Legal Question in Criminal Law in India

A Loan is given to a Proprietorship Firm on the basis of post dated cheque of Proprietorship Firm duly signed by its Proprietor and A Promissory note signed by his son as Authorised Representative of Proprietorship Firm. When cheque presented, it was dishonored due to Insufficient Fund . Legal notice was got issued to 1. Proprietorship Firm 2. Proprietor 3. Authorised Representative. No reply from anyone of three.Case u/s 138 was lodged and Cognizance was taken against all three, Proprietor and Authorised Representative got bail. Substance of accusation was stated u/s 251.Now An application for discharge without mentioning Section in trial court has been put by Authorised Representative taking pleas that there is no relation of his with Proprietorship Firm and he was falsely implicated. Now there is A Supreme Court three bench decision Named Adalat Prasad V Rooplal Jindal in which it was stated that now remedy for accused is only u/s 482, Trial Court can not review its decision.Now there is a Supreme Court Decision Named Raghu Lakshminarayan Vs. Fine Tubes Decided On: 05.04.2007 according to which Proprietor Concern is not a Company u/s 141 N I Act, so its employee can not be implicated as accused. The reasoning for this decision not 100 per cent correct, according to someone’s view and mostly based on civil law which is also not correctly interpretated.

Now u/s 141 N I Act , Company means ……….includes a firm or …..

Here as per someone’s interpretation, a Firm is written, not Partnership Firm. So there a strong pleas that ‘a firm” includes not only both Partnership Firm Registered and Unregistered, but Proprietorship Firm also. Reliance is placed on following namely :

1. HIGH COURT OF MADRAS ,Swathi Creations Vs. Sivanandham Agencies, Decided On: 17.12.2004 MANU/TN/1575/2004 2. HIGH COURT OF ANDHRA PRADESH, Y. Venkata Reddy Vs. Jagadamba Enterprises and Anr. Decided On: 03.01.2002 MANU/AP/0893/2002

2. at : https://marketbusinessnews.com/financial-glossary/firm-definition-meaning/ A firm is a commercial enterprise…sole proprietorship, ..

3. Payee Proprietorship can lodged case u/s 138 (SC decision in Shankar Finance and Investments Decided on 26.06.2008) whie in Civil suit not in Payee name

4. It is settled law that statutory provisions shall have precedents over the judicial pronouncements

Now Guidelines is sought on following points:

1. Whether SC decision Adalat Prasad V Rooplal Jindal is sufficient to get application of Authorised Person dismissed at Trial Court ?

2. What is the correct law whether Proprietorship Firm is a company or not u/s 141 N I Act ?

3. If Proprietorship Firm is a company u/s 141 N I Act, how to deal with SC Decision Raghu Lakshminarayan Vs. Fine Tubes a) at trial Court 2) at High Court u/s 482 3) Whether can be called decision per in curiam on the basis of above

4. Anything else, by which Proprietorship Firm can be recognized a company u/s 141 N I Act

5. Any other guidelines,


Asked on 6/20/22, 8:41 am

1 Answer from Attorneys
Rajiv Chandhok Ph: +919810050896 https://www.linkedin.com/in/rajiv-chandok-0827b733/

1. The discharge application is not maintainable.

2. Proprietorship concern is not a company,

3. Decision in Raghu Lakshminarayan Vs Fine Tubes will rule the field. You may allege connivance by the son at the Trial as well as the 482 CrPC matter at the High Court. In the High court you may also plead criminality and cheating from the beginning against the son as to why did he sign the PRONOTE when the father was issuing the PDC's. This argument comes with a negative rider in as much as that the High Court will ask why did you take the PRONOTE from the son and not the father.

4. A proprietorship concern is the owner or proprietor he himself. Everything done by the firm is purported to be done by the owner/proprietor himself.

5. You should concentrate on recovering your money. At the most the son may not get convicted. let him not. You concentrate on the father being convicted which he would surely be. Please file an order 37 CPC recovery suit on the proprietorship concern against the PROMISSORY NOTE and the security cheque if you have any. They will have no defense in that suit and as far as the fact of AR is concerned, attach, vicarious liability to the father - Son duo in the whole borrowing transaction.

JSR/20922/1

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Answered on 9/20/22, 2:49 am


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