Legal Blog: Institution of Suit and Sole Proprietorship Concern : The Law

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Sunday, October 24, 2010

Institution of Suit and Sole Proprietorship Concern : The Law

This snippet deals with the law relating to the institution of suits and proceedings by a Sole Proprietorship concern. A Proprietor ordinarily means a person who carries on trade or business in a name other than his. The law on this aspect is fairly well settled. No suit can be instituted by a Sole Proprietorship concern in its own name unless there are specific averments stating that the Proprietorship sues through its Proprietor. 

It has been recognized in a number of decisions that a Proprietorship concern, unlike a company or a partnership, is not a legal entity and therefore any proceedings initiated by it would be a nullity. Some of the important decisions on this aspect are compiled in the foregoing para.

It was held by the Delhi High Court in P.C. Advertising v. Municipal Corporation of Delhi 73 (1998) DLT 259 / 1998 (III) AD Delhi 133 (Click here for the Judgment) that;

"Suit filed in the name of proprietorship firm which was neither a registered company nor joint family nor a partnership firm, in the absence of any prayer to seek amendment to allow sole proprietor to sue in his own name was not maintainable"

In Miraj Advertising Corporation v. Vishaka Engineering 115 (2004) DLT 471 (Click here for Judgment) it was held that;

"A proprietorship firm has no legal entity like a registered firm.   A suit cannot be instituted in the name of an unregistered proprietorship firm and the said suit is to be instituted in the name of the proprietor."   

The above view was fortified in Svapn Construction v. IDPL Employees CGHS 127 (2006) DLT 60 (Click here for the Judgment)


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