Manoj Singh v. State of U.P., 2019 SCC OnLine All 5502

SCC® SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 1 Monday, June 03, 2024

Printed For: Mr. Shaunak Kashyap
itl@■l■H# SCC Online Web Edition: http://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
2019 SCC OnLine All 5502 : (2019) 108 ACC 466 : (2019) 201
AIC 850 : 2019 ACD 673
In the High Court of Allahabad

(BEFORE SAUMITRA DAYAL SINGH, J.)
Manoj Singh … Applicant;

Versus
State of U.P. and Another … Opposite Parties.
Application U/S 482 No. - 33417 of 2017
Decided on May 3, 2019
Advocates who appeared in this case:
Counsel for Applicant : - Sarita Mishra
Counsel for Opposite Party : - G.A.
The Order of the Court was delivered by
SAUMITRA DAYAL SINGH, J.:— Heard learned counsel for the parties.
2. The present 482 Cr.P.C. application has been filed to quash the
judgment and order dated 27.07.2017 passed by Additional Sessions
Judge, Court No. 5, Allahabad in Criminal Revision No. 345/2016
(Manoj Singh v. Shakeel Ahmad) as well as order dated 20.07.2016
passed by Additional Chief Judicial Magistrate, Court No. 5, Allahabad
in Complaint Case No. 485 of 2014, under Section 138 Negotiable
Instrument Act, P.S-Jhunsi, District-Allahabad.
3. Learned counsel for the applicant submits, the complaint is wholly
incompetent since the cheque (giving rise to the complaint) was issued
by the ‘company’ M/s. Manoj Rice Mill that was not impleaded as an
accused person (in the complaint). Reliance has been placed on Section
141 of the Negotiable Instrument Act, 1881 (hereinafter referred to as
the Act). The issue is stated to be covered by a Single Judge decision of
this Court in the Application u/s 482 No. 31101 of 2013 (Hitendra
Kishan Lal Jain v. State of U.P.), decided on 13.12.2017.
4. That case involved default/dishonour of a cheque issued by a
proprietorship firm. After referring to Section 141 of the Act, and
relying in decision of the Supreme Court in the case of Aneeta Haada v.
Godfather Travels and Tours Private Limited, (2014) 6 SCC (Cri) 845,
the learned Single Judge observed:—
“Since cheques in question were belonging to a Firm and vide
explanation appended to Section 141 of the Negotiable Instrument
Act, firms or other association of individual are also included in the
word ‘Company’. Hon'ble Supreme Court in the case of Aneeta Hada
(supra) has clearly held that if cheque is issued by a Firm or
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Company, the Firm/Company must be arrayed as an accused. Same

