IMPORTANT POINT
A proprietorship firm is not a legal entity. It can be sued in the name of its proprietor. It is only the proprietor of the firm who is a legal entity. Even if a notice is sent to the proprietor of a firm in his individual capacity without mentioning him as proprietor of the firm, it is a valid notice. Prosecution of a proprietor of a proprietorship firm for the dishonour of the cheque, issued by the proprietorship firm, is a valid prosecution.

Shiv Narayan Dhingra, J.— This appeal has been preferred against the judgment of the trial Court dated 29.10.2003 whereby the appellant was convicted under Section 138 of Negotiable Instruments Act (for short, ‘the Act’) and order of sentence dated 1st November, 2006 whereby the applicant was sentenced to undergo SI for a term of one year and also to pay a fine of

Rs. 98,625.

2. Brief facts relevant for the purpose of deciding this appeal are that the complainant/respondent issued a notice, Ex. C-10, to the appellant informing that three of his cheques, issued in favour of respondent/complainant dated 28.4.2001, 5.6.2001 and 19.7.2001, got dishonoured due to ‘insufficient funds’. Despite this notice, the appellant did not discharge his liability of making payment against these cheques. Thereafter, the complainant filed the complaint in the Court under Section 138 of the Act. Before the learned trial Court, the complainant took the stand that these cheques were issued by the appellant in discharge of his liability towards the loan taken by him from the complainant. The cheques got dishonoured and the appellant failed to pay the cheque amount despite the notice under Section 138 of Negotiable Instruments Act.

3. Vide its reply, Ex. C14, the appellant had taken the stand that the entire loan amount had been settled in the presence of Gurvinder Kaur, daughter of Sh. Dalip Singh, on different dates and lastly on 24.8.2001 and the complainant also issued valid receipts towards full and final settlement and also acknowledged receipt of gold jewellery weighing 500 gm. So there was no legal liability and the cheques were to be returned. Instead of returning these cheques, the complainant retained the same and illegally presented the same to the Bank.

4. During trial, after service of notice under Section 251, Cr.P.C., the complainant proved dishonour of cheques issued by the appellant for insufficient funds. He also proved that the loan amount was paid to the appellant through cheques. He denied that Gurvinder Kaur was his adopted daughter or amount was paid back to him. He denied that there was any settlement between him and the appellant in the presence of Gurvinder Kaur or that he was asked not to present the cheques. Although, the appellant had taken a stand in Ex. C14 that the settlement of loan was done to the satisfaction of complainant and receipt was issued by the complainant, but no receipt was produced by the appellant in the Court. After considering the evidence adduced by both the parties, the learned trial Court came to the conclusion that the cheques were issued by the appellant in discharge of his legal liability. The cheques were dishonoured and despite issuance of notice under Section l38 of the Act, no amount was paid and, therefore, offence under Section 138 of the Act was established.

5. The appellant has impugned the legality of the order of the trial Court on the ground that the notice issued by the complainant was not a valid notice since the drawer of the cheque in this case was M/s. Shraff Coal Corporation whereas the notice was issued in the name of the appellant in his individual capacity and the appellant was also prosecuted by the respondent in his individual capacity and not as a proprietor of M/s. Shraff Coal Corporation. The other plea taken is that the learned trial Court did not appreciate the defence taken by appellant and convicted the appellant solely on the complaint of the complainant. DW1, in her testimony, has specifically stated that she gave Rs. 15,000 twice and

Rs. 10,000 on 23rd August, 2001 and also gave him gold weighing 500 gm., after getting it valuated for Rs. 2,60,000 and no suggestion was put to DW1 denying these facts.

6. During his cross-examination, the appellant was specifically asked that if he had filed the receipt showing handing over of the gold to complainant in the Court. The appellant took the stand that he had lost the same as his landlord has thrown all his belong