How the complaint has to be filed When the Payee is a Proprietary Concern or a partnership firm under negotiable instruments Act.

How the complaint has to be filed When the Payee is a

Proprietary Concern or a partnership firm under negotiable instruments Act.

 

 

 How the complaint has to be filed When the Payee is a

Proprietary Concern ?

In the case of A.C. Narayanan v. State of Maharashtra and

Another [AIR 2014 SC 630] , the Supreme Court has very

clearly held that where the payee is a proprietaryconcern,

the complaint can be filed

A) by the proprietor of the proprietary concern,

describing himself as the sole proprietor of the "payee"; or

B) the proprietary concern describing itself as a sole

proprietary concern, represented by its sole proprietor; or

C) the proprietor or the proprietary concern represented

by the attorney holder under a Power of Attorney executed

by the sole proprietor.

A proprietorship is nothing more than a cloak or a trade

name acquired by an individual or a person for the purpose

of conducting a particular activity. With or without such

trade name, it (sole proprietary concern) remains identified

to the individual who owns it. It does not bring to life any

new or other legal identity or entity. No rights or liabilities

arise or are incurred, by any person (whether natural or

artificial), except that otherwise attach to the natural person

who owns it. Thus it is only a 'concern' of the individual

who owns it. The trade name remains the shadow of the

natural person or a mere projection or an identity that

springs from and vanishes with the individual. It has no

independent existence or continuity.

The Hon’ble karnataka High court in a decision

rendered on 21.09.2022 H.N. Nagaraj V/S Suresh Lal Hira

Lal Crl.P.No.8257/2019 Citation: [2022 LiveLaw (Kar)

400] has held that "In a proceeding under Section 138 of

N.I.Act, the arraying of a proprietor as an accused or a

proprietary concern represented by the proprietor would

be sufficient compliance with the requirements under

Section 138 of N.I.Act, the proprietor and the proprietary

concern are not required to be separataely arrayed as a party

accused."

How the complaint has to be filed When the Payee is the partnership firm? Whether an Unregistered Firm is Entitled to Maintain a Complaint Under Section 138, N.I. Act?

Section 69 of the Partnership Act deals with the effect

of non-registration of a firm.

Effect of Non-Registration:

(1) No suit to enforce a right arising from a contract or

conferred by this Act shall be instituted in any Court by or

on behalf of any person suing as a partner in a firm against

the firm or any person alleged to be or to have been a

partner in the firm unless the firm is registered and the

person suing is or has been shown in the Register of Firms

as a partner in the firm.

(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 ......”

The Hon’ble Gauhati High Court in the case of Indrajit

Gogoi v. Auto Sales and Service Station, (2008) 3 GLR 440,

while disposing a criminal petition filed under Section 482,

Cr.P.C observed as follows:

‘More importantly, nothing contained in Section 69,

prohibits prosecution, in terms of Section 138 of the Act, by

an unregistered firm, of a person, who may have issued a

cheque addressed to such a firm, when such a cheque is

dishonoured and, upon notice of demand for payment

having been received by the drawer, the drawer fails to

make payment. Considering this, it is clear that there was

no bar, on the part of the present unregistered firm, to

institute criminal prosecution against the petitioner, as

accused, for dishonour of the said cheque.’’’

Whether the Partnership Firm (Be it registered or unregistered] must be made as an accused along with the other partners, in order to maintain a complaint for an offence under Section 138 of the Negotiable Instruments Act?

To answer this question, it is very much relvevant to

mention the Land mark Judgment of Hon’ble Madras High

Court in the case of Rangabashyam vs Ramesh [Crl.OP

No 13147 of 2015 Decided on 23.7.2019] 2019 CTC (6)

392 it has been held that “Section 141 of the Negotiable Instruments Act deals with the concept of vicarious liability, wherein for the offence committed by the Company or a partnership firm, the directors or the partners, as the case may, are deemed to be guilty of the offence when it is shown that they are in charge of and responsible for the conduct of the day-to-day affairs of the business or the firm, as the case may be. While

interpreting the provision, the Hon'ble Supreme Court has

categorically held that the complaint cannot be maintained

against the directors of the Company, without making the

company as an accused person. This concept has been

extended even for Partnership Firms. The registration or

non-registration of the Partnership Firm will have no

bearing insofar as 141 of the Negotiable Instruments Act is

concerned. In view of the above discussion, this Court is not in

agreement with the submissions made by the learned

counsel for the respondent. In this case admittedly, the

cheque was given in the name of the Partnership Firm and

after the cheque was dishonored, no statutory notice was

issued to the Partnership Firm, and the Partnership Firm was

not made as an accused in the complaint. Only the partners

have been shown as accused persons in this complaint. Such

a complaint is unsustainable and not in accordance with

Section 141 of the Negotiable Instruments Act and the law

laid down by the Hon'ble Supreme Court. Therefore, the

proceedings will have to be necessarily interfered with by

this Court in exercise of its jurisdiction under Section 482 of

Cr.P.C.

In the result the proceedings in C.C.No.550 of 2012,

pending on the file of the learned Judicial Magistrate No.I,

Villupuram, is hereby quashed and the Criminal Original

Petition is accordingly allowed. Consequently, the

connected miscellaneous petitions are closed.”