SCOI Reaffirms Procedural Status of Proprietorship Concerns under CPC

In a recent decision, the Supreme Court has once again underlined the legal status of proprietorship concerns and their representation in civil proceedings.

What's The Matter?

The case of Dogiparthi Venkata Satish & Anr. v. Pilla Durga Prasad & Ors. arose from a landlord–tenant dispute where the core issue turned not on possession or eviction directly, but on whether the rejection of a plaint could be sustained on the ground that the suit was not properly framed against a proprietorship concern.

The appellants, who were owners of the property, had leased the premises to Aditya Motors, a sole proprietorship run by Pilla Durga Prasad. When the lease expired and possession was not restored, eviction proceedings were initiated.

During the pendency of litigation, the appellants amended the plaint, substituting the name of the sole proprietor in place of the trade name.

The High Court of Andhra Pradesh, however, interfered with the trial court’s rejection of an application under Order VII Rule 11 CPC and held that the suit could not continue since the plaint no longer disclosed a cause of action against the substituted defendant. Relying on Order XXX Rule 10 CPC, the High Court viewed the issue as one of improper impleadment.

The Supreme Court, speaking through Justices Vikram Nath and Sandeep Mehta, firmly disagreed. The Court reiterated that a proprietorship concern is not a juristic person it is merely a business name under which an individual carries on trade.

Consequently, the real legal entity is always the proprietor, who alone can sue or be sued. The Court noted that impleading the proprietor in his personal capacity sufficiently protects the interests of the concern.

Order XXX Rule 10 CPC is only an enabling provision, permitting suits against a business name, but it does not bar suits directly against the proprietor himself.

The judgment relied on earlier precedents such as Ashok Transport Agency v. Awadhesh Kumar and Shankar Finance and Investments v. State of Andhra Pradesh, which had drawn a clear distinction between partnerships, which enjoy procedural recognition under Order XXX CPC, and proprietorships, which remain inseparable from their proprietors.

By setting aside the High Court’s order, the Supreme Court has restored the trial court’s rejection of the Order VII Rule 11 application, thereby allowing the eviction suit to proceed on merits.

This ruling is significant for clarifying what has often been a point of procedural confusion in trial courts. By emphasizing substance over form, the Court has ensured that proprietors cannot evade liability by hiding behind a trade name, nor can plaintiffs be non-suited for failing to describe a proprietorship in a particular way.

The decision reaffirms a pragmatic and purposive approach to civil procedure, discouraging hyper-technical objections that stall the course of justice.

Ultimately, the judgment reinforces the principle that the law treats proprietorship concerns as indistinguishable from their proprietors. While procedural rules exist to guide the structure of litigation, they cannot be weaponized to defeat substantive rights where the real party in interest is already before the court.