Cheque Bounces: Who is respnsible? Company or Signatory? SC split over verdict.

SC split over verdict in cheque bounce case


New Delhi: A two-member bench of the Supreme Court delivered a split verdict on whether a company’s authorized signatory alone can be prosecuted in a cheque bounce case if a complainant chose not to proceed against the organization.

The bench of Justices S B Sinha and V S Sirpurkar has now requested the CJI to refer the issue to a larger bench.


While Justice Sinha felt that the organization, and not just the individual signatory, was liable for criminal prosecution if the bounced cheque was issued on behalf of the
company, Justice Sirpurkar said there was nothing wrong if the complainant chose to proceed only against the individual signatory.

The verdict was delivered in a case related to Aneeta Hada, an authorized signatory of M/S Intel Travels Ltd, who had challenged the summons issued to her by a magistrate on a complaint filed by M/S Godfather Travels and Tours Pvt Ltd.

According to the complainant, Hada on January 17, 2001, had issued a cheque for Rs 5.10 lakh, but it bounced. Following this, Godfather Travels proceeded against Hada under Section 138 of the Negotiable Instruments Act.

But Hada challenged the summons on grounds that she was a mere signatory to the cheque. The high court rejected her plea upon which she appealed in the SC. AGENCIES

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