1997 Edition). The word
'Suit' in common parlance means a
process instituted in a court for recovery
or protection of a right, enforcement of a
claim, or to redress civil injuries.

8. Section 142 of Act under caption
"Congnizance of offences" provides that
conginizance of the offence under Section
138 can be taken upon a ' complaint' in
writing made by the payee or the holder in
due course of the cheque. The word
'complaint' defined in section 2 (d) of the
Code of Criminal Procedure means any
allegation made orally or in writing to a
Magistrate, with a view to taking action
under the said Code, that some person,
whether
known
or
unknown,
has
committed an offence, but does not
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 INDIAN LAW REPORTS ALLAHABAD SERIES [2002
574
include a police report. Since Section 138
is a penal provision that prescribes
punishment for bouncing of cheque on
any of the grounds mentioned therein, the
legislature in its wisdom has used the
word 'complaint' and not 'suit' in Section
142 because a 'Suit' can be maintained
for recovery of money or for any other
civil remedies. So the bar created for a
maintaining a suit in section 69 of the
Partnership Act by an unregistered firm
cannot be stretched and applied to
maintain
criminal
proceeding
under
Section 138 of the Act. In Amit Desai
(supra) a Division Bench of Andhra
Pradesh High Court has taken the view
that the firm being not registered under of
the Partnership Act cannot maintain a
complaint under Section 138 of the Act.
No discussion on point of law involved
was made by the learned Judges except
referring to Section 69 of the Partnership
Act and some decisions of the Apex
Court. While disagreeing with the view
taken by the Kerala High court that
Section 69 (2) of the Partnership Act is
applicable only where civil rights are
invoked, the learned Judges referred to
explanation to Section 138 of the Act and
observed "enforcement of legal liability
has to be in the nature of civil suit
because the debt or other liability cannot
be recovered by filing a criminal case and
when there is a bar of filing a suit by
unregistered firm, the bar equally applies
to criminal case as laid down in
explanation (2) of Section 138 of the
Negotiable Instrument Act." A Division
Bench of the Kerala High Court in the
case of Kerala Arecanut Stores Vs. M/s
Ramkishore and Sons and another, AIR
1975 Kerala 144 having made reference
to various provisions of the Act regarding
rights/ Obligations arising out of a
negotiable instrument observed that the
obligation of the drawer of the cheque as
well as the indorser to the indorsee who
is the holder in due course arises by
virtue of statutory provision and there
being no privity of contract between the
maker of a cheque and the holder in due
course, any right of action available to
such holder is not under any contract. So
he is entitled to sue on his cheque by
reason of the right conferred upon him by
the statute. That being so, action under
Section 138 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. To the same effect is view of
a learned Single Judge of the said High
Court in the case of Abdul Gafoor Vs.
Abdurahiman,1999 ISJ (Banking) 701. It
is observed in the said case that "the
effect
of
non
registration
of
the
partnership firm under Section 69 of the
Partnership Act is applicable only to cases
involving civil rights and it has no
application to criminal cases."

9. In a recent judgment rendered by
the Supreme Court in BSI Ltd and
another Vs. Gift Holdings Pvt. Ltd and
another, 2000 SCC (Cri) 538, the word
'suit' came to be interpreted for deciding
maintainability of a proceeding under
Section 138 of the Act in view of the ban
imposed by of the Sick Industrial
Companies (Special Provisions) Act.
Under Section 22 (1) of the aforesaid Act,
it is provided that no suit for recovery of
money or enforcements of any security
against
the
industrial
company
or
guarantee in respect of any loan or
advance granted to the industrial company
shall lie if in respect of an industrial
company, an inquiry under Section 16 is
pending or any scheme referred to under
Section 17 is under preparation or
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2 All] Vijai Kumar Verma V. State of U.P. and others
575
consideration or a sanctioned scheme is
under implementation or where an appeal
under Section 25 relating to an industrial
company is pending adjudication. It was
contended
that
the
ban
against
maintainability of a suit for recovery of
money would encompass prosecution
proceedings also. Reliance was placed on
the meaning of the word 'suit' as given in
'Bouvier's Law Dictionary' Repelling
such contention the court observed that
the word 'Suit' envisaged in Section 22
(1) cannot be stretched to criminal
prosecutions. A Criminal prosecution is
neither for recovery of money nor for
enforcement of any security etc. Section
138 of the Act is a penal provision the
commission of which offence entails a
conviction and sentence on proof of the
guilt
in
duly
conducted
criminal
proceedings. Once the offence under
Section 138 is completed, the prosecution
proceedings can be initiated not for
recovery of the amount covered by the
cheque but for bringing the offender to
penal liability.

10. In view of discussions made
above, I would hold that even accepting
the contention of the learned counsel for
the petitioner that M/s Sterling Novelty
Products is not a registered firm under the
Partnership Act, yet the bar created by
Section 69 of the said Act has no
application for maintaining a criminal
proceeding under Section 138 of the Act.
In that view of the matter, no interference
is called for in the criminal proceeding
(case no.852/9 of 1999) pending against
the petitioner in exercise of inherent
power.

11. In the result, Criminal Misc.
Application
fails
and
the
same
is
dismissed.
12. The court below is directed to
take up expeditious hearing and dispose
of the case within reasonable time
preferably within a period of six months
from date of receipt of this judgment.
---------
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 29.7.2002

BEFORE
THE HON'BLE M. KATJU, J.
THE HON'BLE K.N. SINHA, J.

Criminal Misc. Writ Petition No. 915 of 2002

Vijai Kumar Verma

...Petitioner
Versus
State of U. P. and others ...Respondents

Counsel for the Petitioner:
Sri Madhur Prakash
Sri S.P. Singh
Amicus Curiae

Counsel for the Respondents:
A.G.A.

Recommendation
to
restore
the
provision of anticipatory bail under
section 438 of Cr.P.C.- Thousands of writ
petitions
and
section
482
Cr.P.C.-
applications are being filed in this Court
praying for stay of the petitioner's
arrest- problem will be obviated by
restoring the provision for anticipatory
bail which was contained in Section 438
Cr.P.C. but was deleted in UP by section
9 of U.P. Act No. 16 of 1976 (held in para
17).

We,
therefore,
make
a
strong
recommendation to the U.P. Government
to immediately issue an ordinance to
restore the provision for anticipatory bail
by repealing section 9 of U.P. Act No. 16
of 1976, and empowering the High Court
as well as the Sessions Courts to grant
anticipatory bail.