{"id":237721,"date":"2020-10-19T17:45:46","date_gmt":"2020-10-19T12:15:46","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=237721"},"modified":"2020-10-23T12:41:11","modified_gmt":"2020-10-23T07:11:11","slug":"all-hc-principle-contained-in-s-141-of-ni-act-is-not-applicable-to-a-sole-proprietary-concern-firm-need-not-be-arraigned-as-an-accused-while-making-a-claim-for-recovery-under-s-138-of-the-ni-act","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2020\/10\/19\/all-hc-principle-contained-in-s-141-of-ni-act-is-not-applicable-to-a-sole-proprietary-concern-firm-need-not-be-arraigned-as-an-accused-while-making-a-claim-for-recovery-under-s-138-of-the-ni-act\/","title":{"rendered":"All HC | Principle contained in S. 141 of NI Act is not applicable to a sole-proprietary concern, firm need not be arraigned as an accused while making a claim for recovery under S. 138 of the NI Act"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>Allahabad High Court<\/strong>: While deciding a petition filed under Article 227 of the Constitution of India, Suresh Kumar Gupta, J., dismissed the same and declined to interfere in the judgment delivered by Sessions Court.<\/p>\n<p style=\"text-align: justify;\">The present petition has been filed by the petitioner to set aside the impugned orders dated 31-10-2018 passed by Additional Court No. 3, Agra in Complaint No. 1500 of 2011 (Nepal Singh v. Dhirendra Singh) under Section 138 of Negotiable Instruments Act, 1881(Hereinafter referred as N.I. Act) and the order dated 6-02-2020 passed by Additional Sessions Judge, Agra in Criminal Revision No. 552 of 2018 (Dhirendra v. State of U.P. ) and to quash the summoning order dated 28-3-2012 as well as an entire proceeding of Complaint Case No. 1500 of 2011 pending in the Additional Court No. 3, Agra.<\/p>\n<p style=\"text-align: justify;\">The factual matrix in the instant case is such that the present petitioner borrowed Rs 1,00,000 from respondent 2 and handed over cheques bearing Nos. 850213 &amp; 850214 for repayment of the borrowed amount. However, the cheques were dishonoured by the bank due to insufficient amount in the account subsequent to which respondent 2 served a notice to the petitioner on 18-10-2011. Later, on 08-11-2011, respondent 2 filed a complaint case no. 1500 of 2011 (Nepal Singh v. Dhirendra Singh) under Section 138 of N.I. Act against the petitioner in the trial court. The trial court vide its order dated 28-3-2012 has taken cognizance and summoned the petitioner.<\/p>\n<p style=\"text-align: justify;\">Counsel for the petitioner, Deepak Kumar Kulshrestha has relied on Section 138 of the N.I. Act, submitting that the complainant\/respondent is incompetent to lodge the prosecution as the cheques were issued by the firm Rashmi Arosole &amp; Chemicals and the petitioner is the proprietor of this firm but the firm is not arraigned as an accused. He relied on the judgments delivered in the cases of <em>Aneeta Hada v. Godfather Travels &amp; Tours (P) Ltd.<\/em>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/ub87NeoU\">(2012) 5 SCC 661<\/a> and <em>Devendra Kumar Garg v. State of U.P<\/em>., <a href=\"http:\/\/www.scconline.com\/DocumentLink\/vDRI456z\">1990 SCC OnLine All 806<\/a><em>\u00a0<\/em>and added that until and unless company or firm is arraigned as an accused director or the other officer of the company\/firm cannot be prosecuted\/punished in the complaint.<\/p>\n<p style=\"text-align: justify;\">Counsel for the respondent, S.B. Maurya attempted to refute these contentions by submitting that the cheques were drawn by the petitioner in his personal capacity and were given by way of security for payment of money. The circumstances do not warrant the arraignment of the aforementioned firm as a party.<\/p>\n<p style=\"text-align: justify;\">The Court perused the cheques closely and concluded that the cheques bear the petitioner\u2019s signature and that there is no dispute with regard to the fact that the petitioner is the sole proprietor of Rashmi Arosole &amp; Chemicals. Also, on perusal of the registration certificate of the firm, it can be established that the petitioner is the sole proprietor of the firm namely Rashmi Arosole &amp; Chemicals.<\/p>\n<p style=\"text-align: justify;\">Upon careful consideration of the facts, circumstances and arguments advances, the Court observed that-<\/p>\n<blockquote>\n<p style=\"text-align: justify;\"><em>\u201cWhile 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 &#8216;concern&#8217; 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.\u201d<\/em><\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">The Court was able to conclude that in a sole proprietary concern, vicarious liability cannot arise because there\u2019s only one person involved. The identity of the sole proprietor and his concern remain one, even if the sole proprietor may adopt a different name for his concern. Hence, there is no defect in the complaint lodged by the respondent. The sole proprietorship firm need not be impleaded for the respondent to realise his claim against the petitioner.<\/p>\n<p style=\"text-align: justify;\">In view of the above, the petition has been dismissed for lack of merit. The Court found no reason to interfere in the orders dated 31-10-2018 passed by Additional Court No. 3, Agra and the order dated 6-2-2020 passed by Additional Sessions Judge against the petitioner. [Dhirendra Singh v. State of U.P., <a href=\"http:\/\/www.scconline.com\/DocumentLink\/8suRITfH\"><b>2020 SCC OnLine All 1130<\/b><\/a>, decided on 13-10-2020]<\/p>\n<hr \/>\n<p><span style=\"color: #008000;\">Yashvardhan Shrivastav, Editorial Assistant has put this story together<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Allahabad High Court: While deciding a petition filed under Article 227 of the Constitution of India, Suresh Kumar Gupta, J., dismissed the <\/p>\n","protected":false},"author":67011,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[31784,42853,30606,23584,36936,7181,20481],"class_list":["post-237721","post","type-post","status-publish","format-standard","hentry","category-casebriefs","category-highcourts","tag-cheques","tag-firm","tag-ni-act","tag-section-138-ni-act","tag-section-141-ni-act","tag-trial-court","tag-vicarious-liability"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>All