Whether proprietary firm can file complaint for dishonour of cheque through it prioprietor?

 The proprietary concern, however, is an unincorporated business entity, if it were an entity at all. Its registration, if any, is for fulfilling other statutory purposes, such as licensing by a civic body or taxing authority. Though it is usually called "the sole-proprietary concern", the expression "sole" is tautological--saying the same thing twice. There can be no more than one proprietor, after all. In this statutory backdrop, let us examine the trial Court's findings on this point: Who is the complainant?

(b) Who is the Complainant?

35. The trial Court takes note of P.W. No. 2's evidence. He is the official from the payee bank, that is the complainant's banker. The witness has deposed that BC Doshi is the proprietor; he produced a copy of account opening form, too. Despite that, the trial Court concludes that Doshi has no proper "authorization" to present the complaint "on behalf of the complainant company." To repeat, in relation to a proprietary concern, its Proprietor getting authorisation does not arise. The proprietary concern and the proprietor are but one; there is no dichotomy.

36. Here curiously, perhaps adding to the trial Court's discomfiture, the proprietor has sued in the assumed name; that is, in the proprietary concern's name. As it is not a legal entity, no proceedings could be maintained in its name. It is, actually, the proprietor who should have sued or who is deemed to have sued here. First, this issue has never been raised in the trial Court, so it passed sub silentio. Second, it is a curable defect; therefore, no need to make adjudicatory mountains out of procedural molehills.

IN THE HIGH COURT OF BOMBAY

Criminal Appeal No. 657 of 2018

Decided On: 23.07.2019

Doshi Brothers Vs.  The State of Maharashtra and Ors.

Hon'ble Judges/Coram:

Dama Seshadri Naidu, J.

Citation: 2020(1) MHLJ 759

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Whether accused in cheque bounce case can be acquitted if complainant has failed to produce Account books?

 The trial Court has accepted that the Company admitted the "issuance of subject cheques" and the "signature of the accused on these cheques." Then, it went on to observe that notably the complainant has produced no document to prove that the alleged goods were sold and delivered to the Company. So "the defence taken by the accused persons appears to be natural and probable one." It has finally held that Doshi, in his evidence, gave the details of the alleged transaction. Yet "neither any Register nor any book of accounts is produced on recorded to show the details as such the date of delivery of goods, quality, quantity and rate of the said goods, the mode of delivery of these gods etc."

57. I am afraid the trial Court has remained oblivious of the statutory presumptions under Sections 118 and 139 of the NI Act. The Company has led no direct evidence, nor does, of course, law compel it to. Then, to rebut, it must have exposed the flaws in the complainant's case. Has it done so?

58. To put this issue in perspective, first, let me observe that after admitting that it ordered steel, the Company has never denied its liability on the ground that it had not received the goods. The best, if not the earliest, opportunity it had was when it received the statutory notice. It remained quiet. Second, the Company has not given the cheques transaction-wise. It has a running account. It received the statement of account, checked it, and accepted it. Third, keeping aside everything else, Doshi can latch on to the statutory presumption under Section 139 that the cheques were given for the discharge of a legally enforceable debt. It must have been the Company's turn to rebut it. Wishing away a presumption is no rebuttal; neither is a bald denial.

IN THE HIGH COURT OF BOMBAY

Criminal Appeal No. 657 of 2018

Decided On: 23.07.2019

 Doshi Brothers Vs.  The State of Maharashtra and Ors.

Hon'ble Judges/Coram:

Dama Seshadri Naidu, J.

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What is distinction between partnership firm and proprietary concern ?

  The distinction between partnership firm and a proprietary concern is well known.  It is evident from Order 30 Rule 1 and Order 30 Rule 10 of the Code of Civil Procedure.  The question came up for consideration also before this Court in Ashok Transport Agency Vs. Awadhesh Kumar wherein this Court stated the law in the following terms (SCC pp. 569-70 para 6)
6. A partnership firm differs from a proprietary concern owned by an individual.  A partnership is governed by the provisions of the Partnership Act, 1932.  Though a partnership is not a juristic person but Order 30 Rule 1 CPC enables the partners of a partnership firm to sue or to be sued in the name of the firm.  A proprietary concern is only the business name in which the proprietor of the business carries on the business.  A suit by or against a proprietary concern is by or against the proprietor of the business.  In the event of the death of the proprietor of a proprietary concern, it is the legal representatives of the proprietary concern, who alone can sue or be sued in respect of the dealings of the proprietary business.  The provisions of Rule 10 of Order 30 which make applicable the provisions of Order 30 to a proprietary concern enable the proprietor of a proprietary concern.  The real party who is being sued is the proprietor of the said business.  The said provision does not have the effect of converting the proprietary business into a partnership firm.  The provisions of Rule 4 of Order 30 have no application to such a suit as by virtue or Order 30 Rule 10, the other provisions of Order 30 are applicable to  suit against the proprietor or proprietary business 'in so far as the nature of such case permits.'  This means that only those provisions of Order 30 can be made applicable to proprietary concern which can be so made applicable keeping in view the nature of the case. 

