The Punjab and Haryana High Court has held that when a cheque issued by a sole proprietary gets dishonoured, not only the entity is amenable for being arrayed as an accused but also all those persons responsible for conduct of its business are also required to be arrayed.
The Justice Sureshwar Thakur while adjudicating upon a petition filed the sole proprietor seeking quashing of Section 138 NI Act complaint against him quashed also added that in purview of Section 141 NI Act, both the firm and director (sole proprietor) should be sued.
The Counsel for the petitioner had argued that for the drawing of a valid inculpation, even against the sole proprietary entity, or a sole proprietary firm, it was but imperative, for the complainant, to sue the sole proprietary entity concerned, whereas, contrarily, the above extracted memo of parties, as carried in the petition complaint, rather revealing qua the complaint suing only the accused/petitioner herein.
He therefore contended that for absence of suing of the sole proprietary concern, rather the complaint is defective, and, also argued that since the above suing of the sole proprietary entity, is a condition precedent, for making the complaint well constituted.
He thus contended that for well maintaining the prosecution under Section 141 of 'the Act', the arraigning of the sole proprietary entity concerned, was a dire statutory necessity, as the sole proprietary entity concerned, is the principal offender, whereas, the other natural, or, non juristic persons, can become arrayed as an accused alongwith it merely on the touchstone of vicarious liability becoming attracted upon them, and, as arises from the dishonour of the negotiable instrument concerned.
On the other hand, Counsel for the respondent argued that provisions of Section 141 NI Act does not disclose, that they are applicable to a sole proprietary entity concerned, and, as such, that the petition complaint instituted in the name of the accused petitioner herein, and, also his being described to be the proprietor, is a valid motion, for the drawing of a valid prosecution against the accused petitioner herein, qua an offence, constituted under Section 138 NI Act.
At the outset, the Court was of the view that the arguements in the present case has spurred from a gross mis-appreciation, and, also from his being completely oblivious to the import, of the explanation, occurring in Section 141 of the NI Act, and, also obviously arises from his complete failure to either fathom the import thereof, and, or, to apply it to the imperative description of the apposite accused, in the memo of parties of the petition complaint.
The Court went on to describe 'Company' as per the NI Act.
"Not only the juristic entity concerned, was amenable for being arrayed as an accused in the petition complaint, but also all those persons responsible to the sole proprietary concern, for the conduct of its business were also required to be arrayed as accused in the memo of parties of the petition complaint."
When the arraigning of the sole proprietary concern rather was a condition precedent for making the complaint well constituted, as it becomes the principal offender, and, with its remaining un-impleaded, as such, the absence of its impleadment cannot make the instant complaint to be well constituted, nor, any valid prosecution can in its absence, be drawn, even against the accused petitioner, who can be assigned only a vicarious liability alongwith it.
The petition was thus allowed and the complaint was quashed.
CASE TITLE: SARDAR BHUPINDER SINGH vs M/S GREEN FEEDS THROUGH ITS PARTNER VIPIN KUMAR
CASE DETAILS: CRM-M-54111-2021
CORAM: Justice Sureshwar Thakur
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(With input from news agency language)
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