Order XXX Rule 10 CPC | Proprietorship Not Juristic Person | Absence of Firm Name Not Fatal Where Proprietor Is Defendant: Supreme Court
Kiran Raj
The Supreme Court of India Division Bench of Justice Vikram Nath and Justice Sandeep Mehta held that a proprietorship concern is not a juristic person and cannot sue in its own name, though it may be sued under the enabling provisions of the Code of Civil Procedure, 1908. The Court directed that impleading the proprietor as a party is sufficient to safeguard the interest of the proprietorship, as the real party in interest is the proprietor. The Court allowed the appeal, set aside the judgment of the Andhra Pradesh High Court, and restored the trial court’s order rejecting an application under Order VII Rule 11 CPC. The trial court has been directed to proceed with the eviction suit on its merits.
The dispute centered around a lease arrangement concerning immovable property owned by the appellants. The case originated when the appellants, owners of the suit schedule property, entered into a registered lease deed dated 13 April 2005 with a sole proprietorship known as Aditya Motors, operated by respondent Pilla Durga Prasad. The lessee conducted business on the premises under this arrangement.
Subsequently, without obtaining the consent of the property owners, Aditya Motors inducted a private limited company, M/s Associated Auto Services Pvt. Ltd., into the leased premises. This development created disputes concerning unauthorized occupation.
Upon expiry of the lease period, the lessee did not vacate the premises. The appellants, after issuing notice under Section 106 of the Transfer of Property Act, 1882, instituted Original Suit No.118 of 2012 seeking eviction. The suit was directed not only against the original lessee, Aditya Motors, but also against M/s Associated Auto Services Pvt. Ltd. and its two directors. In the cause title, the sole proprietorship Aditya Motors was impleaded as defendant no.1, the private limited company as defendant no.2, and the directors as defendants nos.3 and 4.
During the pendency of the suit, the appellants filed an application under Order VI Rule 17 CPC seeking amendment of the plaint. One of the amendments requested was to delete the name of Aditya Motors and substitute in its place Pilla Durga Prasad as proprietor and representative of the lessee. The amendment was allowed by order dated 28 March 2018. This order was not challenged and consequently attained finality. After the amendment, the cause title reflected the suit as “Dogiparthi Venkata Satish and another v. Pilla Durga Prasad and others.”
Following this change, the defendant moved an application under Order VII Rule 11 CPC seeking rejection of the plaint. The contention raised was that since the registered lease deed dated 13 April 2005 was executed in the name of Aditya Motors, and since Aditya Motors had been deleted from the cause title by way of amendment, the plaint disclosed no cause of action against Pilla Durga Prasad. It was argued that the lease existed only between the appellants and Aditya Motors, and hence the plaint could not be sustained against the individual.
The appellants opposed this application. They submitted that Aditya Motors was merely a proprietorship concern and therefore not a juristic person. Since a proprietorship concern cannot sue independently, the real party to the contract and to the proceedings was its sole proprietor, Pilla Durga Prasad. The appellants emphasized that the lease deed itself bore the signature of Pilla Durga Prasad as proprietor of Aditya Motors. Consequently, the cause of action was always against him in his capacity as proprietor, and the amendment merely clarified the proper description of the party. They argued that Order VII Rule 11 CPC could not be invoked in these circumstances and that the suit was maintainable against the proprietor.
The trial court, after hearing the parties, rejected the application under Order VII Rule 11 CPC by order dated 2 July 2018. The trial court accepted the contention that a proprietorship concern is not a separate legal entity and that impleading the proprietor was sufficient.
Aggrieved by this decision, Pilla Durga Prasad preferred Civil Revision Petition No.1679 of 2019 before the High Court of Andhra Pradesh. The High Court allowed the revision petition on 19 October 2023. It relied upon Order XXX Rule 10 CPC, which states that a person carrying on business in a name or style other than his own may be sued in such name or style as if it were a firm name. The High Court held that the proprietorship concern, Aditya Motors, ought to have been made a party, as it could be sued though it could not sue. On this basis, the High Court set aside the trial court’s order and allowed the application under Order VII Rule 11 CPC, resulting in the rejection of the plaint.
