Recently, the Bombay High Court has held that the signatory of the cheque, authorized by a ‘company’, is not the drawer in terms of section 143A of the NI Act and cannot be directed to deposit any portion of interim compensation.

The bench headed by Justice Amit Borkar held that in the case of cheque dishonour, the signatory cannot be directed to pay interim compensation to the complainant under Section 143A  of the NI Act.

Former Videocon chairperson Venugopal Dhoot filed a petition questioning whether the authorised signatory of the cheque is the ‘drawer’ and whether he could be directed to pay interim compensation in an appeal.

The Court re-interpreted Section 138 of the NI Act and observed that the expression 'drawer' had not been interpreted to include the signatory of the cheque.  Further, the Court noted that the expression "drawer" in Section 143A does not include the authorized signatory of a company. 

Section 143A of the NI Act gives power to the Court to direct the drawer in an appeal to the deposit of a minimum sum of 20% of the fine or compensation awarded by the trial court. Section 143A states that -

f the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

Case Title - Lyka Labs Limited & Anr v. State of Maharashtra & Anr