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2004 DIGILAW 1737 (MAD)

Swathi Creations v. Sivanandham Agencies

2004-12-17

V.KANAGARAJ

body2004
Judgment :- The above criminal original petition has been filed under Section 482 of the Code of Criminal Procedure praying to call for the records in C.C. No. 624 of 2004 pending on the file of the Learned Judicial Magistrate No.II, Tiruvallur, and quash the same as against the petitioner. 2. The petitioner's case is that he had purchased petrol from the respondent petrol bunk for a total value of Rs.12,77,073.67; that out of the said sum, he has paid a sum of Rs.8,09,035/- and also issued a cheque for a sum of Rs.4,68,825/- and when the same was presented for collection, it was returned with an endorsement "stop payment"; that a legal notice was issued demanding the same amount on 12.9.2004 and the same was acknowledged by the petitioner; that since he failed to comply with the demand, a case has been filed under Section 138 of the Negotiable Instruments Act in C.C. No. 624 of 2004 on the file of the Judicial Magistrate No.II, Tiruvallur; that since the 1st accused is the proprietary concern and the 2nd accused is the proprietor and both the accused are one and the same, A1 is not a legal entity or juristic person and therefore, the prosecution cannot be initiated against it and hence, he has come forward for the relief extracted Supra. 3. Learned counsel for the petitioner submits that a proprietary concern is neither a firm nor a company so as to come within the ambit of Section 141 of Negotiable Instruments Act. A proprietary concern does not have a separate legal entity apart from its proprietor since the proprietary concern and the proprietor are one and the same person. He also relied on the decision reported in S.K. REAL ESTATES REP. BY ITS PROPRIETOR S.K.KRISHNAMOORTHY AND ANOTHER – Vs. - S. AHMED MEERAN (2002 (1) MWN (CRL) DCC (MAD.) 120) wherein it has been held that.. “Section 141 of Negotiable Instruments Act deals with offences by companies and in the explanation it is stated that 'company means any body corporate and includes a firm or other association of individuals' and director in relation to a firm means a partner in the firm. A proprietary concern is not a firm or company and hence Section 141 is not applicable. The proprietor is the person who does business but for trading convenience, business is done in the name of proprietary concern. A proprietary concern is not a firm or company and hence Section 141 is not applicable. The proprietor is the person who does business but for trading convenience, business is done in the name of proprietary concern. Thus, proprietary concern is not an independent, legal and juristic entity having legal recognition in the eye of law and it can neither initiate proceedings nor proceedings be initiated against it. In case of proprietary concern, the proprietor is always an affected person, who can either indict or be indicted". On such arguments, the learned counsel for the petitioner would seek to quash the proceedings in C.C.No.624 of 2004 pending on the file of the Judicial Magistrate No.II, Tiruvallur. 4. The case of the petitioner is that the petitioner purchased petrol from the respondent's petrol bunk for a total value of Rs.12,77,073.67 and he paid only a sum of Rs.8,09,035/- and for the balance of a sum of Rs.4,68,825/-, the petitioner issued a cheque in favour of the respondent and for bouncing of the cheque on account of stop payment ordered, thus, for not honouring the cheque by the bank of which the cheque is issued, the respondent has initiated the above proceedings under Section 138 of the Negotiable Instruments Act. 5. At the out set, the petitioner has not primarily made it clear as to who issued the cheque. There are two accused insofar as the complaint is concerned. The first accused is the petitioner herein and the second accused is its proprietor, who is not a party herein nor a petitioner in the above criminal original petition. It is not known as to who issued the cheque i.e. whether the first accused named in the complaint or the second accused/the proprietor of the first accused firm or the second accused for and on behalf of the firm. 6. It is an admitted fact that the petitioner issued the cheque. It is not known as to who issued the cheque i.e. whether the first accused named in the complaint or the second accused/the proprietor of the first accused firm or the second accused for and on behalf of the firm. 6. It is an admitted fact that the petitioner issued the cheque. Without either being a juristic person or a legal entity, the petitioner could not have issued the cheque at all and if at all, the cheque has been issued in the name of the petitioner/proprietary concern, it amounts to cheating, because knowingly, the person, who is issuing the cheque on behalf of the petitioner proprietary concern that the proprietary concern is neither a legal entity nor a juristic person, issuing the cheque without sufficient funds in the account one becomes liable to be prosecuted and punished for cheating or under Section 138 of the Negotiable Instruments Act, since he has no business to issue the cheque in the name of proprietary concern, which is admittedly neither a legal entity nor a juristic person. 