S.141 NI Law | Sole proprietor cannot be sued for U/S 138 violation, sole proprietor must also be charged as a defendant: P&H High Court

The High Court of Punjab and Haryana recently ruled that when a check issued by a sole proprietorship is dishonoured, it is necessary to classify the owning company as a defendant, alongside the sole proprietor.

The bench comprising Judge Sureshwar Thakur further added that besides clarified that it would not be enough to prosecute the sole proprietor, given article 141 of the law on negotiable instruments.

The provision provides for a procedure in the event of infringements committed by companies. The bench observed that the provision not only covers legal persons, but also includes companies and “other associations of persons”. He observed,

When the statutory meaning attributed to a “Company”, obviously does not only cover any legal person, but also covers a company, or other association of persons, therefore, not only does a legal person, whether private or anonymous, become a “Company ‘, for the purposes of the application of Article 141 of the ‘Law‘, but also a company or other association of persons also becomes covered by Article 141 of the ‘Law’, in addition to a partner of ‘a company when receives the color of director of a company, also becomes covered for the relevant purposes.

The court was dealing with a case where a check for Rs. 5,50,000/- was issued by the accused petitioner to the defendant-plaintiff towards an alleged discharge of legal liabilities. The check was dishonoured, and proper legal notice was served on the claimant, followed by a complaint to the trial court.

The defendant applicant challenged in this case the summons issued by the court of first instance.

The Court observed that even the sole proprietorship entity becomes “a person” committing an offense under Section 138.

Consequently, not only was the legal entity concerned likely to be implicated in the application, but also all the persons responsible for the sole asset-holding company, for the conduct of its business, should also be implicated in the complaint. memo of the parties to the petition complaint. However, a careful reading of the memorandum from the parties above, relating to the existing complaint, reveals that the sole concern of ownership, inasmuch as M/s Thind Traders was not named as a defendant, but alone its sole owner Sardar Bhupinder Singh has been indicted.

Consequently, it held that when the indictment of the sole proprietor was a condition precedent of the merits of the complaint, the latter becoming the main culprit, the absence of its impleading cannot make this grievance well-founded. -constituted, nor can any valid prosecution in its absence, be brought, even against the accused petitioner, who can only be assigned vicarious liability with it, the court added.

Consequently, judging the merits of the present motion, the court authorized it.

Case Title: Sardar Bhupendar Singh v. MS Green Feeds through partner Vipin Kumar

Click here to read/download the order

About Charles D. Goolsby

Check Also

Dispatch to Bangladesh: one country, two faces – JURIST

In his inaugural video report, JURIST Bangladesh personal correspondent Ahmad Rayhan Farhi, a law student …