The Supreme Court held that a proprietorship concern is not a juristic person and a suit filed against the proprietor personally is maintainable. Order XXX Rule 10 of the CPC is merely enabling and does not bar a suit against the proprietor, who remains the real party in interest for all transactions conducted in the trade name.
Facts Of The Case:
The appellants, owners of a property, leased it to Aditya Motors, a sole proprietorship concern of respondent Pilla Durga Prasad, via a registered lease deed. After the lease expired, the lessee failed to vacate, prompting the appellants to file an eviction suit. The original suit named the lessee as defendant no.1 (Aditya Motors), along with the sub-lessee and its directors. During the proceedings, the appellants amended the plaint, substituting the proprietorship concern’s name with the name of its proprietor, Pilla Durga Prasad, which was allowed. Subsequently, the respondent filed an application under Order VII Rule 11 of the CPC seeking rejection of the plaint, arguing that the cause of action, based on the lease deed with Aditya Motors, had extinguished upon its deletion from the suit. The Trial Court dismissed this application, but the High Court allowed a revision, holding that the proprietorship concern was a necessary party. The Supreme Court was thus appealed to decide the correctness of the High Court’s order.
Procedural History:
The procedural history of this case commenced with the filing of an eviction suit by the owners (appellants) in the Trial Court. During the suit’s pendency, an application to amend the plaint to substitute the sole proprietor for the proprietorship concern was allowed. The defendant then filed an application under Order VII Rule 11 of the CPC for rejection of the plaint, which was dismissed by the Trial Court. Aggrieved by this dismissal, the defendant filed a civil revision petition before the High Court. The High Court allowed the revision, set aside the Trial Court’s order, and directed the rejection of the plaint. This led the plaintiffs to file a Special Leave Petition before the Supreme Court, which granted leave and culminated in the present civil appeal, resulting in the impugned High Court order being set aside.
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Court Observation:
The Supreme Court observed that a proprietorship concern is not a juristic person but merely a business name used by an individual proprietor. It held that Order XXX Rule 10 of the CPC is an enabling provision, permitting a suit to be filed against the trade name, but does not mandate it or bar a suit against the proprietor personally. The Court emphasized that the proprietor is the real party in interest, liable for all transactions conducted in the business name. Consequently, substituting the proprietor for the proprietorship concern does not extinguish the cause of action, as the substantive rights and liabilities remain vested in the proprietor, and such a substitution causes no prejudice. The High Court’s view was deemed hyper-technical and erroneous.
Final Decision & Judgement:
Case Details:
Case Title: Dogiparthi Venkata Satish & Anr. vs. Pilla Durga Prasad & Ors. CITATION: Civil Appeal No. (Arising out of SLP(C) No. 25938 of 2023) Date of Judgement: August 26, 2025 Judges/Justice Name: Justice Vikram Nath and Justice Sandeep Mehta