An arbitration award went in favour of a Company "A' represented by its Proprietor
Can this award be enforced if the Company has closed without assigning its right to any one.
I made the payment by a cheque in favour of company. But the court is insisting on making payment to the Proprietor in his personal name.
Under what sections of law, can this be challenged. Any rulings of any court?
Asked in Civil Law from Bangalore, Karnataka
The direction of the court is not in accordance with the law. When there is no assignment made in favour of the proprietor by the company the cheque cannot be drawn in his favour. Challenge the order in the higher court.
1) it is a sole proprietorship concern .
2)the arbitration proceedings must have been filed by A sole proprietor of the concern
3) a limited company is a separate distinct legal entity but that is not the case with sole proprietorship concern
4) court is absolutely correct in directing you to make payment to sole proprietor on his personal name if his proprietorship concern has closed down
There seems to be something amiss. There can't be a proprietor of a company. A company is managed by directors. It appears that you are talking about a proprietorship firm.
A proprietorship firm is not a separate entity and proprietor and his firm are one and the same thing. Therefore an award in favour of proprietorship firm is as good as that in favour of proprietor. Even if a proprietorship firm .is closed the proprietor remains liable for its activities. In view of above discussion if your answer to my query in the beginning is yes ie it is a proprietorship firm and not a company then on a proof that the person is proprietor of the firm, the benefit of award can be assigned to him.
Advocate, New Delhi
"A " Represented by its proprietor means it is a proprietor ship firm not a company in its legal meaning.
1. It seems the opposite party is a proprietorship firm run by a sole proprietor.
It cannot be a company when represented by propritor.The proprietor represented the firm and if he has filed it the award will be in his name .
2. It means the concern business firm in the arbitration proceedings was not a registered company under companies act, it is a proprietorship firm. The award will be in the name of the applicant in this case the proprietor.
3. if the company/firm was running on single proprietorship and he was representing it in the court the award will be in his name. Hence the execution of the award, the payment should be made to him.
4. Hence the Court is right in directing to pay the proprietor.
In an arbitration award, if the award is clear that the company contested the case and the proprietor has nothing to do with the award because the award was in favor of company, then the executing court may not pressurise the judgment debtor to make payment in favor of the proprietor until there is a petition seeking permission of the court to direct the respondent to make the payment in his favor citing the substantial and convincing reasons for asking so.