HC rules that Section 141 NI Act has no applicability to a proprietary concern, Read Judgement

The Hon’ble Delhi High Court expounded that Section 141 Negotiable Instruments Act, 1881 (‘NI Act’) has no applicability to a proprietary concern and relates to offences by company, firm or association of individuals.

Further, it was held that since a ‘proprietary concern’ is not a separate entity from the ‘proprietor’, it may not be necessary to array ‘proprietary concern’ separately in the facts and circumstances of the case, since the liability incurred by the petitioner is in the personal capacity.

Brief Facts:

The present petition has been preferred for quashing the complaint case titled as ‘Parmod Kumar v. Ashish Verma’ and proceedings emanating therefrom.

Complaint was filed alleging that the Petitioner took amount from the Respondent and to return, a cheque was handed over. The cheque got dishonoured.

The Petitioner was declared as absconder.

 Contentions of the Petitioner:

It was alleged that the proceedings against the petitioner are not maintainable, as the cheque was issued by the petitioner in the name of his proprietorship firm ‘Verma Computers’, of which petitioner is proprietor but the same has not been impleaded as accused in the complaint under Section 138 NI Act.

Observations of the Court:

It was expounded that Section 141 NI Act has no applicability to a proprietary concern and relates to offences by company, firm or association of individuals.

Further, it was held that since a ‘proprietary concern’ is not a separate entity from the ‘proprietor’, it may not be necessary to array ‘proprietary concern’ separately in the facts and circumstances of the case, since the liability incurred by the petitioner is in the personal capacity.

The decision of the Court:

Accordingly, the petition was dismissed.

Case Title: Ashish Verma v. Parmod Kumar

Case No.: CRL.M.C. 2332/2021

Coram: Hon'ble Mr. Justice Anoop Kumar Mendiratta

Advocates for Petitioner: Advs. Mr. Kedar Yadav, Mr. Rahul Yadav, Ms. Minakshi Yadav and Ms. Nisha Singh

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