Uttam Kumar Ray vs M/S Knowledge Infrastructure
2023 Latest Caselaw 4875 Ori

        IN THE HIGH COURT OF ORISSA AT CUTTACK

                     CRLMC No.2215 of 2015

  Uttam Kumar Ray                        ....             Petitioner
                                      Mr. Anirudha Das, Advocate


                               -Versus-


  M/s Knowledge Infrastructure        ....        Opposite Party
  System Pvt. Ltd.
                 Mr. Laxmidhar Pangari, Senior Advocate for OP



            CORAM:
            JUSTICE R.K. PATTANAIK

              DATE OF JUDGMENT:02.05.2023

1.

By invoking inherent jurisdiction of the Court, the petitioner has challenged the impugned order dated 21st August, 2010 passed in ICC Case No.372 of 2010 by the learned S.D.J.M., Panposh at Rourkela, whereby, cognizance of offence under Section 138 of the NI Act has been taken against him and also the criminal proceeding on the grounds inter alia that it is not tenable in law principally 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 thereof.

2. The opposite party filed the complaint against the petitioner under Section 138 of the NI Act alleging therein that it is a private limited company dealing in trade of imported non-coking (steam) coal and has sold 3765.98 MT to the petitioner and accordingly, the material was delivered as per the purchase order and invoice was raised against the above supply and in that connection, the

Uttam Kumar Ray Vrs M/s Knowledge Infrastructure System Pvt. Ltd.

latter issued cheques on different dates but the same stood dishonored with an endorsement of the bank as 'insufficient fund'. Thereafter, opposite party said to have demanded the payment and when it was not honoured, he lodged the complaint against the petitioner for having committed an offence under Section 138 of the NI Act. After the complaint was filed by the opposite party, the learned court below took cognizance of the offence under Section 138 of the NI Act on 21st August, 2010 and thereafter issued process to the petitioner vide Annexure-2.

3. Heard Mr. Das, learned counsel for the petitioner and Mr. Pangari, learned Senior Advocate for opposite party assisted by Mr. A. Sahoo, Advocate.

4. Mr. Das, learned counsel for the petitioner submits that the company with whom the opposite party had the transaction is not an accused in the complaint and hence, the learned court below could not have taken cognizance of the offence under Section 138 of the NI Act and therefore, the impugned order dated 21st August, 2010 cannot be sustained in law. While contending so, Mr. Das cited a decision of the Apex Court in Anil Gupta Vrs. Star India Pvt. Ltd. & Another 2014(3) Crimes 447(SC) to contend that if the company is not a party in a proceeding under Sections 138 read with 141 of the NI Act, its officers cannot be proceeded with.

5. Mr. Pangari, learned Senior Advocate, on the other hand, submits that though the petitioner is the proprietor of M/s. Ray Trading and Company and being a proprietorship, compliance of 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. In

Uttam Kumar Ray Vrs M/s Knowledge Infrastructure System Pvt. Ltd.

other words, it is submitted that such compliance of Section 141 of the NI Act is only to be insisted upon when a company or a partnership firm is involved not a proprietary concern. In support of such contention, Mr. Pangari, learned Senior Advocate placed reliance on the following decisions, such as, Raghu Lakshminarayan Vrs. Fine Tubes AIR 2007 SC1634; M.M. Lal Vrs. State NCT Delhi and Others MANU/DE/4881/2012; Dhirendra Singh Vrs. State of U.P. and Others (2020) ILR 11 All 215 besides H.N. Nagaraj Vrs. Suresh Lal Hira Lal of the Karnataka High Court decided in Criminal Petition No.8257 of 2019 and batch cases.

6. In Anil Gupta (supra), the Apex Court held that the decision in Anil Hada Vrs. Indian Acrylic Ltd (2002) 1 SCC 1 was partly overruled by Aneeta Hada Vrs. Godfather Travels and Tours Pvt. Ltd. 2012(3) Supreme 416 and held and observed that in absence of a company, its officers cannot be criminally prosecuted for an offence under Section 138 of the NI Act. In fact, in Anil Hada case, the Supreme Court held that even if prosecution against the company could not be continued, it is no bar for proceeding against other persons falling within the purview of sub-sections (1) and (2) of Section 141 of the NI Act which was overruled later in Aneeta Hada (supra). However to apply the aforesaid judgment in Anil Gupta (supra) to the case at hand, it has to be concluded that the complaint is against the company or a firm so as to bring it within the purview of Section 141 of the NI Act. In so far as, the decision in Raghu Lakshminarayan (supra) is concerned, it has been categorically held therein that there is a distinction between the partnership firm and a proprietary concern and held that a company or a firm can only be prosecuted as a legal entity as it falls within the purview of Section 141 of the NI Act and not a proprietary concern. The decision in Ashok Transport Agency Vrs.

