In a case involving a dishonoured cheques, the Bombay High Court, presided over by Justice Amit Bokkar, recently ruled that an authorised signatory of a company who signs a check on its behalf is not the “drawer” of the cheque and is therefore not required to pay interim compensation under section 143A of the Negotiable Instruments Act, 1881.
According to petitioners sections 143A and 148 need to be interpreted in plain language; whereas respondents submit that both provisions need to be interpreted by applying the rule of purposive construction.
The argument put forth by respondents to interpret “Drawer” to include “authorised signatory” is challenged on the grounds that it violates a fundamental principle of interpretation that forbids removing related provisions of a statute from their context and interpreting them in isolation from one another or the whole.
If a word has a specific meaning under the NI Act, it cannot have a different meaning when it appears in different places within the same statute. To do so would be to subvert the purpose of the decisive provision cited by the single bench.
The Court noted that the expression “drawer” under section 143A of NI Act does not include the authorized signatory of a company; therefore, the language of the proviso to section 148 lends support to the interpretation that such power is available only in an appeal filed by the “drawer”.
The bench considered the supreme court judgments submitted by both sides, however it was noted that according to Article 141 of the Constitution of India, the Supreme Court’s ruling becomes the law that is applicable to all courts.
As a result, when the Supreme Court articulates its principles in explicit terms, including in its obiter dicta, those principles become binding law. Nonetheless, it might be challenging to infer any principles of a binding nature from a Supreme Court decision when a topic is neither presented nor debated.
The single bench decided that the expression “drawer” in section 143A does not include the authorized signatory of a company, amended section 148 needs to be interpreted accordingly.
The HC highlighted that Section 148 emphasizes such power being conferred only in an appeal by the ‘drawer’. As already held in the earlier part of the judgment that the ‘drawer’ does not include an ‘authorized signatory’ in the case of a company or legal person, section 148 needs to be interpreted to mean that such power to direct compensation is conferred on the Appellate Court only in an appeal filed by the drawer against the conviction under section 138 of the NI Act.
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