2020 (10) TMI 1264 - HC - Indian Laws

Dishonor of cheque - direction to deposit 20% of the cheque amount by way of interim compensation proportionately - applicant submits that the applicant had signed the cheque in question as an authorized signatory of the Company and that there is a difference between an authorized signatory and a drawer - HELD THAT - Issue notice to the respondents, returnable on 4th December, 2020. Learned APP waives notice on behalf of the Respondent No.1-State. Learned Counsel for the applicant to serve the Respondent No.2, by private notice and file affidavit of service before the next date. In the meantime, till the next date, the impugned order dated 24th February, 2020, passed by the learned Metropolitan Magistrate, 33 rd Court, Ballard Pier, Mumbai, in C.C. No.11994/SS of 2018, is stayed.

Summary

Issues: Impugning an order directing deposit of interim compensation under Section 143-A of the Negotiable Instruments Act by an authorized signatory of a company.

Analysis:
1. Impugned Order: The applicant challenged the order directing him to deposit 20% of the cheque amount as interim compensation within 60 days. The applicant contended that he was not the drawer of the cheque but an authorized signatory of the company. He argued that there is a distinction between an authorized signatory and a drawer, citing Section 143-A of the Negotiable Instruments Act. The applicant relied on judgments such as N. Harihara Krishnan v/s J. Thomas and Aneeta Hada v/s Godfather Travels and Tours Private Limited to support his position that it is the company, not him, who should bear any liability.

2. Legal Representation: The applicant's senior counsel highlighted that the company, currently under the Interim Resolution Professional (IRP), would be responsible for any payments directed by the trial court. Emphasizing that the applicant had not pleaded guilty to the complaint, the counsel pointed out that the stage for the impugned order had not yet arrived, as per Section 143-A(1)(a) of the Act. The counsel sought to distinguish the liability between the applicant as an authorized signatory and the company as the drawer of the cheque.

3. Court Proceedings: The High Court issued notice to the respondents, returnable on a specified date, while the APP waived notice on behalf of the State respondent. The applicant was directed to serve notice on the other respondent and file an affidavit of service. Pending further proceedings, the High Court stayed the impugned order dated 24th February, 2020, to maintain the status quo until the next hearing. The order was to be acted upon by all concerned parties based on the digitally signed copy provided by the Court's Private Secretary.