IMPORTANT POINT
A proprietor of a proprietary concern can file a complaint as the payee under Section 138 of the N.I Act.

ORDER :

The petition is filed praying to quash the order dated 18.07.2018 and proceedings in C.C.No.407/2018 pending on the file of the Civil Judge and JMFC, Huvinhadagali registered for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘N.I Act’, for brevity) against the petitioner – accused.

2. Heard learned counsel for the petitioner and learned counsel for the respondent.

3. Petitioner is accused and respondent is complainant in C.C.No.407/2018 pending on the file of the Civil Judge and JMFC, Huvinhadagali registered for offence punishable under Section 138 of the N.I Act. The respondent has filed complaint against the petitioner for dishonour of cheque for offence punishable under Section 138 of N.I Act. The learned Magistrate after recording sworn statement has taken cognizance against the petitioner for offence punishable under Section 138 of N.I Act and ordered to register a criminal case by order dated 18.07.2018. The said order and proceedings in C.C. No.407/2018 are sought to be quashed.

4. Learned counsel for the petitioner would contend that the payee of the cheque is Sri Vasavi Traders and complaint has been filed not by the Sri Vasavi Traders but it is filed by the respondent – Sri S. M. Ravindrashetty. He contends that as per Section 142 of the N.I. Act, the complaint is required to be made by the payee and therefore the complaint filed by the respondent in his personal name cannot be entertained and therefore, the cognizance taken by the learned Magistrate is bad in law. He placed reliance on the decision of the Hon’ble Apex Court in the case of Raghu Lakshminarayan V. M/s Fine Tubes, Reported in AIR 2007 SC 1634.

5. Learned counsel for the respondent would contend that the respondent who has filed complaint is a sole proprietor of the Sri Vasavi Traders and the complaint has been filed by the sole proprietor. He further contends that on perusal of para Nos. 4 and 8 of the complaint the Sri Vasavi Traders is the proprietary concern of the respondent-complainant. He further submits that proprietary concern is trade name and it is carried on by the sole proprietor who is owner of the said proprietary concern and for all practical purposes the sole proprietor is owner responsible for all transactions of the proprietary concern. He also placing reliance on the decision of the Hon’ble Apex Court in the case of Raghu Lakshminarayan V. M/s Fine Tubes (supra) which is relied by learned counsel for the petitioner, contended that a proprietary concern is only a business name in which the proprietor of the business carries on business; a suit by or against a proprietary concern is by or against the proprietor of the business; the real party who is being sued is the proprietor of the said business. He also placed reliance on the decision of the Co-Ordinate Bench of this Court in the case of H.N Nagaraj Vs. Suresh Lal Hira Lal, Reported in ILR 2023 KAR 1631 wherein Co-Ordinate Bench has held that proprietary concern is not required to be arrayed as a separate party in a proceedings under Section 138 of N.I.Act. He also placed reliance on the decision of the Hon’ble Apex Court in the case of M/s Shankar Finance and Investments v. State of A.P. And Ors, Reported in AIR 2009 SC 422 wherein it is held that payee is a proprietary concern, the complaint can be filed by the proprietor of the proprietary concern, describing himself as sole proprietor of the payee. He further contended that the proprietorship firms are businesses that are owned, managed and controlled by one person and they are most common form of business in India and are based on unlimited liability of the owner. He further contended that legally a proprietorship is not a separate legal entity and is merely the name under which a proprietor carries on business. On that point he placed reliance on the decision of the Hon’ble Apex Court in the case of Vinayak Purshottam Dube(Deceased) through Lrs Vs Jayashree Pa