HC | Principle contained in S. 141 of NI Act is not applicable to a sole-proprietary concern, firm need not be arraigned as an accused while making a claim for recovery under S. 138 of the NI Act | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, 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Court answers","author":"Bhumika Indulia","date":"February 16, 2021","format":false,"excerpt":"Allahabad High Court: Ravi Nath Tilhari, J., addressed a matter wherein a person being the director of the company signed a cheque on behalf of the company and since the said cheque got dishonoured, he was made liable, without the company being made liable under the offence of Section 138\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":281009,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/01\/04\/compilation-of-important-judgments-of-supreme-court-and-high-courts-regarding-section-138-of-the-negotiable-instruments-act-1881\/","url_meta":{"origin":237721,"position":1},"title":"Compilation of Important Judgments of Supreme Court and High Courts regarding Section 138 of the Negotiable Instruments Act, 1881","author":"Bhumika Indulia","date":"January 4, 2023","format":false,"excerpt":"by Swarnendu Chatterjee\u2020 Anwesha Pal\u2020\u2020 and Yashwardhan Singh\u2020\u2020\u2020 Cite as: 2023 SCC OnLine Blog Exp 11","rel":"","context":"In &quot;Op Eds&quot;","block_context":{"text":"Op Eds","link":"https:\/\/www.scconline.com\/blog\/post\/category\/op-ed\/legal-analysis\/"},"img":{"alt_text":"Negotiable Instruments Act","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/01\/MicrosoftTeams-image141.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":231311,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/06\/24\/dishonour-of-cheque-mp-hc-director-managing-director-joint-director-other-officers-and-employees-of-a-company-can-not-be-prosecuted-under-s-138-of-ni-act-unless-the-company-is-impleaded-as-an-acc\/","url_meta":{"origin":237721,"position":2},"title":"[Dishonour of Cheque] MP HC | Director\/MD\/JD\/other officers and employees of a company can not be prosecuted under S. 138 of NI Act unless the company is impleaded as an accused","author":"Bhumika Indulia","date":"June 24, 2020","format":false,"excerpt":"Madhya Pradesh High Court:\u00a0Rajendra Kumar Srivastava, J., while addressing a matter with regard to dishonour of cheque held that, Director\/Managing Director\/Joint Director\/other officers and employees of company can not be prosecuted under Section 138 of NI Act unless the company is impleaded as an accused Petitioner is aggrieved with the\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":267807,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/06\/03\/dishonour-of-cheque-section-138-ni-act-delhi-high-court-law-legal-news-legal-updates\/","url_meta":{"origin":237721,"position":3},"title":"Presumption against signatory of a Cheque, Plea of lost cheque to be proved at trial: Del HC refuse quashing of summoning order for S. 138 NI Act offence","author":"Bhumika Indulia","date":"June 3, 2022","format":false,"excerpt":"Delhi High Court: Asha Menon, J. refused to allow a petition filed under Section 482 CrPC seeking quashing of summoning order passed by the Metropolitan Magistrate, Patiala House Courts in complaint filed by the respondents 1 and 2 against the petitioner under Section 138 read with Section 142 of the\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/DelPresump.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/DelPresump.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/DelPresump.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/DelPresump.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/DelPresump.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":362849,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/10\/07\/ibc-does-not-bar-s-138-ni-act-action-against-directors-bom-hc\/","url_meta":{"origin":237721,"position":4},"title":"S. 138 NI Act action against Directors continues despite prior initiation of IBC proceedings; Bombay High Court reiterates","author":"Editor","date":"October 7, 2025","format":false,"excerpt":"\u201cIt made no difference whether the NI Act proceedings were initiated prior to initiation of IBC proceeding or thereafter as it was a settled principle that natural persons could not escape from their personal liability under Section 138 of the NI Act.\u201d","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"S. 138 NI Act action against directors","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/S.-138-NI-Act-action-against-directors.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/S.-138-NI-Act-action-against-directors.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/S.-138-NI-Act-action-against-directors.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/10\/S.-138-NI-Act-action-against-directors.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":261806,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/02\/16\/dishonour-of-cheque-8\/","url_meta":{"origin":237721,"position":5},"title":"Can only a sole proprietor be held liable under S. 138 NI Act for dishonour of cheque drawn on account of sole proprietorship concern? Tis Hazari Court decodes","author":"Bhumika Indulia","date":"February 16, 2022","format":false,"excerpt":"Tis Hazari Courts, New Delhi: While deciding a matter under Section 138 of the negotiable Instruments Act, 1881, Devanshu Sajlan, MM-05 (NI Act) reiterated the settled position of law that there is no concept of vicarious liability in case of a sole proprietorship concern since a sole proprietorship concern does\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Tis-hazari","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/08\/Tis-hazari.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/237721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67011"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=237721"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/237721\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=237721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=237721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=237721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}