Friday, March 6, 2026
Latest:
2024BankingJuly 2024LatestLegalSupreme Court

Section 143-A – NI Act – Interim Compensation – Liability of Directors for Company Cheque

legaldeli

 

Appellant Company had several agreements and sale orders with Cane Agro Energy India Ltd between September 2016 and June 2017.   The appellant made advance payments of Rs.63.46 crores for supply of sugar. However, Cane Company did not supply the sugar and also did not discharge its obligations.

 

In discharge of its liability, the respondent nos.1 to 3 Directors of the Company issued two cheques of Rs.45 crores and Rs.6,64,41,300/- drawn on the Company account.

 

On 2.6.2020, the cheques were dishonoured for insufficiency of funds.  The notice dated 18.6.2020 was served on the respondent nos.1 to 3.  On 11.8.2020, the Magistrate, Kolhapur, issued process on the complaint of the appellant.

By the order dated 27.4.2022, on the application of the appellant under Section 143-A of NI Act, directed the respondent nos.1 to 3 to pay interim compensation at 4% of the total cheque amount.

By the judgment dated 8.3.2023, the High Court held that the signatory of the cheque authorized by the Company is not a “drawer” in terms of Section 143A and therefore, the respondent nos.1 to 3 as Directors cannot be directed to pay interim compensation.

Whether the signatory of the cheque authorised by the Company is the “drawer” for Section 143A of the NI Act leaving aside the company?

HELD that a signatory is merely authorised by the Company to sign the cheque on its behalf and does not become the “drawer”. 

Judgment dated 24.7.2024 of the Supreme Court in Criminal Appeal Nos.3070-3071 of 2024 of Shri Gurudatta Sugars Marketing Pvt Ltd Vs. Prithviraj Sayajirao Deshmukh and others

You May Also Like

Salt – Substandard – Penalty under FSSI Act, 2006

legaldeli

Insurance – Policy issued on receipt of cheque and subsequently dishonoured but vehicle ply on road without valid insurance – HC found that 2002 Notification of Online mode of payment of insurance premium kept in the dark

legaldeli

Slum Act and IBC – Transit Rent Arrears & Resolution Plan

legaldeli

Leave a Reply

Your email address will not be published. Required fields are marked *

I HAVE READ THE DISCLAIMER AND AGREE TO IT.

User Acknowledgement

By proceeding further and clicking on the "AGREE" button herein below, I acknowledge that I of my own accord wish to know more about LegalDeli for my own information and use. I further acknowledge that there has been no solicitation, invitation or inducement of any sort whatsoever from LegalDeli or any of its members to create an Attorney-Client relationship through this knowledge site. I further acknowledge having read and understood the Disclaimer below.

Disclaimer
About: This knowledge-site (www.LegalDeli.in) is owned and operated by LegalDeli (“NDA”), and is a resource for your informational and educational purposes only.

No Warranty: NDA does not warrant that any content or information contained on this knowledge-site is accurate, correct, complete or up-to-date, and hereby disclaims any and all liability to any person for any actual or threatened loss or damage caused by errors or omissions, whether such errors or omissions result from negligence, accident or otherwise. NDA assumes no liability for the interpretation and/or use of the content and/or information contained on this knowledge-site, nor does it offer any warranty of any kind, either expressed or implied in relation to such content or information.

Third-Party Links: NDA does not intend that links / URLs contained on this knowledge-site re-directing users to third party websites be considered as referrals to, endorsements of, or affiliations with any such third party website operators. NDA is not responsible for, and makes no representations or warranties, express or implied, about the content or information contained on such third party websites to which links may be provided on this knowledge-site.

No Legal Advice: By clicking ‘I agree’ and proceeding further, you acknowledge, represent and undertake that you on your own accord wish to know more about NDA, its capabilities and research content and information contained on the knowledge-site, for your own knowledge and personal use. The content and information contained on this knowledge-site should not be construed as nor relied upon as legal advice. You as a reader or recipient of content or information contained in this knowledge-site should not act, nor refrain from acting, based upon any or all of such content or information, but should always seek the advice of competent legal counsel licensed to practice the relevant law in the appropriate jurisdiction.

No Attorney-Client Relationship: This knowledge-site is not intended to be and you should not consider the content or information contained therein to be an advertisement, solicitation, inducement or invitation for an Attorney-Client relationship. Transmission, receipt or use of this knowledge-site, including content and information contained therein, does not constitute nor create an Attorney-Client relationship between NDA and you.

I Agree