SHRI GURUDATTA SUGARS MARKETING PVT. LTD. Versus PRITHVIRAJ SAYAJIRAO DESHMUKH & ORS
FACTS: The appellant company entered into multiple agreements with Cane Agro Energy (India) Ltd. ("Cane") between September 2016 and June 2017, making advance payments totaling Rs. 63,46,00,000/- (Sixty-Three Crores Forty-Six Lakhs) for sugar. Cane failed to fulfill its obligations and agreed to refund the advance. On 30.01.2018, Cane refunded Rs. 1,00,00,000/- (One Crore). Later, on 30.03.2020, Cane issued two cheques totaling Rs. 51,64,41,300/- (Fifty-One Crores Sixty-Four Lakhs Forty-One Thousand Three Hundred), signed by respondent No.1, the Chairman. These cheques were dishonored due to insufficient funds on 02.06.2020.
ISSUE: Can an authorized signatory, who is not the "drawer" of a cheque, be directed to pay interim compensation to the complainant under Section 143A of the Negotiable Instruments Act, 1881?
OBSERVATION: The High Court correctly identified the "drawer" under Section 7 of the Negotiable Instruments Act (NI Act) as the individual who issues the cheque, with primary liability under Section
143A resting with the drawer. The appellant’s argument that directors or other individuals should be liable under Section 143A misinterprets the statute. Liability under Section 141 extends to company officers for cheque dishonor, but this principle does not apply to Section 143A. An authorized signatory does not assume the company's legal identity and, therefore, cannot be considered the drawer. The Supreme Court confirmed that an authorized signatory cannot be directed to pay interim compensation under Section 143A.
