Whether proprietorship firm is a company u/s 141 n i act

Madhu Mittal (Querist) 20 June 2022 This query is : Resolved
A Loan is given to a Proprietorship Firm on the basis of post dated cheque of Proprietorship Firm duly signed by its Proprietor and A Promissory note signed by his son as Authorised Representative of Proprietorship Firm. When cheque presented, it was dishonored due to Insufficient Fund . Legal notice was got issued to 1. Proprietorship Firm 2. Proprietor 3. Authorised Representative. No reply from anyone of three.Case u/s 138 was lodged and Cognizance was taken against all three, Proprietor and Authorised Representative got bail. Substance of accusation was stated u/s 251.Now An application for discharge without mentioning Section in trial court has been put by Authorised Representative taking pleas that there is no relation of his with Proprietorship Firm and he was falsely implicated. Now there is A Supreme Court three bench decision Named Adalat Prasad V Rooplal Jindal in which it was stated that now remedy for accused is only u/s 482, Trial Court can not review its decision.Now there is a Supreme Court Decision Named Raghu Lakshminarayan Vs. Fine Tubes Decided On: 05.04.2007 according to which Proprietor Concern is not a Company u/s 141 N I Act, so its employee can not be implicated as accused. The reasoning for this decision not 100 per cent correct, according to someone’s view and mostly based on civil law which is also not correctly interpretated.
Now u/s 141 N I Act , Company means ……….includes a firm or …..
Here as per someone’s interpretation, a Firm is written, not Partnership Firm. So there a strong pleas that ‘a firm” includes not only both Partnership Firm Registered and Unregistered, but Proprietorship Firm also. Reliance is placed on following namely :
1. HIGH COURT OF MADRAS ,Swathi Creations Vs. Sivanandham Agencies, Decided On: 17.12.2004 MANU/TN/1575/2004 2. HIGH COURT OF ANDHRA PRADESH, Y. Venkata Reddy Vs. Jagadamba Enterprises and Anr. Decided On: 03.01.2002 MANU/AP/0893/2002
2. at : https://marketbusinessnews.com/financial-glossary/firm-definition-meaning/ A firm is a commercial enterprise…sole proprietorship, ..
3. Payee Proprietorship can lodged case u/s 138 (SC decision in Shankar Finance and Investments Decided on 26.06.2008) whie in Civil suit not in Payee name
4. It is settled law that statutory provisions shall have precedents over the judicial pronouncements
Now Guidelines is sought on following points:
1. Whether SC decision Adalat Prasad V Rooplal Jindal is sufficient to get application of Authorised Person dismissed at Trial Court ?
2. What is the correct law whether Proprietorship Firm is a company or not u/s 141 N I Act ?
3. If Proprietorship Firm is a company u/s 141 N I Act, how to deal with SC Decision Raghu Lakshminarayan Vs. Fine Tubes a) at trial Court 2) at High Court u/s 482 3) Whether can be called decision per in curiam on the basis of above
4. Anything else, by which Proprietorship Firm can be recognized a company u/s 141 N I Act
5. Any other guidelines, so that application of Authorised Representative can be dismissed not only at Trial Court level, if necessity arises u/s 482 also.

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This discussion examines whether a proprietorship firm can be legally classified as a 'company' under Section 141 of the Negotiable Instruments Act. It highlights conflicting Supreme Court decisions, particularly 'Raghu Lakshminarayan Vs. Fine Tubes', which suggests proprietorship concerns are not companies, versus interpretations of 'firm' in the Act that could include proprietorships. The analysis also touches upon the procedural limitations for trial courts in reviewing cognizance decisions, directing such matters to Section 482 CrPC.

Dr J C Vashista (Expert) 21 June 2022
Q 1. Whether SC decision Adalat Prasad V Rooplal Jindal is sufficient to get application of Authorised Person dismissed at Trial Court ?
A. If a Magistrate takes cognizance of an offence, issues process without there being any allegation against the accused or any material implicating the accused or in contravention of provision of Sections 200 & 202, the order of the Magistrate may be vitiated, but then the relief an aggrieved accused can obtain at that stage is not by invoking section 203 of the Code because the Criminal Procedure Code does not contemplate a review of an order. Hence in the absence of any review power or inherent power with the subordinate criminal courts, the remedy lies in invoking Section 482 of Code.
The judgment still holds good as it has not so far been overruled by Supreme Court. Please mention, if any.

Q 2. What is the correct law whether Proprietorship Firm is a company or not u/s 141 N I Act ?
A. The proprietorship firm is a separate legal entity and liable to be sued along with signatory of the dishonoured cheque.
The distinction between partnership firm and a proprietary concern is well known. It is evident from Order XXX Rule 1 and Order XXX Rule 10 of the Code of Civil Procedure. The question came up for consideration also before this Court in M/s. Ashok Transport Agency v. Awadhesh Kumar and another [(1998) 5 SCC 567] wherein Apex Court stated the law in the following terms:-
"6. 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 "in so far 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."

Q 3. If Proprietorship Firm is a company u/s 141 N I Act, how to deal with SC Decision Raghu Lakshminarayan Vs. Fine Tubes a) at trial Court 2) at High Court u/s 482 3) Whether can be called decision per in curium on the basis of above
A. The judgment itself is absolutely unambiguous and clear as the subject matter falls within the jurisdiction of Section 482 Cr PC to be decided by High Court.

Q 4. Anything else, by which Proprietorship Firm can be recognized a company u/s 141 N I Act
and
Q 5. Any other guidelines, so that application of Authorised Representative can be dismissed not only at Trial Court level, if necessity arises u/s 482 also.
A. Both the questions have already been addressed herein above.

Advocate Bhartesh goyal (Expert) 21 June 2022
Well analised and explained by Dr.J.C.Vashista expert.

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