view has been expressed by the Hon'ble Supreme Court in the cases
relied upon by the learned counsel for the applicant that until and
unless Company or Firm is arrayed as an accused, director or other
officials of the Company/Firm cannot be prosecuted/punished.
………………………………………………………………….Thus, on the sole ground
of non-arraigning of the Firm as an accused in the complaint, the
submissions raised by the learned counsel for the applicant that
complaint proceedings are an abuse of process of law is acceptable.
It is also pertinent to mention here that it will be immaterial whether
the Firm running in the name and style of ‘New Arihant Trading’ is a
proprietorship Firm or registered Firm.”
5. Shri Madan Mohan Srivastava, learned counsel for the opposite
party no. 2 and Sri. Ankit Srivastava, learned AGA, on the other hand
submit, the position in law is otherwise. The provision of Section 141 of
the Act would not apply in the case of a sole proprietorship concern and
that it would be restricted to a duly incorporated company or a
partnership firm or an association of persons only.
6. Having heard learned counsel for the parties and having perused
the record, in the first place there is no dispute to the fact that the
applicant was running a sole proprietary concern in the name M/s.
Manoj Rice Mill. It was neither a partnership firm nor a company nor
any other association of persons. Then, the provision of Section 141 of
the Act reads:—
“141. Offences by companies.-(1) If the person committing an
offence under section 138 is a company, every person who, at the
time the offence was committed, was in charge of, and was
responsible to the company for the conduct of the business of the
company, as well as the company, shall be deemed to be guilty of
the offence and shall be liable to be proceeded against and punished
accordingly:
Provided that nothing contained in this sub-section shall render
any person liable to punishment if he proves that the offence was
committed without his knowledge, or that he had exercised all
due diligence to prevent the commission of such offence.
[Provided further that where a person is nominated as a Director
of a company by virtue of his holding any office or employment in
the Central Government or State Government or a financial
corporation owned or controlled by the Central Government or the
State Government, as the case may be, he shall not be liable for
prosecution under this Chapter.]
(2) Notwithstanding anything contained in sub-section (1), where
any offence under this Act has been committed by a company and it
is proved that the offence has been committed with the consent or
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
connivance of, or is attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
Explanation.- For the purposes of this section,-
(a) “company” means any body corporate and includes a firm or
other association of individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.”
7. A plain reading of the provision makes it clear, if the person
committing the offence is a “company”, in that event every natural
person responsible for such commission as also the artificial person
namely the company shall be deemed to be guilty of the offence and be
liable to be proceeded against and punished accordingly. Also, certain
other natural persons may be held guilty, if so proved.
8. By way of the Explanation (a) attached to that provision of law,
the term ‘company’ (specifically for the purpose of Section 141 of the
Act), has been defined to mean a body corporate or a firm or any other
association of individuals. In this statutory context, it calls for
examination whether a sole proprietary concern, qualifies or falls within
the meaning of the term ‘company’ or a ‘firm’ used in that provision.
9. There can be no doubt as to the meaning to be attributed to a
“body corporate”. That has to be an entity artificially incorporated,
either by a special statute enacted to incorporate such corporations or
under a general statute such as the Companies Act whereunder public
and private companies are commonly incorporated, or a duly
constituted entity given such status under a statute such as co-
operative societies, local authorities etc. constituted under different
enactments. However, it can never be understood to include a
proprietorship firm that is neither incorporated nor constituted by or
under any statute.
10. As to the meaning to be attributed to the words “association of
individuals”, the same has to be understood as an entity created by the
free will of more than one individual, for furtherance of a common
object or purpose. The use of the plural form of the word ‘individual’
itself leaves no room for any doubt in that regard. Then, for any
‘association’ of individuals to arise, there have to exist at least two
individuals to form it. A single individual may never form an association
with himself.
11. Thus, the phrase “association of individuals” necessarily requires
such entity to be constituted by two or more individuals i.e. natural
persons. On the contrary a sole-proprietorship concern, by very
description does not allow for ownership to be shared or be joint and it
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
defines, restricts and dictates the ownership to remain with one person
only. Thus, “associations of individuals” are absolutely opposed to sole-
proprietorship concerns, in that sense and aspect.
12. A ‘partnership’ on the other hand is a relationship formed
between persons who willfully form such relationship with each other.
Individually, in the context of that relationship, they are called
‘partners’ and collectively, they are called the ‘firm’, while the name in
which they set up and conduct their business/activity (under such
relationship), is called their ‘firm name’.
13. While a partnership results in the collective identity of a firm
coming into existence, a proprietorship is nothing more than a cloak or
a trade name acquired by an individual or a person for the purpose of
conducting a particular activity. With or without such trade name, it
(sole proprietary concern) remains identified to the individual who owns
it. It does not bring to life any new or other legal identity or entity. No
rights or liabilities arise or are incurred, by any person (whether natural
or artificial), except that otherwise attach to the natural person who
owns it. Thus it is only a ‘concern’ of the individual who owns it. The
trade name remains the shadow of the natural person or a mere
projection or an identity that springs from and vanishes with the
individual. It has no independent existence or continuity.
14. In the context of an offence under section 138 of the Act, by
virtue of Explanation (b) to section 141 of the Act, only a partner of a
‘firm’ has been artificially equated to a ‘director’ of a ‘company’. Its a
legal fiction created in a penal statute. It must be confined to the
limited to the purpose for which it has been created. Thus a partner of a
‘firm’ entails the same vicarious liability towards his ‘firm’ as ‘director’
does towards his ‘company’, though a partnership is not an artificial
person. So also, upon being thus equated, the partnership ‘firm’ and its
partner/s has/have to be impleaded as an accused person in any
criminal complaint, that may be filed alleging offence committed by the
firm. However, there is no indication in the statute to stretch that legal
fiction to a sole proprietary concern.
15. Besides, in the case of a sole proprietary concern, there are no
two persons in existence. Therefore, no vicarious liability may ever arise
on any other person. The identity of the sole proprietor and that of his
‘concern’ remain one, even though the sole proprietor may adopt a
trade name different from his own, for such ‘concern’. Thus, even
otherwise, conceptually, the principle contained in section 141 of the
Act is not applicable to a sole-proprietary concern.
16. In the case of Ashok Transport Agency v. Awadhesh Kumar,
(1998) 5 SCC 567, it has been held:
“6. A partnership firm differs from a proprietary concern owned by
an individual. A partnership is governed by the provisions of the
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Indian Partnership Act, 1932. Though a partnership is not a juristic

