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        2023 (3) TMI 431 - HC - Indian Laws

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        Drawer under the Negotiable Instruments Act excludes a company's authorised signatory for interim compensation and mandatory deposit. The term 'drawer' under the Negotiable Instruments Act means the person on whose account the cheque is drawn, not an authorised signatory signing for a ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                          Drawer under the Negotiable Instruments Act excludes a company's authorised signatory for interim compensation and mandatory deposit.

                          The term "drawer" under the Negotiable Instruments Act means the person on whose account the cheque is drawn, not an authorised signatory signing for a company. Section 143A therefore does not extend interim compensation liability to such signatory, because vicarious liability cannot be implied beyond the statutory text. Section 148 applies a minimum 20% deposit only in an appeal by the drawer against a section 138 conviction, so that requirement does not automatically bind an appeal filed by a person other than the drawer. Any deposit direction in such cases may instead be considered under the Code of Criminal Procedure.




                          Issues: (i) Whether the authorised signatory of a company is the drawer for the purposes of section 143A of the Negotiable Instruments Act, 1881 and can be directed to pay interim compensation. (ii) Whether, in an appeal under section 148 of the Negotiable Instruments Act, 1881 filed by a person other than the drawer, a minimum deposit of 20% of the fine or compensation is mandatory.

                          Issue (i): Whether the authorised signatory of a company is the drawer for the purposes of section 143A of the Negotiable Instruments Act, 1881 and can be directed to pay interim compensation.

                          Analysis: The expression "drawer" in the Negotiable Instruments Act, 1881 was construed in its plain and legal sense with reference to sections 7, 30, 31, 138, 141 and 143A. The liability under section 138 was held to attach primarily to the drawer of the cheque, while section 141 creates a distinct vicarious liability for specified officers of a company. The Court held that an authorised signatory is not the drawer merely because he signs on behalf of the company, and that section 143A does not create any separate vicarious liability for such signatory. Purposive interpretation could not be used to rewrite the provision or expand the class of persons liable beyond the drawer.

                          Conclusion: The issue was answered against the complainant and in favour of the petitioner. An authorised signatory of a company is not the drawer for section 143A and cannot be directed to pay interim compensation under that provision.

                          Issue (ii): Whether, in an appeal under section 148 of the Negotiable Instruments Act, 1881 filed by a person other than the drawer, a minimum deposit of 20% of the fine or compensation is mandatory.

                          Analysis: Section 148 was read as conferring power on the Appellate Court to direct a minimum deposit only "in an appeal by the drawer" against conviction under section 138. Since an authorised signatory is not the drawer, the statutory requirement of a minimum 20% deposit under section 148 was held inapplicable to appeals filed by persons other than the drawer. The Court also noted that any direction for deposit in such appeals may be considered under section 389 of the Code of Criminal Procedure, 1973 while dealing with suspension of sentence, but that does not make the section 148 deposit mandatory.

                          Conclusion: The issue was answered in favour of the petitioner. A minimum deposit of 20% of the fine or compensation under section 148 is not mandatory in an appeal filed by a person other than the drawer.

                          Final Conclusion: The common legal questions were decided in favour of the accused side, and the petitions were to be dealt with in accordance with those answers.

                          Ratio Decidendi: The term "drawer" in sections 143A and 148 of the Negotiable Instruments Act, 1881 means the person on whose account the cheque is drawn and does not extend to an authorised signatory of a company; vicarious liability cannot be implied where the statute confines liability to the drawer.


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