No Need to Implead Sole Proprietorship Firm if Partner is Party in Cheque Bounce Case

In the instant case, the Petitioner filed a petition under Section 227 of the Constitution of India and prayed that the order passed by the Additional Court No. 3, Agra in Nepal Singh vs Dhirendra Singh should be set aside.

Allahabad High Court dismissed the petition as it lacked merit.

Brief Facts of the Case:-

Respondent no.2 informed the Court that the Petitioner borrowed Rupees One lakh from him and handed over two cheques of fifty thousand each as security.

When the cheques were presented before the bank, they were dishonoured.

A complaint u/s 138 of N.I Act was filed, and the Trial Court took cognizance and summoned the Petitioner.

Complaint not maintainable states Counsel for the Petitioner

Yes Learned Counsel for the Petitioner informed the Court that the respondent wholly incompetent to lodge the Complaint because the cheques were issued by M/s Rashmi Arosole & Chemicals and the firm has not been arraigned as an accused.

A reference was made to Aneeta Hada Vs. M/s Godfather Travels & Tours Pvt. Ltd. where the Supreme Court held that if the firm or company issued the cheques, the firm/company must be arraigned as an accused.

Learned A.G.A opposes the prayer of the Petitioner:

It was argued that the Petitioner drew the cheques in his personal capacity.

Learned Counsel also stated that the cheques were given as security, so there was no reason the firm as a party.

Issue Before the Court

The issue before the Allahabad High Court was if the prosecution can file a case without arraigning the firm.

Sole Proprietorship Firm Need Not be Impleaded if Partner is Party in 138 Case

It was observed by the Court that

if the person committing the offence is a “company”, in that event every natural person responsible for such commission as also the artificial person namely a company will be deemed to be guilty of an offence and be liable to be proceeded against and punished accordingly.

The Allahabad High Court held that in the instant case, the cheques were drawn on the name of a sole proprietor firm

and the owner of the firm has been named as an accused. 

It was further observed that the identity of the proprietor and that of his company remains same and even if the name of the firm is different,

liability remains the same therefore principle contained in Section 141 will not be applicable in this case.

The Court finds no defect in the Complaint.

Allahabad High Court held that there was no need to implead the firm in the case as the sole owner of the firm has already been impleaded.

Accordingly, the petition was dismissed as it lacked merit.

Case Details:-

Title: Dhirendra Singh vs the State of U.P. and Another 

Case No. MATTERS UNDER ARTICLE 227 No. – 2231 of 2020

Date Of Order: 13.10.2020

Coram: Hon’ble Justice Suresh Kumar Gupta

Counsel for Petitioner:- Deepak Kumar Kulshrestha 

Counsel for Respondent:- G.A.

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