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