Directors are not liable for dishonoured cheques issued from the company's A/C

The Supreme Court clarified that a director is not liable under Section 138 of the Negotiable Instruments Act for a bounced cheque issued from the company's account to settle a personal loan.

The case involved a man who repaid a personal loan via a cheque drawn on Shilabati Hospital’s account, where he was a director.

The Court clarified that Section 138 applies only when the cheque is drawn from an account maintained by the individual personally.

However, the Court observed the possibility of a cheating charge, as the debtor had issued the cheque to settle a loan, implying fraudulent intent.