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Brittany Ho   31 December 2019

Regarding negotiable instruments act

My question is regarding Negotiable Instruments Act , legal proceedings and liabilities. I am a businessman and Supplied Material to one of the manufacturer and recevied the postdated / undated cheques. There is a Manufacturing Unit Eg- XYZ Health Care The Owner of Manufacturing unit is Mr. Gupta and he has Given his factory and compay name ( XYZ Healthcare ) on Lease to Mr. Gautam and Mr. Singhla , in mean while Mr. Singhla has withdrawn and now Mr. Gautam is Running the manufacturing unit. indecision From some sourses we got to know the lease will be ending in december 2019 and my be it is possible that Mr. Gautam's lease will not be renewed and he will leave the plant or may be due to overdues of credits he will leave himself . I have post dated cheque of XYZ Healthcare ( but i dnonot know who has signed it , Mr Gautam or Mr Gupta ) ( Possibility is that Mr Gautam has signed ) , My Question is if i proceed for cheque bouncing case , weather the manufacturing unit is liable to pay the amount or only director who is running the plant presently is liable. If the lease ends / lease holder withdraw , do manufacturing unit or actual owner is also liable. ??? In this Situation from whome we will clam the money and to whom all we have to make parties in Negotiable Instruments Act case.?


 5 Replies

G.L.N. Prasad (Retired employee.)     01 January 2020

Do not take risks, and wait for something to happen.  First, get a statement of account showing dues to you by that company and fill that amount and present the cheque for payment.  You can think of other remedies at a later date.  You need the guidance of an expert advocate right from filling the cheque to presentation and corresponding with that company.  You are concerned with dues.  If it is a registered company, you can get details of the management from the Registrar of companies for a small fee while issuing notices for cheque bounce.  You are not concerned with the signatories of the cheque and all the managing members are responsible for the dues payable to you collectively, and the signatory is only authorized to issue such cheques.  This means others who are involved in management can not escape from legal liability for the only reason that cheque was not signed by them when the dues are from the company/form/organization.

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     01 January 2020

Cheque drawer is main responsible for bounced cheques. Drawer whether company or firm and its directors

G.L.N. Prasad (Retired employee.)     01 January 2020

Drawer here refers the Account holder name.  Signatories may be different and they are not drawers and they are authorized signatories for and on behalf of the drawer.

P. Venu (Advocate)     01 January 2020

In my considered opinion, you cn present the cheque as and when dueand , if dishonoured has the discretion to initiate under action under Section 138 NI Act. Your concern ought to be in realising the money due to you. Other aspects are not relevant; it is for the company concerned to take care of their constraints.

T. Kalaiselvan, Advocate (Advocate)     03 January 2020

The liability will be on the drawer of the cheque.

If the cheque was signed ion behalf for the company then its director who has signed the cheque can be held as necessary party to the cheque bounce case.

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