S.138 NI Act | Proprietor & Proprietary Concern Need Not Be Arrayed Separately As Accused: Karnataka High Court

The Karnataka High Court has held that a proprietary concern is not a separate entity and as such, ought not to be arrayed as a separate accused in a case registered under section 138 of the Negotiable Instruments Act. A single judge bench of Justice Suraj Govindaraj observed,"In a proceeding under Section 138 of N.I.Act, the arraying of a proprietor as an accused or a proprietary concern represented by the proprietor would be sufficient compliance with the requirements under Section 138 of N.I.Act, the proprietor and the proprietary concern are not required to be separately arrayed as a party accused." The bench dismissed a batch of petitions seeking to quash the cognizance taken by the magistrate court. It was contended that non-arraying of the proprietary concern separately as an accused goes to the root of the matter and is contrary to Section 141 of NI Act. Findings: Referring to section 141 of the NI Act the bench observed that the said provision relates to offences by Companies and it does not indicate the applicability of the same to a proprietary concern though it indicates that it would apply to a company, firm or association of individuals. Further it said, "The requirement of Section 141 of N.I.Act has arisen on account of a company being a corporal entity, a firm being either registered or unregistered comprising two or more partners and an association of individuals also comprising two or more individuals. Thus, in all the three situations, there would be more than two or more people who could be incharge of the affairs of the business of the company, firm or association of individuals and it is therefore required for the complainant to make specific allegations as regards each such person so as to invoke the criminal process." Insofar as a proprietary concern is concerned, the bench observed that there can only be one proprietor and it is the said proprietor who would be incharge of the affairs of the proprietary concern. Thus, it is not required for any pleading to be made as regards who is the person in charge of a proprietary concern when there is only one proprietor. The bench refused to accept the view taken by the Punjab and Haryana High Court in the case of Sardar Bupender Singh, CRM-M-54111/2021, where the definition of a company was extended to a proprietary concern to contend that the proprietary concern has a separate and independent existence. It said, "In my considered opinion a proprietary concern cannot have any independent or separate existence dehors the proprietor thereof." Case Title: H.N. NAGARAJ v. SURESH LAL HIRA LAL Case NO: CRL.P.NO.8257/2019 Citation: 2022 LiveLaw (Kar) 400 Date of Order: 21ST DAY OF SEPTEMBER, 2022 Appearance: G S VENKAT SUBBA RAO, ADVOCATE for petitioner; NEHA SHETTY, ADVOCATE for respondent Click Here To Read/Download Order

S.138 NI Act | Proprietor & Proprietary Concern Need Not Be Arrayed Separately As Accused: Karnataka High Court

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