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PUNJAB AND HARYANA HIGH COURT
HON'BLE R.C.KATHURIA, J.
Crl. Misc. No. 50086- M of 2001
Decided on 22.1.2002
M/S BEDI SONS STEELS & WIRES
versus
M/S B.C. BROTHERS
The liability of a proprietary concern and its proprietor under Section 138 of the Negotiable instruments Act, 1881, and the fulfillment of the eligibility criteria prescribed under Section 142 of the Act by the respondent as the payee or holder of the cheque in due course.
Headnote:
Negotiable instruments Act - Quashing of complaint - Section 138 of the Negotiable instruments Act, 1881 - Summary of Acts and Sections: Section 138 of the Negotiable instruments Act, 1881, Section 420 of the Indian Penal Code, Section 245 of the Code of Criminal Procedure, 1973 - The court discussed the interpretation and application of Section 138 of the Negotiable instruments Act, 1881, and its implications on the liability of a proprietary concern and its proprietor. The court referred to various judgments to establish that a proprietary concern and its proprietor are one and the same person, and the prosecution against the proprietorship concern represented by its proprietor is maintainable. The court also emphasized that the eligibility criteria prescribed under Section 142 of the Act had been fulfilled by the respondent as the payee or holder of the cheque in due course. The court's decision was influenced by the legal provisions and interpretations regarding the liability of a proprietary concern and its proprietor under Section 138 of the Act.
Fact of the Case:
The petitioner sought quashing of a complaint and summoning order under Section 138 of the Negotiable instruments Act, 1881, and Section 420 of the Indian Penal Code. The complaint was filed by M/s B.G.Brothers against the petitioner for issuing a cheque that was returned unpaid due to insufficient funds. The petitioner moved an application under Section 245 of the Code of Criminal Procedure, 1973, arguing that as a proprietorship concern, it has no legal entity and proceedings could not be initiated against it. The application was contested by the respondent, and the petition was filed after the application was dismissed.
Finding of the Court:
The court found that the prosecution against the proprietary concern represented by its proprietor is maintainable, and the eligibility criteria prescribed under Section 142 of the Act had been fulfilled by the respondent as the payee or holder of the cheque in due course. The court dismissed the petition, emphasizing that the petitioner's arguments regarding the maintainability of the complaint were not sustainable.
Issues: The issues involved in the case included the maintainability of the complaint against a proprietary concern, the interpretation of Section 138 of the Negotiable instruments Act, 1881, and the eligibility criteria for filing a complaint under Section 142 of the Act.
Ratio Decidendi: The court's decision was based on the interpretation and application of Section 138 of the Negotiable instruments Act, 1881, and the fulfillment of the eligibility criteria prescribed under Section 142 of the Act by the respondent as the payee or holder of the cheque in due course.
Final Decision: The petition seeking quashing of the complaint and summoning order was dismissed by the court.
R.C. Kathuria, J. - In this petition, the petitioner seeks quashing of complaint (Annexure P-1), summoning order dated 20.04.1998, copy of which is Annexure - P.2, whereby the petitioner had been directed to appear in the Court to face trial in complaint filed under Section 138 of the Negotiable instruments Act, 1881 (hereinafter referred to as `the Act') read with Section 420 of the Indian Penal Code and the order dated 20.8.2001 (Annexure P-5) whereby application filed by the petitioner under Section 245 of the Code of Criminal Procedure, 1973 (hereinafter referred to as `the Code') seeking dismissal of the complaint was rejected.
2. The essential facts to focus the controversy involved in the present petition need to be noticed. M/s B.G.Brothers, Link Road, Ludhiana through its Proprietor, Bharat Bhushan, respondent in the present petition, filed a complaint under Section 138 of the Act read with Section 420 I.P.C. on the allegation that the petitioner had issued a cheque dated 25.8.1997 for Rs. 22,000/- in favour of the complainant-respondent. When the cheque was presented to the bank, the same was returned unpaid with the remarks that funds were insufficient to honour the cheque.
Thereafter, the cheque was again dishonoured on the ground of insufficiency of funds. In support of the allegations made in the complaint, Bharat Bhushan appeared as PW-1. He produced on record cheque Ex. P.I, memos Ex. P.2 and Ex.P.3, copy of notice Ex.P.4, postal receipt Ex. P.5 and A.D. Ex. P.6 In addition, Prem Nath, Record Keeper, State Bank of India, (PW-2) was examined, who proved the certified copy of messenger book Ex. PW2/A, copy of dishonouring of cheque register Ex. PW 2/B and certified copy of statement of accused Ex. PW2/C. On the basis of above evidence, the Additional Chief Judicial Magistrate, Ludhiana, as per order dated 20.4.1998, founds sufficient ground against the petitioner-accused to face trial in respect of the offences stated in the complaint.
3. On appearance before the Court, the petitioner moved an application under Section 245 of the Code on the ground that the petitioner, which is a proprietorship concern, has no legal entity nor it is a jurisdical person and for that reason proceedings could not be initiated against its name in terms of the provisions of Section 11 of the Indian Penal Code read with Section 3 (42) of the General Clauses Act and for that reason complaint being not maintainable was liable to be dismissed. This application was contested by the respondent on the ground that the complaint has been filed by M/s B.G.Brothers as proprietors of the respondent and for the reason it was maintainable. The application was dismissed vide order dated 20.8.2001. Aggrieved by these orders, the present petition has been filed.
4. I have heard learned counsel for the petitioner at length.
5. Learned counsel for the petitioner sought quashing of the complaint on the grounds stated in the application filed under Section 245 of the Code which have been noticed earlier. In support of the stand taken, reliance was placed on the observations made in Sri Sivasakthi Industries v. Arihant Metal Corporation, 1992 (2) AH India Banking Law Judgments 20 wherein it was observed as under:
"Proprietor concern is not a firm. A firm is a partnership firm consisting of partners. In this case, the first-accused is not a firm. It is only a proprietary concern. As such Section 141 of the Negotiable Instruments Act, which enables prosecution against the company as well as other person who at the time of the offence was committed was incharge of and was responsible to the company, cannot be pressed into service. The learned counsel for the respondent was totally under an erroneous impression that the first accused is a firm. There is basic and fundamental difference between a firm and a proprietary concern. The first accused is only a proprietary concern, its proprietor being Raman. Accused 1 and 2 are one and the same person. In p
