In Brief
A company entered into agreements with another company for sugar supply but the latter failed to deliver and refused to refund advance payments. Directors of the defaulting company signed two cheques totaling over Rs. 51 crores, which were dishonoured. The payee sought interim compensation under Section 143-A of the Negotiable Instruments Act from the cheque signatories, arguing they should bear liability as directors in charge of the company. The Supreme Court upheld the High Court's rejection of this claim, holding that only the drawer (the company itself, not individual authorized signatories) can be held liable for interim compensation. The Court emphasized that while directors may face vicarious liability for criminal dishonour under Section 141, interim compensation liability attaches solely to the drawer under Section 143-A, and penal statutes must be interpreted strictly.
The lawyer headnote and full judgment text are available to registered users.