S.K. Real Estates and Another vs S. Ahmed Meeran

C. Nagappan, J.—The petitioners are accused Nos. 1 and 2 respectively in C.C. No. 5890 of 1997 on the file of V-Metropolitan

Magistrate, Egmore, Chennai and they pray for quashing the proceedings in the case.

The respondent has filed a private complaint against the petitioners arraying them as accused Nos. 1 and 2 for offence u/s 138, Negotiable

Instruments Act. According to the respondent/complainant, the first accused is a concern, represented by its proprietor S.K. Krishnamurthy and

the second accused is S.K. Krishnamurthy and they entered into an agreement for sale with the complainant and he paid a sum of Rs. 2,20,000/-.

The transaction did not materialise and hence the first accused concern and its proprietor gave a cheque in favour of the complainant. On

presentation, the cheque got dishonoured on 22.5.1997 with an endorsement ""Funds insufficient"". At the request of second accused, the cheque

was represented on 3.6.1997 and 14.6.1997 and on both the occasions, the cheque got dishonoured for the same reason and thereafter the

complainant issued a lawyer''s notice, dated 25.6.1997, to the accused and it was received by the accused. No payment had been made even

thereafter. Hence the complaint is filed.

Mr. V. Krishnamoorthy, learned Counsel for the petitioner, at the time of argument, made an endorsement that he is withdrawing the petition as

against the second petitioner and containing his argument in respect of first petitioner alone. He contended that the proprietary concern is not a

legal entity apart from its proprietor, the concern name being the name of the proprietor himself and hence the prosecution against the first

petitioner is not sustainable and liable to be quashed. Per contra, the learned Counsel for the respondent contended that both the proprietary

concern and the proprietor can be proceeded against and the prosecution against both can be sustained.

Section 141 of Negotiable Instruments Act deals with offences by companies and in the explanation it is stated that company means any body

corporate and includes a firm or other association of individuals and director in relation to a firm means a partner in the firm. A proprietary concern

is not a firm or company and hence Section 141 is not applicable. The proprietor is the person who does business but for trading convenience,

business is done in the name of proprietary concern. 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 initialed against it. In case of proprietary concern, the

proprietor is always an affected person, who can either indict or be indicted.

Mr. V. Krishnamoorthy, learned Counsel for the petitioner, mainly relied on the decision of this Court in Sri Sivasakthi Industries, rep. by its

proprietor, Raman v. Arikant Metal Corporation 1992 L.W. (Crl.) 347. In that case, the first accused was a concern represented by proprietor

Raman and the second accused was Raman and they were proceeded against for an offence u/s 138 of N.I. Act. Pratap Singh, J, held that

accused Nos. 1 and 2 are one and the same person and, as such, the proceedings as against the first accused, namely, M/s. Sri Sivasakthi

Industries, represented by its proprietor, Raman, are to be quashed and the complaint is maintainable as against the second accused. The facts of

the above case and the present case are identical.

Mr. V. Krishnamoorthy, learned Counsel for the petitioner, drew my attention to some decisions on this point. In Raman v. Krishna

Pharmaceutical Distributors, III (1994) CCR 1601, Pratap Singh, J held that the proceedings against Sri Janaki Pharmacy, represented by

proprietor, are liable to be quashed, since the proprietary concern is not a legal entity and A. Raman was the drawer of the cheque, who can be

prosecuted.

In the decision of the Gujarat High Court in Satish Jayantilal Shah Vs. State of Gujarat, , R.R. Jain, J. held that definition of person u/s 11 of Indian

Penal Code and u/s 11 of General Clauses Act does not include ''proprietor'' and hence a proprietary concern is not a legal entity or juridic person

and it can neither initiate any proceedings nor proceedings can be initiated against it.

In Anas Industries, rep. by its proprietors. Ram Mohan v. Sri Suresh Bafna 1999 1 L.W. (Cri.) 405, B. Akbar Basha Khadiri, J. held that Anas

Industries is the accused and it is not a juridical person and the prosecution against the proprietorship suffers inherent defect and liable to be

quashed.

In yet another decision in Vaidyanathan, etc. v. Dodla Dairy Limited, etc. 1999 1 L.W. (Crl.) 395 M. Karpagavinayagam, J. held that it is a settled

position of law that the proprietorship concern by itself is not a legal entity apart from its proprietor; the proprietary concern and the proprietrix are

one and the same person. The learned Judge further held, that both proprietorship and proprietrix are one and the same and it can be put in the

cause title of the complaint, while prosecuting the drawer either as proprietorship concern represented by proprietrix or the proprietrix,

representing the proprietorship concern, as both the things convey the same meaning. Anyhow, this question does not arise in the facts of the

present case.

In this case, accused No. 1 is the proprietary concern and accused No. 2 is the proprietor and both the accused are one and the same person.

Accused No. 1 is not a legal entity or juridical person and the prosecution cannot be maintained against it. At the same time, the prosecution

against accused No. 2 is maintainable and can be continued. For the reasons stated above, the proceedings against accused No. 1 are liable to be

quashed,

In the result, this petition in respect of second petitioner/accused No. 2 is dismissed as withdrawn. The petition is allowed insofar as the first

petitioner is concerned and the proceedings as against accused No. 1in C.C. No. 5890 of 1997 on the file of V-Metropolitan Magistrate, Egmore,

Chennai, are hereby quashed. Connected Crl. M.P. No. 1238 of 2001 is closed.