Company Director or Authorised Signatory of cheque is not a Drawer in terms of Section 143A of NI Act and cannot be directed to pay interim compensation under Section 143A – Shri Gurudatta Sugars Marketing Pvt. Ltd. Vs. Prithviraj Sayajirao Deshmukh and Ors. – Supreme Court
In this Landmark Judgment, the Hon’ble Supreme Court upheld the ratio of Lyka Labs Limited and Anr. v. The State of Maharashtra and Anr. (2023) ibclaw.in 131 HC and held that:
(i) The general rule against vicarious liability in criminal law underscores that individuals are not typically held criminally liable for acts committed by others unless specific statutory provisions extend such liability.
(ii) The High Court rightly emphasized that liability under Section 141 arises from the conduct or omission of the individual involved, not merely their position within the company.
(iii) The distinction between legal entities and individuals acting as authorized signatories is crucial.
(iv) This principle, fundamental to corporate law, ensures that while authorized signatories can bind the company through their actions, they do not merge their legal status with that of the company.
(v) The drawer under Section 143A of NI Act refers specifically to the issuer of the cheque, not the authorized signatories.
(vi) The judgment in Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. (2017) ibclaw.in 821 SC nowhere lays down that directors or authorised signatories would come under the ambit of ‘drawer’ for the purposes of Section 143A.
(vii) An authorized signatory is not a drawer of the cheque, as established in N. Harihara Krishnan Vs. J. Thomas (2017) ibclaw.in 964 SC.
