Afsal Baker vs Maya Printers on 25 September, 2015.PDF-cheque bounce-ker HC-5 pg

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Afsal Baker vs Maya Printers on 25 September, 2015
Kerala High Court
Afsal Baker vs Maya Printers on 25 September, 2015
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE SATHISH NINAN
FRIDAY, THE 9TH DAY OF DECEMBER 2016/18TH AGRAHAYANA, 1938
CRP.No. 640 of 2015 ()
-----------------------
AGAINST THE ORDER IN OS 783/2013 of PRLINCIPAL MUNSIFF COURT,ERNAKULAM
DATED 25-09-2015
REVISION PETITIONER:
---------------------AFSAL BAKER, AGED 44,
S/O.BAKER, PROPRIETOR, ABLE PUBLISHING COMPANY, 38/2408,
1ST FLOOR, PARAKKAT BUILDINGS, K.K.ROAD, KUMARANASAN
JUNCTION, KOCHI-17.
BY ADV. SRI.B.JAYASANKAR
RESPONDENT(S):
-------------1. MAYA PRINTERS
S.N.COMPLEX, MAIN ROAD, EROOR P.O., NADAMA VILLAGE,
TRIPUNITHURA, REPRESENTED BY MANAGING PARTNER,
P.S.PRASAD,S/O.AK.SUNDARAN, PALACHUVATTIL HOUSE,
EROOR P.O., NADAMA VILLAGE, TRIPUNITHURA.
2. P.S.PRASAD
S/O.A K.SUNDARAN, PALACHUVATTIL HOUSE, EROOR P.O., NADAMA
VILLAGE, TRIPUNITHURA.
3. P.S.AJAYA KUMAR, AGED 40,
S/O.A K.SUNDARAN, PALACHUVATTIL HOUSE, EROOR P.O., NADAMA
VILLAGE, TRIPUNITHURA.
4. LEKHA AJAYAKUMAR
W/O.P.S.AJAYAKUMAR, PALACHUVATTIL HOUSE, EROOR P.O.,
NADAMA VILLAGE, TRIPUNITHURA.
5. SHIMNA PRASAD
W/O.P.S.PRASAD, PALACHUVATTIL HOUSE, EROOR P.O., NADAMA
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Afsal Baker vs Maya Printers on 25 September, 2015
VILLAGE, TRIPUNITHURA.
THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD
09-12-2016, THE COURT ON 21-12-2016 PASSED THE FOLLOWING:
ON
vdv
Sathish Ninan, J
C.R
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C.R.P No.640 of 2015
==========================
Dated this the 21st day of December, 2016
ORDER
1. The order dated 25.09.2015 passed in O.S No.783 of 2013 of Principal Munsiff's Court,
Ernakulam, is under challenge in this C.R.P, by the defendant in the suit. The suit was one for
recovery of money on dishonoured cheques. The defendant raised a contention regarding the
maintainability of the suit, which was considered as a preliminary issue. The said contention was
negatived by the impugned order.
2. The first plaintiff is a partnership firm. Plaintiffs 2 to 5 are its partners. For payment of amounts
due from the defendants to the plaintiff in connection with the business of printing and allied
services of the plaintiffs, the defendant issued C.R.P No.640 of 2015 four cheques in favour of the
first plaintiff firm in discharge of the liabilities. The cheques were dishonoured and hence the suit
was laid for recovery of the amounts due thereunder. The defendant filed a written statement
contending that the first plaintiff is an unregistered partnership firm and that the suit is not
maintainable under Section 69 (2) of the Partnership Act.
3. The issue regarding maintainability of the suit was considered as a preliminary issue. The learned
Munsiff, relying on the decision reported in Arecanut Stores v Ramakrishnan and Sons (1974 KLT
828 Kerala) and Haldiram Bhujiawala v A.K.Deepak (2000 (3) SCC 250 : 2000 KHC 479) concluded
that since the suit is on a dishonoured cheque, the bar under Section 69(2) of the Indian Partnership
Act will not apply. Accordingly, it was held that the suit is maintainable.
C.R.P No.640 of 2015
4. Learned counsel Sri.Jayasankar, would contend that the decisions relied on by the court below to
hold that the suit is maintainable, do not apply to the facts of the case at hand. The issue that was
considered in Arecanut Stores v Ramakrishnan and Sons (1974 KLT 828 Kerala) was the rights of an
endorsee of a cheque as against the drawer of the cheque. Between the endorsee and the drawer
there is no privity as such. The right to sue flows out of the statutory right that has arisen on
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Afsal Baker vs Maya Printers on 25 September, 2015
indorsement provided under the Negotiable Instruments Act. It was in such context that it was held
in the said judgment that the right to sue has arisen under the statute and not under the contract
and therefore, the suit is maintainable. He contends that in the instant case since the plaintiff in the
suit is none other than the payee of the cheque, the principle of privity of contract C.R.P No.640 of
2015 comes in and hence it cannot be said that the suit is for enforcing any statutory right.
5. It is not in dispute that the first plaintiff is an unregistered firm. The other plaintiffs in the suit are
the partners of the first plaintiff firm. For discharge of the amounts due from the defendant to the
firm, few cheques were issued. The cheques were dishonoured and accordingly, the suit is laid on
the dishonoured instruments. A copy of the plaint was made available to me during the course of
hearing, by the learned counsel for the petitioner. On a reading of the plaint, it is seen that the suit
as such is laid on the dishonoured cheques and not on the original cause of action based on the
contract relating to some printing work. The suit is laid on the instruments/the cheques as such.
Here it would be relevant to refer Section 69(2) of the Indian Partnership Act.
