Decided on: 26 August 2025
Coram: Justice Vikram Nath and Justice Sandeep Mehta
Citation: 2025 SCC OnLine SC 1825
The case addressed the question of whether a sole proprietorship can be recognized as a juristic person or is to be regarded solely as a trade name.
Facts
The property was leased to Aditya Motors (the lessee), a sole proprietorship concern of Pilla Durga Prasad (P.D. Prasad), under a registered lease deed on 31/04/2005. Further, it appeared that without the consent of the owner-appellant, Aditya Motors inducted M/s. Associated Auto Services Pvt. Ltd.
After the lease ended, the lessee did not leave, so the owners sued for eviction, naming Aditya Motors (the business name) and others. The suit’s title was changed to name the actual person, Pilla Durga Prasad, instead of just “Aditya Motors”, after it was clarified that he was the sole proprietor.
The defendant argued that since Aditya Motors (the trade name) was removed and replaced with the proprietor’s name, the suit should be dismissed due to lack of cause of action. The trial court rejected this and said naming the proprietor was enough. The High Court disagreed, saying the concern should have been sued in its trade name.
The appellants objected to the said application, stating that Aditya Motors was a proprietorship concern with Pilla Durga Prasad as its sole proprietor and since a proprietorship concern is not a juristic person, it would not make any difference if the proprietor was made a party as representative of Aditya Motors, which description remained in the cause title. However, the cause of action was against R.D. Pillai.
Issue
Whether a proprietorship should be treated as a distinct legal entity for the purpose of being sued, or merely as the trade name of the individual proprietor?
Court Analysis
“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 in the case of Ashok Transport Agency v. Awadhesh Kumar held that, “In the event of the death of the proprietor of a proprietary concern, it is the legal representatives of the proprietor who alone can sue or be sued in respect of the dealings of the proprietary business.”
Also in, Shankar Finance and Investments v. State of Andhra Pradesh and others, this Court emphasised that in proceedings involving proprietary concerns, representation may be in the trade name or through an authorised agent with personal knowledge, yet the proprietor remains the real party in interest.
Hence the court held that a proprietorship is only a “trade name”. It is not a separate legal entity like a company or partnership. If the lawsuit is against the proprietor, that’s sufficient. There’s no prejudice or mistake in suing the owner by name. There is no technical error in suing the owner rather than the trade name, because the real party is always the individual proprietor.