OM TRADING COMPANY v. R K TEXTILE & ANR

1. By this petition the Petitioner challenges the order dated 7th November, 2009 passed by the learned Additional Sessions Judge and also order dated 18th September, 2009 passed by the learned Metropolitan Magistrate dismissing the complaint of the Petitioner under Section 138 of the Negotiable Instruments Act, 1881.

2. Briefly the facts of the case are that the Respondents purchased some fabric from the Petitioner vide bill No. 3866 dated 30th March, 2008 worth ~19,800/-, the receipt of which was duly acknowledged by the Respondent No. 2 who is the proprietor of Respondent No. 1. That as against the part payment of the said liability the Respondent No. 2 issued a cheque bearing CRL.M.C. 73712010 Page 1of[5] 2011:DHC:10661 No. 380527 for Rs. 10,000/- dated lih April, 2008 drawn on ICICI Bank, Nehru Place Branch, New Delhi with the assurance that the cheque would be encashed and the rest of the payment would be made later. However on presentation of the cheque, the same was returned with memos dated 16th April, 2008 and 30th April, 2008 with remarks 'insufficient funds'. The Petitioner issued a notice to the Respondent No. I stating the abovementioned facts. On a complaint being filed the learned Metropolitan Magistrate dismissed the complaint at the stage of issuance of summons on the ground that the statutory demand notice did not meet the requirement of proviso (b) to Section 138 of the Negotiable Instruments Act and since it was not a valid demand notice, the provisions of Section 138 of the Negotiable Instruments Act were not fulfilled in the present case. On a revision petition being filed before the learned Additional Sessions Judge, the order of the learned Metropolitan Magistrate was upheld and it was observed that the complaint was not maintainable not only because of invalid/imperfect statutory demand notice but also because of the fact that the Complainant is a sole proprietorship firm the not being a legal entity. There is no averment in the complaint to the effect that Shri Rajesh Khandelwal was the proprietor ofthe Petitioner firm. CRL.M.C. 73712010

3. On filing ofthe present petition, notice was issued to the Respondents. Despite service of notice none has appeared on behalf of the Respondent either on 21st April, 2011 or thereafter today despite pass-over. Learned counsel for the Petitioner relies upon K.R. Indira vs. Dr. G. Adinarayana, 2003 (8) SCC 300, Suman Sethi vs. Ajay K. Churiwal and another, 2000 (2) sec 380, Central Bank of India and another VS. Mis Saxons Farms and others, AIR 1999 SC 3607 and Shankar Finance and Investments Vs. State ofAndhra Pradesh & Ors. (2008) 8 SCC 536.

4. I have heard learned counsel for the Petitioner.

5. The notice to the Respondents read as under: "You are hereby served legal notice on behalf of our client Mis Om Trading Co., K-29, Punjabi Bazar, Kotla Mubarkpur, New Delhi. You made a purchase of Rs.19,800/- vide bill No. 3866 dated 30.03.2008. You made part payment of this bill by cheque no.380527 dated 12.04.2008 of Rs.10,000/-. The cheque has been dishonoured three times by the bank on 16.04.2008, 30.04.08 and 09.05.08 respectively. You are requested to make full payment of the bill of Rs.19,800 within 15 days failing which our client will have no option but to take legal action under the law."

6. A bare reading of the notice shows and clearly depicts that the cheque was issued for a sum of ~10,000/- which was dishonoured three times and CRL.M.C. 73712010 \b the cheque was made in lieu of part liability for the sum of~19,800/-. In the last paragraph the Petitioner has demanded his full payment of the bill, that is, ~19,800/- within fifteen day. A reading of the notice does not show that the statutory requirement of Section 138 of Negotiable Instruments Act has not been complied with.

7. The Hon'ble Supreme Court in K.R. Indira Vs. Dr. G. Adinarayana (2003) 8 sec 300 held: "In a given case if the consolidated notice is found to provide sufficient information envisaged by the statutory provision and there was a specific demand for the payment of the sum covered by the cheque dishonoured, mere fact that it was a consolidated notice, and/or that further demands in addition to the statutorily envisaged demand were also found to have been made may not invalidate the same."

8. Further the learned Additional Sessions Judge by the impugned order in paragraph 8 has given contrary findings regarding the sole proprietorship firm. In the first sentence it is stated that the Complainant is a sole proprietorship firm as per paragraph-I ofthe complaint and Shri Khandelwal is the sole proprietor. It is further stated that there is no averment made in the complaint to the fact that Shri Khandelwal is the proprietor of the Complainant.

9. Further their Lordships in Shankar Finance and Investments Vs. State ofAndhra Pradesh and Ors. (2008) 8 SCC 536 held: CRL.M.C. 73712010 Page[4] of[5] "l 0. As contrasted from a comp'.1i[1])' incorporated under the Companies Act, 1956 which is a legal entity distinct from its shareholders, a proprietary concern is not a legal entity distinct from its proprietor. A proprietary concern is nothing but an individual trading under a trade name. In civil law where an individual carries on business in a name or style other than his own name, he cannot sue in the trading name but must sue in his own name, though others can sue him in the trading name. Therefore, if the appellant in this case had to file a civil suit, the proper description of plaintiff should be "Atmakuri Sankara Rao carrying on business unde!" the name and style of M/s Shankar Finance & Investments, a sole proprietary concern". But we are not dealing with a civil suit. We arc dealing with a criminal complaint to which the special requirements of Section 142 of the Act apply. Section 142 requires that the complainant should be payee. The payee is Mis Shankar Finance & Investments. Therefore in a crim!11al complaint relating to an offence under Section 138 of the /\ct, it is permissible to lodge the complaint in the name of the proprietary concern itself."

10. In view of the facts of the casi~ 1i1c;indings of the learned Additional Sessions Judge cannot hold the ground. Thus the impugned orders are set aside. The matter is remanded back for r:t~...1ring to the learned Trial Court. The Petitioner will appear hefore the learned Trial Court on l91 h August,

2011. Trial Court record be sent back.

11. Petition is disposed of. ~~ MUKTAGUPTA,J. AUGUST 02, 2011 'vn' CRL.M.C. 73712010 Page 5 o/5 !l