person but Order XXX Rule 1 CPC enables the partners of a
partnership firm to sue or to be sued in the name of the firm. 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. 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. The provisions of Rule 10 of Order XXX which make
applicable the provisions of Order XXX to a proprietary concern,
enable the proprietor of a proprietary business to be sued in the
business names of his proprietary concern. The real party who is
being sued is the proprietor of the said business. The said provision
does not have the effect of converting the proprietary business into a
partnership firm. The provisions of Rule 4 of Order XXX have no
application to such a suit as by virtue of Order XXX Rule 10 the other
provisions of Order XXX are applicable to a suit against the
proprietor of proprietary business “insofar as the nature of such case
permits”. This means that only those provisions of Order XXX can be
made applicable to proprietary concern which can be so made
applicable keeping in view the nature of the case.”
(emphasis supplied)
17. In Bhagwati Vanaspati Traders v. Supt. of Post Offices, (2015) 1
SCC 617, it has been held:
“11. We find merit in the second contention advanced at the
hands of the learned counsel for the appellant. It is indeed true, that
the NSC was purchased in the name of M/s. Bhagwati Vanaspati
Traders. It is also equally true, that M/s. Bhagwati Vanaspati Traders
is a sole proprietorship concern of B.K. Garg, and as such, the
irregularity committed while issuing the NSC in the name of M/s.
Bhagwati Vanaspati Traders, could have easily been corrected by
substituting the name of M/s. Bhagwati Vanaspati Traders with that
of B.K. Garg. For, in a sole proprietorship concern an individual uses
a fictional trade name, in place of his own name”.
(emphasis supplied)
18. Directly relevant to the question raised in the present
proceedings, in Raghu Lakshminarayanan v. Fine Tubes, (2007) 5 SCC
103, it was observed:
“8. The concept of vicarious liability was introduced in penal
statutes like the Negotiable Instruments Act to make the Directors,
partners or other persons, in charge of and control of the business of
the company or otherwise responsible for its affairs; the company
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
itself being a juristic person.

9. The description of the accused in the complaint petition is
absolutely vague. A juristic person can be a company within the
meaning of the provisions of the Companies Act, 1956 or a
partnership within the meaning of the provisions of the Partnership
Act, 1932 or an association of persons which ordinarily would mean a
body of persons which is not incorporated under any statute. A
proprietary concern, however, stands absolutely on a different
footing. A person may carry on business in the name of a business
concern, but he being proprietor thereof, would be solely responsible
for conduct of its affairs. A proprietary concern is not a company.
Company in terms of the Explanation appended to Section 141 of the
Negotiable Instruments Act, means any body corporate and includes
a firm or other association of individuals. Director has been defined
to mean in relation to a firm, a partner in the firm. Thus, whereas in
relation to a company, incorporated and registered under the
Companies Act, 1956 or any other statute, a person as a Director
must come within the purview of the said description, so far as a
firm is concerned, the same would carry the same meaning as
contained in the Partnership Act.
10. It is interesting to note that the term “Director” has been
defined. It is of some significance to note that in view of the said
description of “Director”, other than a person who comes within the
purview thereof, nobody else can be prosecuted by way of his
vicarious liability in such a capacity. If the offence has not been
committed by a company, the question of there being a Director or
his being vicariously liable, therefore, would not arise.
11…….
12…….
13……..
14. We, keeping in view the allegations made in the complaint
petition, need not dilate in regard to the definition of a “company” or
a “partnership firm” as envisaged under Section 34 of the Companies
Act, 1956 and Section 4 of the Partnership Act, 1932 respectively,
but, we may only note that it is trite that a proprietary concern
would not answer the description of either a company incorporated
under the Companies Act or a firm within the meaning of the
provisions of Section 4 of the Partnership Act”.
(emphasis supplied)
19. The Madras High Court, in Sri. Sivasakthi Industries v. Arihant
Metal Corporation, (1992) 74 Comp Cas 749, P. Muthuraman v.
Padmavathi Finance (Regd), (1994) 80 Comp Cas 656 and again in
S.K. Real Estates v. Ahmed Meeran, (2002) 111 Comp Cas 400 has
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
consistently held that a sole proprietorship is neither a firm nor a

