2022 (2) TMI 445 - HC - Indian Laws

Court Upheld Discharge Rejection for Proprietorship Firm

M/s Neel Jewelers Gorakhpur Thru Its Proprietor And Another Versus State Of U.P. Thru Addl. Chief Secy Govt Of U.P. Civil Sectt. And Another

The court upheld the rejection of the discharge application and allowed the trial against the proprietor of the proprietorship firm under Section 138 of ... Dishonor of cheque - rejection of application filed by the revisionists for being exonerated of the liabilities/obligations mentioned in the complaint - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The submission of the learned counsel for the revisionists, that the application for discharge was filed on the direction issued by this Court in the order dated 22.02.2021 passed in Application under Section 482 Cr.P.C. No. 1901 of 2021, is apparently wrong, as by means of the aforesaid order, this Court had merely granted a liberty to the revisionists to move an application and the application was directed to be decided in accordance with the law, which includes the law regarding its maintainability. Therefore, the learned Court below has not committed any illegality in examining the maintainability of the application - the application does not mention the provision of law under which it has been moved presumably because there is no such provision - the application does not mention the provision of law under which it has been moved presumably because there is no such provision. In IN RE : EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881. [2021 (4) TMI 702 - SUPREME COURT], the Hon'ble Supreme Court has held that Section 258 cannot come into play in respect of the complaint filed under Section 138 of the Act. Affirming the earlier decisions in the Adalat Prasad (supra), the Hon'ble Supreme Court held that the Trial Court cannot be conferred with inherent power either to review or recall the order of issuance of process. Therefore, keeping in view the law laid down by the Hon'ble Supreme Court, the conclusion of the learned Court below that it has no jurisdiction to recall or review the order passed by itself summoning the accused does not suffer from any legal infirmity and needs no interference by this Court in exercise of its revisional power under Section 397/401 Cr.P.C. A proprietorship concern is not a juristic person. It is merely a trade name used by a person for doing his business. A person may carry on a business in the name of the proprietorship concern but he being the proprietor of the business, would be solely responsible for all the actions and liabilities of the proprietorship concerned. It is correct that the provisions of Section 141 of the Act have no bearing to the present case where the revisionist no. 1 is not a company - the stand taken by the revisionists in the application for discharge is that in para 11 of the complaint, a prayer has been made to punish the revisionists under Section 141 of the Act. No punishment is prescribed under Section 141 of the Act which has been reproduced above and the revisionists have not been summoned for being punished under Section 138 of the Act only and not under Section 141. In In Re: Expeditious Trial of Cases Under Section 138 of N.I. Act 1881, the Hon'ble Supreme Court has been pleased to hold that Section 202 (2) of the Code in respect of examination of witnesses on oath is not applicable to the complaints filed under Section 138 of the Act. The evidence of witnesses on behalf of the complainant shall be permitted on affidavit. If the Magistrate holds an inquiry himself, it is not compulsory that he should examine the witnesses. In suitable cases, the Magistrate can examine documents for satisfaction as to the sufficiency of grounds for proceeding under Section 202 Cr.P.C. As the Magistrate has taken into consideration the complainant's affidavit and the documentary evidence on record, he has complied with the mandate of Section 202 Cr.P.c. Therefore, the submission of the learned counsel for the revisionists regarding non-compliance of Section 202 Cr.P.C. is also without any force and is hereby rejected. This Court does not find any illegality in the impugned order - the instant Criminal Revision lacks merits and is hereby dismissed at the admission stage. Issues Involved:1. Validity of the order rejecting the application for discharge.2. Applicability of Section 141 of the Negotiable Instruments Act, 1881 to a proprietorship firm.3. Compliance with Section 202 Cr.P.C. in summoning the accused.Detailed Analysis:1. Validity of the Order Rejecting the Application for Discharge:The revisionists challenged the order dated 18.10.2021, which rejected their application for discharge from liabilities under the complaint. The court clarified that the application for discharge was not filed under any specific provision of law, which suggests there is no provision supporting such an application. The court referenced the Supreme Court's decision in Adalat Prasad vs. Rooplal Jindal & others (2004) 7 SCC 338, stating that once the process is issued under Section 204 Cr.P.C., there is no provision for recalling the process. This principle was reiterated in subsequent Supreme Court decisions, including Bholu Ram vs. State of Punjab (2008) 9 SCC 140 and Subramanium Sethuraman vs. State of Maharashtra (2004) 13 SCC 324. The court concluded that the lower court's decision to examine the maintainability of the discharge application was not illegal.2. Applicability of Section 141 of the Negotiable Instruments Act, 1881:The revisionists argued that Section 141 of the Act, which pertains to offenses by companies, does not apply to a proprietorship firm. The court acknowledged that the complaint incorrectly mentioned Section 141, but clarified that the revisionists were summoned under Section 138 of the Act for the dishonor of a cheque. The court cited Raghu Lakshminarayan vs. Fine Tubes (2007) 5 SCC 103, explaining that a proprietorship concern is not a juristic person and the proprietor is solely responsible for its actions. Therefore, while Section 141 does not apply, the proprietor (revisionist no. 2) is still liable under Section 138.3. Compliance with Section 202 Cr.P.C. in Summoning the Accused:The revisionists contended that the trial court summoned them without recording the complainant's statement under Section 202 Cr.P.C. The court found this argument unpersuasive, noting that the complainant's affidavit and documentary evidence (original cheque, bank memo, registered notice, and postal receipt) were considered under Section 202 Cr.P.C. The court referenced Section 145 of the Negotiable Instruments Act, 1881, which allows evidence by affidavit, and the Supreme Court's decision in In Re: Expeditious Trial of Cases Under Section 138 of N.I. Act 1881 (2021 SCC OnLine SC 325), which held that Section 202 (2) Cr.P.C. does not apply to complaints under Section 138. Thus, the trial court's procedure was deemed compliant with the law.Conclusion:The court found no illegality in the order dated 18.10.2021 rejecting the discharge application and upheld the trial court's decision to proceed with the trial against revisionist no. 2, the proprietor of the proprietorship firm. The criminal revision was dismissed at the admission stage, and the trial court was directed to continue with the trial in accordance with the law.