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HC ruled that a Managing Director cannot be held vicariously liable under Section 138 of Negotiable Instruments Act for a dishonored cheque that was not drawn by their company. While the petitioner, as MD of Kwality Ltd, handed over the dishonored cheque to the complainant, the cheque was actually drawn by DRTPL and signed by its director. The court clarified that Section 138 liability attaches to the drawer of the cheque and their company's responsible officers, not to third parties who merely deliver the instrument. Since the petitioner was not a director of DRTPL (the drawer company), merely delivering the cheque did not create liability under Section 138. Petition allowed.
HC ruled that a Managing Director cannot be held vicariously liable under Section 138 of Negotiable Instruments Act for a dishonored cheque that was not drawn by their company. While the petitioner, as MD of Kwality Ltd, handed over the dishonored cheque to the complainant, the cheque was actually drawn by DRTPL and signed by its director. The court clarified that Section 138 liability attaches to the drawer of the cheque and their company's responsible officers, not to third parties who merely deliver the instrument. Since the petitioner was not a director of DRTPL (the drawer company), merely delivering the cheque did not create liability under Section 138. Petition allowed.
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