TagNegotiable Instruments Act

Actions against Independent Directors for Dishonour of Cheques

The question of liability of independent directors is a sensitive one given such directors carry substantial risk without having an influence in the day-to-day management of the company. Hence, the Companies Act, 2013 introduced a specific carve out in section 149(12) by which an independent director cannot be made liable for acts pertaining to the company except in limited circumstances “which...

An Overview of Exceptions to Moratorium under the Insolvency And Bankruptcy Code

[Radhika Malpani is a 3rd year B.B.A., LL.B student at National Law University, Jodhpur] With the enactment of the Insolvency and Bankruptcy Code, 2016, (“Code”) a unified framework to deal with insolvency has been set in place. Previously, insolvency was dealt under multiple statutes and scattered provisions embedded with numerous complexities. With the introduction of the Code, the liquidation...

Corporate Insolvency and the Admission of a Debt under the Negotiable Instruments Act

[Siddharth Kumar is a III year BBA LLB (Hons.) student at Vivekananda School of Law and Legal Studies, New Delhi and can be reached at [email protected]] The National Company Law Appellate Tribunal (“NCLAT”) in Sudhi Sachdev v. M/s APPL  Industries Ltd. held that the pendency of a case under sections 138 and141 of the Negotiable Instruments Act, 1881 (“NI Act”)  amounts to an admission of...

Moratorium under the Bankruptcy and Insolvency Code: Impact on Proceedings for Cheque Dishonour

[Guest post by Aayush Mitruka, a lawyer based in Delhi. An earlier version of this post was published in the newsletter of ICSI – Pune chapter.] The Insolvency and Bankruptcy Code, 2016 (the “Code”) is an all-encompassing legislation which is, inter alia, aimed at a structured and time-bound process for insolvency resolution and liquidation. Chapter II (Part II) of the Code contains...

Supreme Court on Prosecuting a Company for Cheque Dishonour

The Supreme Court in N. Harihara Krishnan v. J. Thomas ruled yesterday on certain procedural aspects relating to the offence under section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) of dishonour of a cheque issued by a company. It held that any failure to include the company as an accused in the complaint at the outset (i.e. within the limitation period) would be fatal to the...

Supreme Court on Dishonour of Post-Dated Cheques Issued as Security

[The following post is contributed by Sneha Bhawnani, who is an Assistant Legal Advisor at Vinod Kothari & Co. She can be contacted at [email protected]] In the present era of commercial dealings, the issuance of post-dated cheques has become a common phenomenon and therefore the significance of such post-dated cheques cannot be under-emphasized. In this context, a predominant question...

Negotiable Instruments Amendment Ordinance Promulgated

In May, the Government proposed the Negotiable Instruments (Amendment) Bill, 2015 with a view to amending the Negotiable Instruments Act, 1882 (the “NI Act”). This was necessary due to jurisdictional issues pertaining to cases brought under section 138 of the NI Act for dishonour of cheques. The background and rationale for the amendment has been stated explicitly in the Statement of Objects and...

Procedural leniency under the Negotiable Instruments Act

Over the past few years, the Supreme Court has gone a long way towards reducing the use of section 138 of the Negotiable Instruments Act (“Act”) as the basis for the vicarious liability of directors. In February last year, National Small Industries v. Harmeet Singh Pantial, the Supreme Court emphasised the high standards required in order to invoke vicarious liability of creditors under section...

Director and Officer Liability for Dishonour of Cheques

(The following post has been contributed by Avirup Bose. Avirup is an Indian lawyer, who has graduated from NUJS Kolkata and has an LL.M from the Harvard Law School) On July 6, a Division Bench of the Supreme Court passed a judgment in K.K. Ahuja v. V.K. Vora (MANU/SC/1111/2009, per R.V. Raveendran, J.) (“K.K. Ahuja”), where it considered the particular question as to who can be said to be...

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