18/04/2023
As a lawyer with experience in handling cheque bounce cases, I find the recent Bombay High Court decision on the liability of the company's authorized signatory under Section 143A of the Negotiable Instruments Act particularly noteworthy.
Section 143A of the Negotiable Instruments Act was introduced in 2018 to provide interim relief to the payee in cheque bounce cases. The provision allows the payee to claim interim compensation from the drawer of the cheque, even before the trial is completed.
In a recent decision, the Bombay High Court clarified that the authorized signatory of a company, who is not the drawer of the cheque, cannot be held liable to pay interim compensation under Section 143A. The court held that the authorized signatory of a company cannot be equated with the drawer of the cheque, even if they signed the cheque on behalf of the company.
The court observed that the provisions of Section 143A of the Negotiable Instruments Act do not impose any liability on the authorized signatory of a company who is not the drawer of the cheque. If the payee wants to claim interim compensation from the authorized signatory, they need to establish that the signatory had knowledge of the cheque's dishonor and had a role to play in its issuance.
This decision is significant as it provides clarity on the scope of Section 143A of the Negotiable Instruments Act and ensures that the authorized signatory of a company is not unfairly held liable for something that they have not done.
This decision by the Bombay High Court provides valuable guidance to lawyers and their clients on how to proceed in cheque bounce cases.