Section 138 Loophole: Fraudsters Exploit Drawer vs. Authorized Signatory Distinction to Evade Liability for Bounced Cheques.

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....Dishonor of Cheque - drawer of the cheque versus authorised signatory - One can easily visualise the object of Section 138 of the Negotiable Instruments Act, 1881, will be defeated, If the proposition canvassed by the petitioner is held legally valid. Fraudsters will open the Bank Account in the name of Proprietor concern by one individual and another individual will be nominated as Authorised Signatory. Allow the cheque drawn by the authorised signatory gets bounced and pleads that he is only the drawer of the cheque, but not the person maintaining the account. - HC....