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The expression "drawer" in Section 143A of NI Act does not include the authorized signatory of a company, therefore, amended Section 148 needs to be interpreted accordingly, Court held.
The Bombay High Court recently held that authorised signatory of a company who signs a cheque on its behalf is not the ‘drawer’ of the cheque and hence such signatory is not liable to pay interim compensation under Section 143A of the Negotiable Instruments Act, 1881 in a case for dishonour of cheque.
“Having held that the expression 'drawer' in Section 143A does not include the authorized signatory of a company, amended section 148 needs to be interpreted accordingly,” the court observed.
The single judge bench of Justice Amit Borkar had framed two issues in a batch of matters with common question of law:
“It is also a settled rule of construction that all the constituent parts of a statute are to be taken together to ascertain the legislative intent. Each word, phrase or sentence is to be considered in the light of the general purpose of the act itself. Words and phrases occurring in a statute are to be taken not in an isolated or detached manner dissociated from the context but are to be read together and construed in the light of the purpose and object of the act itself,” the court stated while dealing with the issues concerned.
The court observed that language of Section 143A allows for a plain interpretation to the exclusion of all other rules of interpretation. The word ‘drawer’ in Section 143A had a clear and unambiguous meaning. Under Section 143A, the trial court has the power to order the drawer to pay interim compensation to the complainant for the pendency of the trial.
“The objective is to make the payee of the cheque pay interim compensation to provide relief to drawees from undue delay in the final resolution of the dishonoured cheque. The lawmakers' intention is also clear from the recorded minutes of Lok Sabha Debates conducted when the Bill was introduced and passed,” the court observed.
In addition, the court stated that the term drawer has acquired technical connotations that must not be altered. The court observed that the legislature has never altered the definition of the drawer, and judicial rulings have always held that drawer refers exclusively to the principal criminal and not those who are vicariously accountable.
The court further reasoned that the Supreme Court has regularly excluded check signers from the definition of "drawer" in Section 138. “The expression 'drawer' in section 138 has not been interpreted to include either signatory of the cheque or the signatory director. Despite the expression ‘drawer occurring in section 138, both signatories of a cheque and in charge director have been held vicariously under 141”, the court stated.
Further, there is no power under Section 141 of the NI Act for the court to direct payment of interim compensation, the court noted.
While observing that the High Courts must accept as binding not only the ratio decidendi in the decisions of the Supreme Court but also the obiter dicta, the court stated that Apex Court has treated company as ‘principal offender’ in a prosecution under Section 138 and ‘authorised signatory’ vicariously liable under Section 141(2) of NI Act.
“Having held that the expression "drawer" in section 143A does not include the authorized signatory of a company, amended section 148 needs to be interpreted accordingly. The plain language of section 148 makes it clear that the Appellate Court is granted the power to direct deposit of a minimum sum of 20% of the fine or compensation awarded by the Trial Court in an appeal by the drawer,” the court said, and framed the answers to the issued made as following:
The court further clarified that the appellate court has the power under Section 389 of CrPC to direct deposit of amount in an appeal under Section 148 of NIA.
Case Title: Lyka Labs Ltd. & Anr. vs. State of Maharashtra & Anr. and connected cases.
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