Law4u - Made in India

What is the role of the authorized signatory in a corporate cheque bounce case?

29-Mar-2025
Cheque Bounce

Answer By law4u team

In a corporate cheque bounce case, the role of the authorized signatory is crucial because they are the ones who sign the cheque on behalf of the company. Under Section 138 of the Negotiable Instruments Act, 1881, both the company and its authorized signatory can be held legally accountable if a cheque issued by the company bounces due to insufficient funds or other reasons. Liability of the Authorized Signatory Primary Responsibility: The authorized signatory is personally liable along with the company since they issued the cheque. Criminal Proceedings: If a complaint is filed under Section 138, both the company and the signatory may face criminal prosecution. Director’s Liability: If the authorized signatory is a director, managing director, or key officer, they may be prosecuted unless they prove they had no knowledge of the transaction. Defenses Available: The signatory had no knowledge of the dishonor. The cheque was issued without proper authorization. The cheque was presented after its validity expired. Legal Consequences Imprisonment up to 2 years or fine up to twice the cheque amount, or both. A court may grant bail but conviction can lead to criminal records. The company may face business restrictions or loss of credibility.

Answer By Anik

Dear Client, Section 138 read in conjunction with Section 141 of the Negotiable Instruments Act may impose liability on the authorized signatory who signs the company's check on its behalf in the event that it bounces. In particular Section 141 addresses offenses committed by corporations stating that the company and all individuals in charge of and accountable for the operation of the business at the time of the offense may face prosecution. The role of the authorized signatory is essential since they bear direct responsibility for the dishonor of a check they sign. I hope this answer helps. In case of future queries, please feel free to contact us. Thank you.

Cheque Bounce Verified Advocates

Get expert legal advice instantly.

Advocate Sachin krishna chavan

Advocate Sachin krishna chavan

Family,Divorce,Civil,Cheque Bounce,Criminal,Landlord & Tenant,Child Custody,Breach of Contract,Property,Succession Certificate,Recovery,

Get Advice
Advocate Ateek

Advocate Ateek

Anticipatory Bail, Cheque Bounce, Civil, Divorce, Family, Motor Accident, Muslim Law, Criminal, Revenue

Get Advice
Advocate Dr Krishan Jhajhra

Advocate Dr Krishan Jhajhra

Cheque Bounce, Cyber Crime, Criminal, Civil, Divorce

Get Advice
Advocate Azhar Khan

Advocate Azhar Khan

Anticipatory Bail,Cheque Bounce,Child Custody,Criminal,Documentation,High Court,Insurance,

Get Advice
Advocate Saksham Dhanda

Advocate Saksham Dhanda

Civil, Criminal, Recovery, Motor Accident, Cheque Bounce, Consumer Court, Banking & Finance

Get Advice
Advocate Sachit Sharma

Advocate Sachit Sharma

Anticipatory Bail, Banking & Finance, Cheque Bounce, Child Custody, Civil, Consumer Court, Court Marriage, Corporate, Criminal, Divorce, Documentation, Domestic Violence, Family, Insurance, High Court, Labour & Service, Landlord & Tenant, Motor Accident, Muslim Law, Property, R.T.I, Recovery, Succession Certificate, Revenue, Wills Trusts

Get Advice
Advocate Puneet Tandon

Advocate Puneet Tandon

GST, Tax, Court Marriage, Divorce, Family, Cheque Bounce, Banking & Finance

Get Advice
Advocate Dhanendra Srivastava

Advocate Dhanendra Srivastava

Anticipatory Bail,Cheque Bounce,Court Marriage,Criminal,Divorce,Domestic Violence,Family,GST,Child Custody,

Get Advice
Advocate Prabhat Chaudhary

Advocate Prabhat Chaudhary

High Court, Anticipatory Bail, Arbitration, Armed Forces Tribunal, Breach of Contract, Cheque Bounce, Child Custody, Civil, Consumer Court, Corporate, Court Marriage, Customs & Central Excise, Criminal, Divorce, Documentation, Cyber Crime, Domestic Violence, Family, Immigration, Property, R.T.I, Recovery, Patent, Motor Accident, Muslim Law, Media and Entertainment, Medical Negligence, Succession Certificate, Trademark & Copyright, Wills Trusts, Supreme Court, Tax, Revenue, Insurance, International Law, Landlord & Tenant, Labour & Service, Banking & Finance, Bankruptcy & Insolvency, GST, NCLT, RERA, Startup

Get Advice
Advocate Shyam Krishna Das

Advocate Shyam Krishna Das

Anticipatory Bail, Cheque Bounce, Criminal, Domestic Violence, Motor Accident

Get Advice

Cheque Bounce Related Questions

Discover clear and detailed answers to common questions about Breach of Contract. Learn about procedures and more in straightforward language.