The Supreme Court of India, in a judgment delivered on August 26, 2025, has held that a suit filed against the proprietor of a business is maintainable, and it is not mandatory to separately implead the proprietorship concern. A bench of Justice Vikram Nath and Justice Sandeep Mehta set aside an order of the High Court of Andhra Pradesh which had rejected a plaint on the grounds that the proprietorship firm was not a party to the suit after an amendment. The apex court ruled that impleading the proprietor sufficiently protects the interests of the proprietorship, as the two are legally indistinct.
Background of the Case
The case, Dogiparthi Venkata Satish & Anr. vs. Pilla Durga Prasad & Ors., arose from an eviction suit. The appellants, Dogiparthi Venkata Satish and another, were the owners of a property leased to ‘Aditya Motors’, a sole proprietorship of Pilla Durga Prasad, under a registered lease deed dated April 13, 2005. After the lease expired, the lessee did not vacate the premises. The owners filed a suit for eviction (Original Suit No. 118 of 2012) against Aditya Motors (defendant no. 1), a sub-lessee M/s. Associated Auto Services Pvt. Ltd. (defendant no. 2), and its two directors.
During the proceedings, the plaintiffs filed an application under Order VI Rule 17 of the Code of Civil Procedure, 1908 (CPC) to amend the plaint. The amendment sought to delete ‘Aditya Motors’ as defendant no. 1 and substitute it with ‘Pilla Durga Prasad’ as the representative of the lessee. This amendment was allowed by the trial court on March 28, 2018, and the order was not challenged, thereby becoming final.
Arguments of the Parties
Following the amendment, the defendant, Pilla Durga Prasad, moved an application under Order VII Rule 11 of the CPC for the rejection of the plaint. The primary ground for this application was that since the original lease deed was with ‘Aditya Motors’ and the firm had been deleted from the suit, the plaint disclosed no cause of action against Pilla Durga Prasad in his individual capacity.
The plaintiffs countered this application, arguing that ‘Aditya Motors’ was merely the trade name of a sole proprietorship owned by Pilla Durga Prasad. They contended that a proprietorship concern is not a juristic person and that the cause of action was always against Pilla Durga Prasad, who was the sole proprietor and the signatory to the lease deed. They argued that substituting the proprietor’s name for the trade name made no material difference to the suit.
The Trial Court, accepting the plaintiffs’ arguments, dismissed the application to reject the plaint by its order dated July 2, 2018. Aggrieved, Pilla Durga Prasad filed a Civil Revision Petition before the High Court of Andhra Pradesh.
High Court and Supreme Court’s Analysis
The High Court allowed the revision petition, setting aside the Trial Court’s order and rejecting the plaint. The High Court’s decision was based on its interpretation of Order XXX Rule 10 of the CPC, concluding that the proprietorship concern ought to have been a party to the suit.
The Supreme Court, hearing the appeal against the High Court’s order, disagreed with this “hyper technical view.” The bench, led by Justice Vikram Nath, held that the Trial Court was correct in rejecting the application under Order VII Rule 11.
The Court explained the legal status of a proprietorship concern, stating, “A proprietorship concern is nothing, but a trade name given by an individual for carrying on his business. A proprietorship concern is not a juristic person.”
Analyzing Order XXX Rule 10 CPC, the Court noted that the provision allows a person carrying on business in a name other than their own to be sued in that name. The judgment clarified the import of this rule:
“The use of the word can in Order XXX Rule 10 CPC only indicates that proprietorship concern may be made a party. However, it does not necessarily mean that the proprietor itself if made a party would not be enough, inasmuch as, the proprietorship is to be defended by the proprietor only and not by anybody else.”
The Court emphasized that no prejudice is caused when the proprietor is impleaded, as they are the sole person responsible for the proprietorship’s interests. “Order XXX Rule 10 CPC does not in any manner debar a suit being filed against the proprietor,” the bench observed.
The Supreme Court cited its previous judgment in Ashok Transport Agency v. Awadhesh Kumar and another (1998) 5 SCC 567, which established that a proprietary concern is merely a business name and the real party being sued is the proprietor. The Court quoted:
“A proprietary concern is only the business name in which the proprietor of the business carries on the business. A suit by or against a proprietary concern is by or against the proprietor of the business.”
Further reliance was placed on Shankar Finance and Investments v. State of Andhra Pradesh and others (2008) 8 SCC 536, which reiterated that in proceedings involving proprietary concerns, the proprietor remains the real party in interest.
The Court concluded that the High Court had taken a “completely hyper technical view not realising that there was no prejudice caused and the cause of action very much accrued against the proprietor as he alone had signed the lease deed on behalf of the proprietorship concern.”
Decision
Allowing the appeal, the Supreme Court set aside the impugned judgment of the High Court. The order of the Trial Court rejecting the application under Order VII Rule 11 CPC was restored. The Supreme Court directed the Trial Court to proceed with the suit on its merits in accordance with the law.
