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S.K. Real Estates And Another v/s S. Ahmed Meeran

    Crl.O.P.No.25135 of 2000

    Decided On, 13 November 2001

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE C. NAGAPPAN

    For the Petitioners: V. Krishnamoorthy, Advocate. For the Respondent: S. Haja Mohideen Gisthi, Advocate.



Judgment Text

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 under Section 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 concerned 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 confining 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 initiated 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 M/s. Sri Sivasakthi Industries, rep. by its proprietor, Raman v. M/s. Arikant Metal Corporation, 1992 Mad LW (Cri) 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 under Section 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, (1994) 3 Cur Cri R 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 v. Pankaj Mashruwala, reported in 1996 Cri LJ 3099, R. R. Jain, J. held that definition of person under Section 11 of Indian Penal Code and under Section 3(42) 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 proprietor S. Ram Mohan v. Sri Suresh Bafna, (1999) 1 Mad LW (Crl) 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 v. M/s. Dodla Dairy Limited, (1999) 1 Mad LW (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. Any how, 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

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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 in so far as the first petitioner is concerned and the proceedings as against accused No. 1 in C.C. No. 5890 of 1997 on the file of V-Metropolitan Magistrate, Egmore, Chennai, are hereby quashed. Connected Cri. M.P. No. 1238 of 2001 is closed. Petition partly allowed.
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