IN THE HIGH COURT OF JUDICATURE AT MADRAS
 DATED : 04.02.2016
CORAM :
THE HONOURABLE MS. JUSTICE R.MALA
Crl.O.P.No.19324 of 2015 & M.P.No.1 of 2015

  M/s.Lakshmi Metal Works 
     Proprietor K.Rajasekar 
 
Vs.

 State rep. by.
     The Inspector of Police
    Citation: 2016 CRLJ 2730

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Whether proprietorship firm can be prosecuted if proprietor dies?

 In respect of A3 is concerned, A3 is a proprietary concern. A proprietary concern does not have a separate legal entity apart from its proprietor since the proprietary concern and the proprietor are one and the same person. Thus, proprietary concern is not an independent, legal and juristic entity having legal recognition in the eye of law and it can neither initiate proceedings nor proceedings be initiated against it. In the instant case, A1 has borrowed money and a complaint has been preferred against A1 for failing to repay the money. Since A1 died, A3 shall not be impleaded as  accused and so, the proceeding against A3 is liable to be quashed. In the decision relied by the learned counsel for the petitioner in 2007 (5) SUPREME COURT CASES 103, it has been stated as follows :

  The distinction between partnership firm and a proprietary concern is well known.  It is evident from Order 30 Rule 1 and Order 30 Rule 10 of the Code of Civil Procedure.  The question came up for consideration also before this Court in Ashok Transport Agency Vs. Awadhesh Kumar wherein this Court stated the law in the following terms (SCC pp. 569-70 para 6)
6. A partnership firm differs from a proprietary concern owned by an individual.  A partnership is governed by the provisions of the Partnership Act, 1932.  Though a partnership is not a juristic person but Order 30 Rule 1 CPC enables the partners of a partnership firm to sue or to be sued in the name of the firm.  A proprietary concern is only the business name in which the proprietor of the business carries on the business.  A suit by or against a proprietary concern is by or against the proprietor of the business.  In the event of the death of the proprietor of a proprietary concern, it is the legal representatives of the proprietary concern, who alone can sue or be sued in respect of the dealings of the proprietary business.  The provisions of Rule 10 of Order 30 which make applicable the provisions of Order 30 to a proprietary concern enable the proprietor of a proprietary concern.  The real party who is being sued is the proprietor of the said business.  The said provision does not have the effect of converting the proprietary business into a partnership firm.  The provisions of Rule 4 of Order 30 have no application to such a suit as by virtue or Order 30 Rule 10, the other provisions of Order 30 are applicable to  suit against the proprietor or proprietary business 'in so far as the nature of such case permits.'  This means that only those provisions of Order 30 can be made applicable to proprietary concern which can be so made applicable keeping in view the nature of the case. 

15.  A Constitution Bench of this Court in S.M.S.Parmaceuticals Ltd. V. Neeta Bhalla furthermore categorically stated that the complaint petition must contain the requisite averments to bring about a case within the purview of Section 141 of the Act so as to make some persons other than the company vicariously liable therefor.  

It is a proprietary concern.  On the date of borrowal, it was stated that he borrowed for business purpose.  But the cheque has been issued as an individual capacity.  In such circumstances, I am of the view that the third petitioner is also not an accused because it is not a juristic person for prosecution.  

IN THE HIGH COURT OF JUDICATURE AT MADRAS
 DATED : 04.02.2016
CORAM :
THE HONOURABLE MS. JUSTICE R.MALA
Crl.O.P.No.19324 of 2015 & M.P.No.1 of 2015

  M/s.Lakshmi Metal Works 
     Proprietor K.Rajasekar 
 
Vs.

 State rep. by.
     The Inspector of Police
    Citation: 2016 CRLJ 2730

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Whether suit against proprietary concern is suit against proprietor of business?

