NI Act| Company’s Authorized Signatory Not “Drawer” Of Cheque, Not Liable To Pay Interim Compensation Under Sec.143A: Bombay High Court

Case: Lyka Labs Limited & Anr. v. State of Maharashtra & Anr. and connected cases

Coram: Justice Amit Borkar

Case No.: Criminal Application No.886 Of 2022

Court Observation: The signatory of the cheque, authorized by the “Company”, is not the drawer in terms of section 143A of the NI Act and cannot be directed to pay interim compensation under section 143A.

By specifically fastening the liability on the drawer/issuer, the legislature excluded anyone else from being made liable to pay interim compensation…Principal offender under Section 138 in case cheque issued by the company is the drawer(company). Drawer alone would have been the offender thereunder if the Act did not contain section 141. By virtue of Section 141 of the Act that penal liability under Section 138 is cast on other persons connected with the company. Therefore there is no need to interpret the word ‘drawer’ to include authorised signatory. The expression ‘drawer’ in section 138 has not been interpreted to include either signatory of the cheque or the signatory director. Despite the expression ‘drawer’ occurring in section 138, both- signatories of a cheque and in charge director have been held vicariously liable under section 141.bom

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Keywords

NI Act| Company’s Authorized Signatory, Not Liable To Pay Interim Compensation

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