In Brief
A director of a private company signed and issued a cheque on the company's bank account to discharge his personal debt to the complainant. The cheque was dishonoured for lack of funds. The Trial Court convicted the director under Section 138 of the Negotiable Instruments Act, 1881. The High Court quashed the conviction, holding that the director, as an authorized signatory, is not the legal "drawer" of a cheque drawn on the company's account—only the company itself is. The Supreme Court upheld the High Court, establishing that Section 138 applies only to the actual drawer of a cheque. To hold a director vicariously liable under Section 141, the company must first be prosecuted as the principal offender. The appeal was dismissed.
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