Challenging the High Court’s order, the appellants approached the Supreme Court through a Special Leave Petition, which was granted and converted into the present Civil Appeal. The appellants contended that the High Court had taken a hyper-technical approach in interpreting Order XXX Rule 10 CPC and failed to appreciate that the proprietor and the proprietorship are indistinguishable for purposes of litigation.
Thus, the matter came before the Supreme Court for adjudication, raising significant issues on the legal status of proprietorship concerns and the applicability of procedural provisions of the CPC to suits involving such entities.
The Supreme Court recorded that the trial court was correct in rejecting the application under Order VII Rule 11 CPC, whereas the High Court had committed a serious error in its interpretation. The Bench analyzed the scope of Order XXX Rule 10 CPC in detail.
Justice Vikram Nath observed: “A proprietorship concern is nothing, but a trade name given by an individual for carrying on his business. A proprietorship concern is not a juristic person. It cannot sue, however, in view of Order XXX Rule 10 CPC, it can be sued.”
The Court proceeded to examine the wording of the rule, which provides: “Any person carrying on business in a name or style other than his own name, or a Hindu undivided family carrying on business under any name, may be sued in such name or style as if it were a firm name, and, in so far as the nature of such case permits, all rules under this Order shall apply accordingly.”
The judgment noted: “The use of the word can in Order XXX Rule 10 CPC only indicates that proprietorship concern may be made a party. However, it does not necessarily mean that the proprietor itself if made a party would not be enough, inasmuch as, the proprietorship is to be defended by the proprietor only and not by anybody else. Once the proprietor has been impleaded as a party representing the proprietorship, no prejudice is caused.”
The Bench recorded that the High Court had taken a “completely hyper technical view not realising that there was no prejudice caused and the cause of action very much accrued against the proprietor as he alone had signed the lease deed on behalf of the proprietorship concern.”
To reinforce its reasoning, the Court referred to precedent. It quoted from Ashok Transport Agency v. Awadhesh Kumar (1998) 5 SCC 567: “A proprietary concern is only the business name in which the proprietor of the business carries on the business. A suit by or against a proprietary concern is by or against the proprietor of the business. The provisions of Rule 10 of Order XXX… enable the proprietor of a proprietary business to be sued in the business names of his proprietary concern. The real party who is being sued is the proprietor of the said business. The said provision does not have the effect of converting the proprietary business into a partnership firm.”
The Court also cited Shankar Finance and Investments v. State of Andhra Pradesh (2008) 8 SCC 536: “In regard to business transactions of companies, partnerships or proprietary concerns, many a time the authorised agent or attorney holder may be the only person having personal knowledge of the particular transaction… Be that as it may. In this case we find no infirmity.”
Summarizing its analysis, the Bench stated: “Whether proprietorship concern is sued in its name or through its proprietor representing the concern is one and the same thing. Once the interest of the proprietorship concern was taken care of by the proprietor having been impleaded, nothing further remained.”
Thus, the Court concluded that the High Court’s reliance on Order XXX Rule 10 CPC to insist upon impleading the trade name was misplaced. The trial court’s approach of recognizing the proprietor as the real party in interest was upheld as legally sound.
The Court ordered: “Accordingly, the appeal is allowed. The impugned order is set aside. The Trial Court to proceed in accordance with law to decide the suit on its own merits. Pending application, if any, shall stand disposed of.”
Advocates Representing the Parties
For the Petitioners: Mr. K. Parameshwar, Sr. Adv.; Ms. Rao Vishwaja, Adv.; Mr. P. Vamshi Rao, Adv.; Ms. Tatini Basu, AOR
For the Respondents: Mr. S.S. Prasad, Sr. Adv.; Ms. C. K. Sucharita, AOR; Mr. Vinod Kumar Gupta, Adv.; Mr. Dama Sheshadri Naidu, Sr. Adv.; Ms. Jaikriti S. Jadeja, AOR; Mr. Rahul Reddy, Adv.; Mr. Shivang Goel, Adv.; Mr. Ishaan Aggarwal, Adv.; Mr. Ojas Mittal, Adv.; Ms. Praseena Elizabeth Joseph, AOR
Case Title: Dogiparthi Venkata Satish and another v. Pilla Durga Prasad and others
Neutral Citation: 2025 INSC 1046
Case Number: Civil Appeal No… of 2025 (arising out of SLP(C) No.25938 of 2023)
Bench: Justice Vikram Nath, Justice Sandeep Mehta
