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Suit in the name of assumed business name of proprietary concern – maintainable: Punjab and Haryana High Court

It appeared that the in case of a proprietary firm if the relationship between the firm and the proprietor is clear and not in dispute then it does not matter whether the suit is brought in the name of the firm or the proprietor, which is one and the same thing. In the present case also the suit by the proprietary firm is through the sole proprietor giving complete details. So the suit by the proprietary concern in the present case is maintainable held by Hon’ble Justice Rajbir Sehrawat in M/s Radha Raman Industries versus M/s Manoj Trading Company [RSA No.351 of 2016 (O&M)]. 

The facts leading to this case relate to the that the plaintiff is a firm dealing in food grains, cereals, oilseeds etc. at New Anaj Mandi Palwal and the defendant is a firm being in the business of oil etc. The defendant-firm purchased mustard seed from the plaintiff for a total amount of`5, 45,376/-. The defendant paid only a sum of `45,000/- on 15.03.2005, vide a pay order, and the remaining amount of `5, 00,376/- was not paid by the defendant. Therefore, the plaintiff firm filed a suit for recovery along with interest. The defendant filed a written statement. It did not dispute the supply of the material through the bills. However, it took the defence that it had paid the money against the valid receipts and therefore, nothing is due towards it which the plaintiff might be entitled to recover. Hence, the prayer for dismissal of the suit.

The plaintiff proved the bills on record and understanding its onus to prove the payments, the defendant also examined besides proprietor. Both the parties examined the Hand Writing Expert also to prove/disprove the disputed signatures on the alleged receipts of payment. Both the Hand Writing Expert gave their contradictory reports regarding the signatures on the said receipts of payment. The trial Court decreed the suit by believing the evidence of the plaintiff.

Aggrieved against the judgment and decree passed by the trial Court, the present appellant preferred an appeal before the lower Appellate Court. However, the lower Appellate Court also dismissed the appeal filed by the present appellant. Hence, the present appeal.

The lower Appellate Court while appreciating the evidence on file, recorded a finding that the alleged payment receipts were not proved as per the law. It was further observed by the lower Appellate Court that the evidence of the present appellant was contradictory even to the pleadings taken by the present appellant in the written statement. It was recorded by the lower Appellate Court that in the pleadings the present appellant/defendant had taken a plea that the payments from the defendant were received by Manoj Kumar through his munim-Ashok Kumar. Mohan Lal Goyal, the witness examined by the present appellant, has deposed that receipts were signed by Mukesh Kumar, the brother of Manoj Kumar and he signed in the presence of witnesses. Therefore, as per the learned lower Appellate Court, the statement being in contradiction to even the pleadings of the defendant, cannot be relied upon. Learned lower Appellate Court also recorded a finding that even on perusal, the signatures on the receipts do not tally with the signatures of the person alleged to have signed these receipts. Hence, the appeal was dismissed.

If a person is carrying business in a name or style other than his own name; then that person can be sued either in his own name or in his assumed business name and style; which he was holding out to the rest of world for the purpose of business. The intention of this provision is that if a person carries on a business in a name other than his own name, then that person should not be able to avoid the liability just by taking a plea that the assumed name does not belong to him”. This provision entitles the plaintiff; suing against such a person; even in his assumed name so that such a person cannot take a plea to the contrary to avoid his liability. Hence, this provision has, in fact, created a legal person in the form of the assumed business name or style of a person and has raised the assumed business name of a person to the level of a firm. However, this provision, by any means, cannot be read to mean that a person carrying on business through a proprietary concern cannot sue other people in the name of his proprietary concern for his entitlements from the business carried through the proprietary concern. Rather conversely, such a person suing through a firm gets support and locus standi to file a suit by virtue of Order 30 Rule 10 because if his assumed name and style is treated as a legal person for being sued against then as a natural extension thereof his assumed name has to be treated a legal person for filing a suit by him as well. Any other interpretation would go against the express provisions of the Code of Civil Procedure.

A bare perusal of provision contained in Sub Clause (2) of Order 8 Rule 6A makes it clear that the counterclaim filed by a defendant shall have the effect of a cross suit on behalf of the defendant. Therefore, if a proprietary concern, sued  Under Order 30 Rule 10; has got the right to file a cross suit as a defendant under the above said provision. In such a situation, it shall be totally irrational to hold that the proprietary concern cannot file a suit as a plaintiff. If an entity is treated as a legal person and a plaintiff for the purpose of a cross suit then there is nothing to prevent such an entity come as a plaintiff in the first instance. Otherwise, also no specific provision in statutory law has been pointed out. On the contrary, it is well-settled law that the suit by the proprietary concern is a suit by its sole proprietor and the suit by the sole proprietor is a suit by his proprietary concern. Both are the same thing for the purpose of the proceedings before the Court of Law. Any ‘person is entitled to file a suit for his or its entitlements against the defendant unless the suit is prohibited by some specific provision of law. As per the General Clauses Act, Section 3 (42) even incorporation is not necessary for an entity to claim the status of a ‘person’ so even an un-incorporated entity can file suit unless specifically prohibited by statutory law. Hence, a suit by a proprietary concern of sole proprietor or by the assumed business name or style of a person is very much maintainable. However, since the sole proprietary concern or the assumed business name is owned by a single individual, so while filing a suit in the name of proprietary concern or assumed business name the complete details of the owner of the proprietary concern or assumed business name shall be required to the disclosed in the plaint as required Under Order 7 Rule 1 of the Code of Civil

Procedure to establish the identity of the owner of the proprietary concern or the assumed business name.

In the case of a proprietary firm, if the relationship between the firm and the proprietor is clear and not in dispute then it does not matter whether the suit is brought in the name of the firm or the proprietor, which is one and the same thing. In the present case also the suit by the proprietary firm is through the sole proprietor giving complete details. So the suit by the proprietary concern in the present case is maintainable. No other point was argued by the learned counsel for the appellant. In view of the above, the present appeal fails and the same is hereby dismissed.

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