Uttam Kumar Ray Vrs M/s Knowledge Infrastructure System Pvt. Ltd.

Awadhesh Kumar (1998) 5 SCC 567 was quoted with approval by the Apex Court in Raghu Lakshminarayan, wherein, it has been held that a proprietary concern is only the business name on which the proprietor of the business carried on the business; a suit by or against a proprietary concern is by or against the proprietor of the business; and in the event of the death of the proprietor of a proprietary concern, it is the legal representatives of the proprietor, who alone can sue or be sued in respect of the dealings of the proprietary business. In M.M. Lal (supra), this Court also held that sole proprietorship firm has no separate legal entity and in fact, is a business name of the sole proprietary and thus, any reference to the sole proprietorship firm means and includes sole proprietary thereof and vice versa and in such view of the matter, a proprietorship firm would not fall within the ambit and scope of Section 141 of the Act which envisages that if the person committing an offence under Section 138 of the NI Act is a company, every person who at the time of offence was committed, was in-charge of and was responsible to the company for the conduct of its business as well as the company shall be deemed to be guilty of the offence and a company includes a partnership firm and any other association or individuals. It obviously means Section 141 of the NI Act is with reference to a company or a firm but not to a sole proprietorship concern. It may be said that the proprietor and proprietary concern are not required to be separately arrayed as a party/accused. In other words, in a proceeding under Section 138 of the NI Act, if the proprietor is an accused or a proprietary concern represented by the proprietor is arrayed an accused would be sufficient compliance of the requirement of Section 138 of the NI Act. Similarly, in Dhirendra Singh (supra), the High Court of Allahabad

Uttam Kumar Ray Vrs M/s Knowledge Infrastructure System Pvt. Ltd.

concluded that in case of a proprietary concern, no vicarious liability may ever arise and therefore, the principle contemplated in Section 141 of the NI Act is not attracted and hence, a complaint cannot be held as not maintainable or defective on the ground that the proprietary firm has not been arrayed as an accused. In the said case, the accused was found to be the proprietor of a firm. Having found the accused to be sole proprietor, in Dhirendra Singh (supra), it was held that the legal fiction was created in the statute about the vicarious liability is to bring within its fold any company or firm or association of individuals and not a proprietorship concern. The Karnataka High Court in H.N. Nagaraj (supra) also considered the question as to whether the proprietary concern is required to be arrayed as a separate party/accused in a proceeding under Section 138 of the NI Acts and answered it in the negative. So the settled position of law is that Section 141 of the NI Act is applicable in case of a company or a firm and not proprietary concern. In the case at hand, the complaint is filed by the opposite party alleging that the petitioner being the proprietor of the proprietary concern M/s. Ray Trading and Company issued the alleged cheques which bounced back and dishonored and hence, the complaint was filed and being a proprietary concern, the proprietor is liable to pay back the amount due and to discharge the labiality which was in connection with supply of 3765.98 MT of non-coking (steam) coal. Nowhere, the petitioner ever claimed that the opposite party had any such transaction with a company or firm. It is made to appear from the complaint (Annexure-1) that the opposite party had the business dealings with the proprietary concern owned by petitioner. When such is the case and the petitioner being the proprietor of M/s. Ray Trading and Company, the

Uttam Kumar Ray Vrs M/s Knowledge Infrastructure System Pvt. Ltd.

Court is of the considered view that there was no need of any compliance of Section 141 of the NI Act. As earlier discussed, the decisions in Anil Gupta and Aneeta Hada (supra) can only be made applicable to a company or firm and its officers and not to a proprietary concern.

7. Accordingly, it is ordered.

8. In the result, CRLMC stands dismissed.

(R.K. Pattanaik) Judge

THAKURD Digitally signed by THAKURDAS TUDU

AS TUDU Date: 2023.05.05 20:35:05 +05'30'

TUDU