Company Cheque Signatories Cannot be deemed as “Drawer”

In a significant ruling, the Supreme Court overturned the Karnataka HC’s order directing Bijay Agarwal to pay 20% of the fine as compensation under Section 148(1) of the Negotiable Instruments Act. 

The case involved a dishonoured cheque issued by M/s Gee Pee Infotech Pvt. Ltd., signed by Agarwal, with the note “payment stopped by drawer.” 

The SC clarified that under Section 148, a signatory cannot be held liable for compensation unless conditions under Section 141, addressing directors' liability, are met, reaffirming the principle of corporate personality.