company nor an association of individuals, under section 141 of the Act.
20. In contrast, in Aneeta Haada (supra), there existed a duly
incorporated company whose cheque signed by its authorized signatory
(Aneeta Haada), had been dishonored giving rise to the criminal
complaint alleging commission of offence under Section 138 of the Act.
The Supreme Court held, in the case of offence under Section 138 of
the Act being committed by a company/juristic person, it would be
imperative to first arraign the company (juristic person) as an accused
person. The other category of offenders i.e. natural person/s may be
arraigned only on the touchstone of vicarious liability.
21. That three judge decision of the Supreme Court is based on and
follows the earlier three judge decision of that Court in St. of Madras v.
C.V. Parekh, (1970) 3 SCC 491, the principle laid down and applied
being, in the case of an offence being committed by a juristic person,
the occasion to proceed against the person authorized by such person
would arise only if the latter is first arraigned as an accused person and
held guilty.
22. Plainly, there is no ratio laid down, that in case of a sole-
proprietary concern, both the business concern and the sole proprietor
would be liable to be prosecuted or be impleaded as accused person in
the criminal complaint. To that extent, the decision of the learned
single judge in Hitendra Kishan Lal Jain (supra), is not based on a
correct reading of Aneeta Haada (supra).
23. The above principle enunciated in Aneeta Haada (supra) or C.V.
Parekh (supra) has no bearing in the case of a sole-proprietary concern.
Neither there exist two persons/accused, nor there exists any person
other than the sole-proprietor whose actions may constitute ingredients
of an offence under section 138 of the Act. He is the person engaged in
the conduct of his business/‘concern’ and he is the person who
issues/signs the cheque, whose dishonour is the primary ingredient of
the offence.
24. While I would otherwise have been bound to refer the matter to
the larger bench in view of my disagreement with Hitendra Kishan Lal
Jain (supra), however, in view of further fact that the position in law
stands clearly enunciated by authoritative pronouncements of the
Supreme Court in the case of Ashok Transport Agency v. Awadhesh
Kumar (supra) and Bhagwati Vanaspati Traders v. Supt. of Post Offices
(supra) as followed and directly applied to section 141 of the Act in
Raghu Lakshminarayanan v. Fine Tubes (supra), which decisions had
not been placed and therefore not considered in Hitendra Kishan Lal
Jain (supra), it appears that that decision of the learned single judge, is
contrary to the binding law laid down by the Supreme Court. Also, it
has been rendered per incuriam. Being bound by the law laid down by
TiresurestW<11f
to kgal resea,cJ,
/"
-----------------------------------------------------------------------------------------------------------------------------------------------------------
the Supreme Court, there is no requirement to refer the question to a

larger bench of the Court.
25. Accordingly, there is no defect in the complaint lodged against
the applicant, in his capacity as the sole proprietor of the concern M/s.
Manoj Rice Mill. There was no requirement to implead his sole
proprietary concern as an accused person nor there was any need to
additionally implead the applicant by his trade name.
26. The present application lacks merit and is accordingly dismissed.
———
Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/
regulation/ circular/ notification is being circulated on the condition and understanding that the publisher would not be
liable in any manner by reason of any mistake or omission or for any action taken or omitted to be taken or advice
rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/ notification. All
disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The authenticity of
this text must be verified from the original source.

Manoj Singh v. State of U.P., 2019 SCC OnLine All 5502

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Manoj Singh v. State of U.P., 2019 SCC OnLine All 5502

Uploaded by

Copyright:

Available Formats

SCC® SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.

Page 1 Monday, June 03, 2024

In the High Court of Allahabad

Manoj Singh … Applicant;

Company, the Firm/Company must be arrayed as an accused. Same

Indian Partnership Act, 1932. Though a partnership is not a juristic

itself being a juristic person.

consistently held that a sole proprietorship is neither a firm nor a

the Supreme Court, there is no requirement to refer the question to a

You might also like