High Court of Orissa opines that Section 141 of the NI Act is with reference to a company or a firm and does not apply to a sole proprietorship concern and the proprietor and proprietary concern are not required to be separately arrayed as a party/accused. Under section 138 NI Act, the proprietor being arrayed as an accused would be sufficient.
Brief Facts:
The petitioner has challenged the order dated 21st August 2010 passed by the learned S.D.J.M. whereby cognizance was taken under section 138 of the NI Act against the petitioner. It has been challenged on the ground that the same is not tenable in law on the ground that the company which is a party to the alleged transaction has not been arrayed as an accused which is a requirement of law in terms of Section 141.
The opposite party had filed a complaint against the petitioner under section 138 of the NI Act alleging that it is a private limited company that is dealing in the trade of imported non-cooking coal and has sold some amount to the petitioner and accordingly the material was delivered. The cheques issued for payment later, stood dishonored because of insufficient funds. Then the party demanded the payment, when it was not made, the opposite party lodged a complaint.
Contentions of the Petitioner:
The petitioner side has contended that the company with whom the said transaction took place has not been made an accused in the complaint and hence according to them the learned court below could not have taken cognizance of the offense and therefore the impugned order cannot be sustained in the eye of law. They have also relied on the judgment of the supreme court in the case of Anil Gupta Vs. Star India Pvt. Ltd. & Another, wherein it was held that if the company is not a party in a proceeding under Sections 138 read with 141 of the NI Act, its officers cannot proceed.
Contentions of the Respondent:
The opposite party has contended that the petitioner is the proprietor of M/s. Ray Trading and Company and being a proprietorship, compliance with Section 141 of the NI Act does not arise as it is neither a company incorporated under the Companies Act nor a firm within the meaning of the provisions of Section 4 of the Partnership Act. it has been insisted by them that compliance with Section 141 of the NI Act is only insisted upon when a company or a partnership firm is involved and not when it is a propriety concern. For contending the same, they have referred to several judgments.
Observations of the Court:
The Hon’ble Court noted that in the Anil Gupta case as referred by the petitioners it was held that in the absence of a company, its officers cannot be criminally prosecuted for an offense under Section 138 of the NI Act, but for applying this judgment in the current case it has to be concluded that the complaint is against the company or a firm in order to bring it under the purview of Section 141 NI Act. The court then noted the judgment in the case of Raghu Lakshminarayan Vs. Fine Tubes, where a distinction was made between a partnership firm and a propriety concern and it was held that a company or a firm can only be prosecuted as a legal entity as it falls with Section 141 of the NI Act and not a propriety concern. It was also noted in the above-mentioned case that a suit by or against a proprietary concern is by or against the proprietor of the business. Then according to the judgment in the case of M.M. Lal Vs. State NCT Delhi and Others, it was noted that a sole proprietorship firm does not have a separate legal entity and a proprietorship firm would not fall within the ambit and scope of Section 141 of the Act. the court then noted that section 141 of the NI Act is with reference to a company or a firm but not to a sole proprietorship concern are not required to be separately arrayed as a party.
For the current case, it was noted that the petitioner was the proprietor of the proprietary concern and nowhere has the opposite party alleged that a transaction with a company or a firm, and the court was of the view that the was no need for any compliance of Section 141 of the NI Act.
The Decision of the Court:
The CRLMC was dismissed
Case Title: Uttam Kumar Ray v. M/s Knowledge Infrastructure System Pvt. Ltd.
Coram: Justice R.K. Pattanaik
Case No.: CRLMC No.2215 of 2015
Advocates for the Petitioners: Mr. Anirudha Das, Advocate
Advocate for the Respondents: Mr. Laxmidhar Pangari, Senior Advocate for OP
Read Judgment @LatestLaws.com
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