A partnership firm differs from a proprietary concern owned by an
individual. A partnership is governed by the provisions of the Indian Partnership
Act, 1932. Though a partnership is not a juristic person but Order XXX Rule 1
CPC enables the partners of a partnership firm to sue or to be sued in the
name of the firm. A proprietary concern is only the business name in which the
proprietor of the business carries on the business. A suit by or against a
proprietary concern is by or against the proprietor of the business. In the event
of the death of the proprietor of a proprietary concern, it is the legal
representatives of the proprietor who alone can sue or be sued in respect of the
dealings of the proprietary business. The provisions of Rule 10 of Order XXX
which make applicable the provisions of Order XXX to a proprietary concern,
enable the proprietor of a proprietary business to be sued in the business
names of his proprietary concern. The real party who is being sued is the
proprietor of the said business. The said provision does not have the effect of
converting the proprietary business into a partnership firm. The provisions of
Rule 4 of Order XXX have no application to such a suit as by virtue of Order
XXX Rule 10 the other provisions of Order XXX are applicable to a suit against
the proprietor of proprietary business "insofar as the nature of such case
permits". This means that only those provisions of Order XXX can be made
applicable to proprietary concern which can be so made applicable keeping in
view the nature of the case.”
(emphasis is ours)
Based on the observations recorded in the aforesaid judgment, the second contention
advanced by the learned counsel for the appellant was, that in sum and substance, a
sole proprietorship concern allows the fictional use of a trade name on behalf of an
individual. It was contended, that truthfully only one individual is the owner of a sole
proprietorship concern. As such, according to learned counsel, the name of the sole
proprietorship concern, can again be substituted with the name of the sole proprietor.
If that is allowed, the NSC purchased by the appellant would strictly conform to the
mandate of law. According to learned counsel, it makes no difference whether the
individual’s name, or the proprietorship’s name is recorded while purchasing an NSC.
It was pointed out, that if the respondent was not agreeable in accepting the trade
name, the respondent ought to have corrected the NSC by substituting the name of
M/s. Bhagwati Vanaspati Traders with that of its sole proprietor, namely, B.K. Garg.
We find merit in the second contention advanced at the hands of the learned
counsel for the appellant. It is indeed true, that the NSC was purchased in the name
of M/s. Bhagwati Vanaspati Traders.
It is also equally true, that M/s. Bhagwati
Vanaspati Traders is a sole proprietorship concern of B.K. Garg, and as such, the
irregularity committed while issuing the NSC in the name of M/s. Bhagwati Vanaspati
Traders, could have easily been corrected by substituting the name of M/s. Bhagwati
Vanaspati Traders with that of B.K. Garg. For, in a sole proprietorship concern an
individual uses a fictional trade name, in place of his own name. The rigidity adopted
by the authorities is clearly ununderstandable.
The postal authorities having
permitted M/s. Bhagwati Vanaspati Traders to purchase the NSC in the year 1995,
could not have legitimately raised a challenge of irregularity after the maturity thereof
in the year 2001, specially when the irregularity was curable. 

“REPORTABLE”
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4854 OF 2009
M/s. Bhagwati Vanaspati Traders
.... Appellant
versus
Senior Superintendent of Post Offices, Meerut
Citation;AIR 2015SC 901

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Suit by proprietory concern -misdescription of plaintiff whether can be amended?

The counsel for respondent No. 1 cited J. D. Singh and Ors. v. Calcutta Port Trust, . It was held in this cited case that though a plaint in the name of an unregistered firm is legally non est for all purposes, yet, a plaint or a proceeding instituted in the trade or business name of a sole owner is not similarly deemed to be void for all future purppses. In cases of bona fide error where the mistake has been made not for any ulterior purpose that Court permits a rectification of the name so that the person suing is permitted even at a late stage to show himself as the claimant on record. Thus the case cited by the learned counsel for respondent No. 1 also accepts the proposition that the sole owner cannot file a suit in the trade name. However, the authority enables the rectification of the bona fide mistake.

8. The counsel for revision-petitioner cited Neogi Ghose & Co. v. Sardar Nehalsingh and Anr. . This case approves the proposition of permissibility of rectification. In this regard, the relevant facts were that on the objection being raised about the non-maintainability of suit as it was brought in the name of firm, the plaintiff, who was the sole proprietor of the firm, moved an application for amendment of plaint by inserting certain words before the name of firm, so as to indicate that the person carrying on business under the name and style of firm was the plaintiff. The learned Judge opined that the application should not be dismissed but having regard to the arguments, he expressed his preparedness to make the order directing that the amendment should be allowed upon the terms of payment of costs and holding that the plaintiff would be entitled to claim such relief if the suit had gone on from the time of his being joined as plaintiff.

Bombay High Court

Municipal Council vs K. Ravindra And Company And Ors. on 4 February, 2003

Equivalent citations: 2003 (6) BomCR 287, 2003 (2) MhLj 987, 2003(4)ALLMR672, , 2003(2)MhLj986, 

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