C.R.P No.640 of 2015 "S:69(2).- No suit 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."
6. Under Section 69(2) of the Partnership Act, there is an express bar on suits by an unregistered
partnership on a contract as against a third party. If the suit as laid is based on the original cause of
action, which the plaintiffs had as against the defendant, namely their business transaction,
definitely the suit would be squarely hit by Section 69(2) of the Partnership Act. The question that
arises for determination is as to whether the present suit is based on any contract between the
plaintiffs and the defendant.
C.R.P No.640 of 2015
7. Sections 30 and 37 of the Negotiable Instruments Act are as under:"S.30. Liability of drawer.- The drawer of a bill of exchange or cheque is bound in
case of dishonour by the drawee or acceptor thereof, to compensate the holder,
provided due notice of dishonour has been given to, or received by, the drawer as
hereinafter provided.
37. Maker, drawer and acceptor principals.- The maker of a promissory note or
cheque, the drawer of a bill of exchange until acceptance, and the acceptor are, in the
absence of a contract to the contrary, respectively liable thereon as principal debtors,
and the other parties thereto are liable thereon as sureties for the maker, drawer or
acceptor, as the case may be."
8. When a cheque issued by a drawer is dishonoured, the statute casts a liability on the drawer of the
instrument, by virtue of Section 30 and 37, to C.R.P No.640 of 2015 compensate the holder of the
instrument namely the payee. The liability is created under the statute dehors the liability under and
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Afsal Baker vs Maya Printers on 25 September, 2015
in terms of the original contract between the parties. As per Section 37 of the Negotiable
Instruments Act, the drawer of a cheque is liable thereon as principal debtor. The statute, under the
said two provisions, fixes a liability on the drawer of the cheque in case that instrument is not
honoured. In Arecanut Stores v Ramakrishnan and Sons (1974 KLT 828 Kerala) this Court held that
the Negotiable Instruments Act is a self contained Act and provides for the rights and obligations of
the parties to the Negotiable Instrument and that parties acquire rights under such instruments in
accordance with law. This Court has held that the obligation of the drawer of a cheque as well as the
endorser, to the endorsee, who is a holder in due course, arises by virtue of C.R.P No.640 of 2015
statutory provisions. In the said case, the court has considered the liability of the drawer of a cheque
as against an endorsee, who is a holder in due course. There the court noticed that there may not be
any privity of contract as such between the holder in due course and the drawer of the cheque, but
he is entitled to sue on the cheque by reason of the right conferred under the statute. The judgment
as such may not be applicable to the case at hand since, as noticed, the issue considered therein was
the liability of the payee as against a holder in due course, who is an endorsee from the original
payee.
9. In Raptakos Brett & Co. Ltd. v Ganesh Property (1998(7) SCC 184) the apex court held that
Section 69(2) cannot bar the enforcement of a suit by an unregistered firm in respect of the
statutory right or common law right. In the said case, it was held C.R.P No.640 of 2015 that right to
evict a tenant on expiry of the lease is a statutory right under the Transfer of Property Act. It was
held that "under law, the erstwhile landlord is entitled to restoration of possession by endorsement
of statutory obligation of the erstwhile tenant as statutorily imposed on him under Section 108(q)
r/w Section 111(a) of the Transfer of Property Act. The noncompliance of the statutory obligation by
the defendant, when made subject matter of corresponding legal right of the erstwhile landlord,
cannot be said to be giving rise to enforcement of any contractual right of the plaintiff arising from
the expired contract of tenancy". The apex court concluded that the right of eviction thereupon is
based on the statutory obligation and cannot be said that the cause of action arises out of the
erstwhile contract. Thus, the apex court has in categoric terms held that when C.R.P No.640 of 2015
the cause of action for the suit flows or originates from a statutory right or liability, the bar under
Section 69(2) of the Partnership does not come into play. The said judgment was again relied on by
the Apex Court in Haldiram Bhujiawala v A.K.Deepak (supra).
10. In the instant case, as noticed above, by virtue of Sections 30 and 37 of the Negotiable
Instruments Act, on the dishonour of a cheque, the statute creates a liability on the drawer, apart
from the general law of contracts. The right to sue on the contract is available and open to the party.
However, apart from that, the statute creates a liability as against the drawer of the instrument. If
the suit is on the original cause of action based on the original contract between the parties, there is
no doubt, the suit would be hit by Section 69(2) of the Indian Partnership Act. But, in the C.R.P
No.640 of 2015 instant case, what is sought to be enforced is the liability created under the
Negotiable Instruments Act. It is not a case where suit is filed on the original cause of action by
producing the cheques as a piece of evidence to prove the liability under the original contract. Here,
the suit itself is laid on the instrument. A reading of the plaint leaves no room for doubt regarding
that. The bar under Section 69(2) of the Indian Partnership Act would apply only where the suit is
sought to be laid on a contract and not in a case where statutory right/liability is sought to be
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Afsal Baker vs Maya Printers on 25 September, 2015
enforced. In the instant case, the suit being purely based on the liability under Section 30 and 37 of
the Negotiable Instruments Act, it is a suit based on statutory liability dehors the contract between
the parties. The suit cannot be held to be barred under Section 69(2) of the Indian Partnership Act.
C.R.P No.640 of 2015 In the circumstances, I find no reason to differ from the conclusion arrived at
by the court below to the effect that the suit is not barred under Section 69(2) of the Indian
Partnership Act and that it is maintainable.
In the result, the C.R.P is dismissed.
Sd/-
Sathish Ninan,
Judge
vdv
//TRUE COPY//
P.A TO JUDGE
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