TaxTMI 
TaxTMI 
2026 (9) TMI 538
X X X X Extracts X X X X
X X X X Extracts X X X X
....ils, are that the respondent-complainant claims to be carrying on business under the name and style of M/s Rakesh Trading Company. It is alleged that the petitioner, carrying on business under the trade name M/s Anmol Pesticides, had been purchasing pesticides, seeds and other agricultural products from the complainant in the ordinary course of business. According to the complainant, a substantial amount became due and payable by the petitioner towards the outstanding business liability. In order to discharge the said liability, the petitioner is alleged to have issued cheque No.000153 dated 05.09.2020 drawn on HDFC Bank for a sum of Rs. 8,60,000/- in favour of the complainant. Upon presentation, the cheque was dishonoured with the remarks "Funds Insufficient". A statutory demand notice was thereafter issued, but despite service thereof, payment was not made within the prescribed period, compelling the respondent to institute the complaint under Section 138 of the Act. The learned trial Court, after considering the preliminary evidence adduced by the complainant, found sufficient grounds to proceed against the petitioner and accordingly passed the summoning order dated 08.10.2020. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....007(5) SCC 103, and Bijoy Kumar Moni v. Paresh Manna, 2026(5) SCC 380, as also upon the judgments of this Court in M/s Advance Technological Products v. Kapil Gupta, 2024 NCPHHC 81655 and Parvesh Kaur v. State of Punjab, 2022 SCC OnLine P&H 4065. It is submitted that the aforesaid judgments make a clear distinction between a company or other juristic entity, on the one hand, and a sole proprietary concern, on the other, and consequently the principle laid down in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., 2012(5) SCC 661 regarding the necessity of arraigning the principal offender cannot be mechanically applied to a sole proprietary concern. OBSERVATIONS AND FINDINGS 6. I have heard learned counsel for the parties at considerable length and have carefully perused the paper-book as well as the judgments relied upon by both sides. 7. The controversy involved in the present petition lies within a narrow compass. The petitioner seeks quashing of the complaint primarily on the ground that the cheque in question was issued from the bank account of M/s Anmol Pesticides, whereas the said concern has not been separately arrayed as an accused. The respondent, on the other ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct from the natural person sought to be made liable. The question whether such requirement arises in the present case cannot, therefore, be answered merely by looking at the name appearing on the cheque. The legal status of the concern issuing the cheque has first to be determined. 11. The Explanation to Section 141 expressly provides that for the purposes of the said section, "company" means any body corporate and includes a firm or other association of individuals. Thus, the expression "company" as employed in Section 141 is wider than the expression ordinarily understood in company law. It encompasses not only a body corporate but also a firm or other association of individuals. A company, in its legal sense, is a juristic person having an identity distinct from the individuals who constitute or manage it. It can own property, incur liabilities, enter into contracts and, subject to the provisions of law, can itself be prosecuted for an offence. Its directors or other persons in charge of its affairs are separate natural persons, and their liability under Section 141 is a statutory vicarious liability arising from their position and responsibility in relation to the company. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erefore, the liabilities of the proprietor himself. 14. This distinction is of particular significance in the context of Section 141 of the Negotiable Instruments Act. The provision proceeds on the existence of an entity or association which is capable of being treated as the principal offender, while the persons who are in charge of and responsible for the conduct of its business may, subject to the statutory conditions, be made vicariously liable. In the case of a company, the company is a legal person distinct from its directors and officers. Likewise, in the case of a partnership firm or an association of individuals, there are persons other than the particular individual who may be sought to be made liable by virtue of their relationship with, and responsibility for, the business of the entity or association. A sole proprietorship presents no such distinction. There is no separate juristic person or association on one side and the proprietor on the other. There is only the proprietor, who conducts the business under the chosen trade name and is himself the person behind all its rights, obligations and liabilities. 15. Consequently, the concept of vicarious liability unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....intained in the name of M/s Anmol Pesticides does not alter its legal character. The trade name appearing on the cheque cannot, by itself, confer an independent juristic personality upon the concern. 19. Once M/s Anmol Pesticides is found to be a sole proprietary concern, the very foundation of the petitioner's objection disappears. The petitioner is not being prosecuted as a person vicariously liable for an offence committed by a separate juristic entity. He is being prosecuted as the proprietor of the concern which issued the cheque. The case, therefore, does not attract the principle requiring separate arraignment of the principal offender under Section 141 of the Act, as contemplated by the Constitution Bench in Aneeta Hada (supra). The objection that the complaint is not maintainable merely because M/s Anmol Pesticides has not been separately arrayed as an accused is, therefore, without merit. To accept the same would amount to treating a sole proprietary concern as an entity having an association of individuals. The sine qua non of the explanation to Section 141 of the NI Act is an entity which is an association of individuals, which can be true to company or a partner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, the allegations in the F.I.R. do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. 5. Where the allegations made in the F.I.R. or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. 6. Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. 7. Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 108. We also give a note of caution to the effect that the power ....