Mallika Agencies vs Geetha Krishna Spinning (P) Ltd.

T.V. Masilamani, J.—Heard both sides.

The petitioner is the accused in the case filed by the respondent/complainant for the offence u/s 138 of the Negotiable Instruments Act, 1881.

The main contention of the petitioner is that the petitioner is the proprietary concern under the name and style "Mallika Agency" and the petitioner herein is not a juridical person and hence its proprietor Balachandra cannot represent the same and that therefore the impugned proceedings before the Judicial Magistrate, Rajapalayam is liable to be quashed.

Learned counsel for the petitioner has placed reliance on the decision Anas Industries v. Sri Suresh Bafna 1999 1 L.W. (CRL.) 405; and S.K. Real Estates v. S. Ahmed Merran 2002 CRL L.J. 1689 for the position that the petitioner is not a legal entity or juridical person and that therefore the prosecution against the petitioner cannot be maintained.

Per contra, learned counsel for the respondent has submitted in his argument that the petitioner being a proprietary concern is represented by the sole proprietor Balachandra and therefore he has further contended that the said concern represented by the proprietor in the petition is liable for prosecution u/s 138 and 141 of the Negotiable Instruments Act, 1881. He has drawn the attention of this Court to the decision, Lawn Hosiery Mills and Others Vs. Durga Fashions, and contended that in vie of the ratio laid down by this Court in the said decision, the prosecution impugned hereunder is maintainable against the petitioner.

In the said decision, the case was that the complainant was originally shown as proprietary concern represented by the proprietor and that during the trial, the cause title was amended by substituting the name of the proprietor in the place of the proprietary concern as the complainant. In this context, learned Judge of this Court, Justice M.KARPAGAVINAYAGAM rendered the decision with the following ratio:-

"That the prosecution by the proprietor representing the proprietary concern or by the proprietary concern represented by the proprietor were one and the same, as both convey the same meaning. Therefore, even without amendment, the complaints were maintainable because the complainant in both the cases was only the proprietor representing the proprietary concern. The amendment which had been permitted by the trial court would not change the character and basic structure of the complaints. The trial court was to continue the trial."

Relying on the earlier decision of this Court in N.Vaidyanathan/Deepika Milk Marketing v. Dodla Dairy Ltd. (2000) 1 M.W.N. (CRL) (Mad) 33 it has been clarified by Justice M. KARPAGAVINAYAGAM with reference to the decision 1999 1 L.W. (CRL.) 405 relied on by the petitioner, and such observation runs as follows:-

"Learned counsel for the petitioners would cite the decision reported in Anas Industries v. Suresh Bafna 1999 1 L.W.(Crl.) 405 where it is held that the complaint cannot be filed against the proprietorship concern, as the same would suffer inherent defect. But, here, the complaints have been filed by the proprietor Subramaniam, who has signed as complainant in both these complaints.

Moreover, in the decision of this Court in N.Vaidyanathan/Deepika Milk Marketing v. Dodla Dairy Ltd (2000) 1 M.W.N. (CRL) (Mad) 33 it is held that it is a settled position of la that the proprietorship concern by itself is not a legal entity, apart from its proprietor, the proprietary concern and the proprietor are one and the same person. It is further held in the said decision that the prosecution against the proprietor representing the proprietorship concern or proprietorship concern represented by its proprietor are one and the same, as both these things sink, sail and merge with only one entity.

So, the above proposition of la laid down by this court in regard to cause title relating to the accused would apply equally to the cause title of the complainant also. Therefore, by following the above proposition, it can be safely held that the prosecution by the proprietor representing the proprietorship concern or the proprietorship concern represented by its proprietor are one and the same, as both things convey the same meaning."

Conversely, in this case, the petitioner/accused is represented by the proprietor of the proprietary concern and therefore learned counsel for the respondent has argued and in my opinion rightly that in vie of the ratio laid down in the said decision, the petitioner has been correctly described in the complaint filed by the respondent.

In vie of the said findings rendered by this Court in Lawn Hosiery Mills and Others Vs. Durga Fashions, I am of the vie that the prosecution laid against the proprietary concern represented by the proprietor is valid in la and it follows that the contention of the learned counsel for the petitioner is not sustainable in this respect.

Under similar circumstances, this Court while deciding another case, Sri Sivasakthi Industries v. Arihand Metal Corporation 1992 (74) COMP CAS 749 Pratap Singh, J. (as he then was) reiterated the principle of la on this aspect of the matter that a proprietary concern as well as the proprietor are one and the same for the purposes of Section 141 of the Negotiable Instruments Act and that where a cheque is issued by the proprietor of a concern, he is the drawer of the cheque and he alone can be prosecuted and that therefore the proprietor is precluded from taking a defence that the cheque was issued on behalf of the concern and that he cannot be prosecuted.

In another case rendered by the Andhra Pradesh High Court in Dr. V. Bala Raju Vs. Pashak Feeds Pvt. Ltd. and Another, a question arose whether a person who manages the affairs of the proprietary concern may be made liable along with the proprietor of the sole proprietary concern for the offence u/s 138 of the Negotiable Instruments Act, 1881 by invoking the aid of Section 141 of the Act. It was held in that decision laying the principle on this aspect of the matter as follows:-

"Therefore, by virtue of the explanation, to Section 141 of the Act theory of vicarious liability is also extended to bodies corporate firms and associations of individuals only but not to sole proprietary concerns. Since Kousalya Enterprises, admittedly, is a proprietary concern, it cannot be said to be a Company, or a firm or a body corporate or an association of individuals, for to first respondent to invoke Section 141 of the Act to make the petitioner also liable on the ground that he is managing its affairs. It is well known that penal statute has to be strictly construed, and it is also well known while construing a Section no word can be added to or deleted from that Section. So by invoking Section 141 of the Act a person who is not either the drawer of the dishonoured cheque, or the proprietor but is in charge of the day to day affairs of a sole proprietary concern, cannot be made liable for an offence u/s 138 of the Act."

Hence it is abundantly made clear that either the drawer of the cheque on behalf of the sole proprietary concern or the sole proprietor of the concern is liable u/s 138 of the said Act and it follows that in this case the sole proprietor having been made accused is certainly liable under the said provisions of law.

Though the petitioner has raised several other contentions in this petition, this Court is of the vie that the same have to be established only during trial of the case and therefore this Court is of the concerned vie that this petition is liable to be dismissed as devoid of merits and the same is dismissed accordingly. Consequently, Crl.M.P.Nos.458 and 4127 of 2005 are closed.