In a sharp correction of what it called an overly “hyper-technical” approach, the Supreme Court ruled that there is no legal difference between suing a proprietorship in its trade name or suing the proprietor directly. A sole proprietorship, the Court emphasized, has no life independent of its owner.
The bench of Justices Vikram Nath and Sandeep Mehta set aside a ruling of the Andhra Pradesh High Court, which had held that a case should be pursued against the trade name rather than the individual proprietor.
The dispute stemmed from an eviction case. Landlords, after the expiry of a lease, filed proceedings against “Aditya Motors,” a sole proprietorship. When the tenant refused to vacate, they amended the plaint, replacing the trade name with the proprietor, Prasad. Prasad argued that this substitution destroyed the case itself, urging the courts to throw out the suit.
The trial court rejected his plea, but the High Court sided with him. The Supreme Court, however, reversed that position, stressing that since a proprietorship has no separate existence from its owner, suing either the trade name or the proprietor amounts to the same thing.
“The concern is to be defended only by its proprietor,” Justice Nath noted, explaining that impleading the proprietor caused no prejudice to the case. Order XXX Rule 10 of the CPC, the Court added, is not a barrier to suing the proprietor directly.
Criticizing the High Court’s reasoning, the judgment observed that the real party to the dispute was always the proprietor, who had signed the lease in his own capacity. With no other party’s rights in jeopardy, the Court held that replacing the trade name with the proprietor’s name was a procedural correction, not a fatal defect.
With that, the Supreme Court allowed the appeal and firmly underlined that in law, a proprietorship and its proprietor are inseparable.