7. Coming to the provision of law under Section 141 of the Negotiable Instruments Act, interpreting it in the judgment cited above, reported in (2002 (1) MWN (CRL) DCC (MAD) 120), the learned Judge of this Court has arrived at the conclusion that the proprietary concern is not an independent legal entity or juristic person having legal recognition and therefore, it cannot initiate proceedings nor could any proceeding be initiated against it. But, the said judgment is silent insofar as such an entity issuing of cheque without being a legal or juristic person or entity nor having any legal recognition in the eye of law. But, the said judgment is silent insofar as such an entity issuing of cheque without being a legal or juristic person or entity nor having any legal recognition in the eye of law. The answer is that when a proprietary concern is in a position to issue a cheque dealing with such legal transactions, it should also become answerable or liable for being prosecuted and punished in the manner known to law and further, the wider connotation of the Section if interpreted i.e. the company means any body corporate includes a firm or other association of individuals though in the literal sense, it cannot be concluded as a firm or as an association of individuals, it could be explained that without being either a firm or a body of individuals, does it mean that no other legal entity recognised under law cannot be proceeded with under Section 138 of the Negotiable Instruments Act is the point for consideration. Criminals would always try to escape only on such misinterpretation of the section in its narrow sense. 8. Further more, when an association of individuals is termed as a company, here, is a proprietary concern having a sole proprietor which is recognised in law as a firm and since the firm is entitled to deal with the cheque, it has also become liable to be prosecuted and punished in case the cheque issued by it is not honoured and therefore, because it is a proprietary concern and it does not fall under the strict meaning of the company, it cannot be said that those which are falling outside the scope of company or body corporate or association of individuals, cannot be prosecuted and punished. The import and the actual meaning of the Section is that a company or corporation or body corporate or a firm or a proprietary concern or whatever it is, they are absolutely liable for being prosecuted and punished for cheque bouncing matters. 9. The import and the actual meaning of the Section is that a company or corporation or body corporate or a firm or a proprietary concern or whatever it is, they are absolutely liable for being prosecuted and punished for cheque bouncing matters. 9. The point for consideration is whether the individual or the group of individuals, who form part of the company or firm as Director or partner or in any other capacity are also liable to be prosecuted and punished is the point for consideration insofar as the Section 141 of the Negotiable Instrument Act is concerned and it is not the company or firm or body corporate or association of individuals which are at stake is the question that is to be decided. This Court is at a loss to understand as to which are the proprietary concerns which cannot be prosecuted and punished under Section 138 of Negotiable Instruments Act since it is a 'firm' which for the simple reason in the common parlance it is addressed as a proprietary concern, it does not mean that the term 'concern' could neither be brought under the term 'company' or firm and nor is a separate entity and therefore, is not in agreement with the preposition held by the learned single judge of this Court in the judgment cited supra. 10. On the contrary, this Court is of the firm view that the proprietary concern or its proprietor or proprietors could very well fall within the definition and are subject to prosecution under Section 138 to 142 of Negotiable Instruments Act provided, the cheque issued by the proprietary concern or by its proprietor is dishonoured for insufficiency of funds and hence the following order: In result, (i) The above criminal original petition does not merit acceptance and becomes only liable to be dismissed and is dismissed accordingly. (ii) Consequently, Crl.M.P. Nos. 12175 and 12176 of 2004 are also dismissed.