DIRECTORS NOT RESPONSIBLE FOR DISHONOURED CHEQUE

Directors not responsible for dishonoured chequeRecent Supreme Court Judgment has brought cheers on director’s faces of the companies. The Supreme Court ruled last week that prosecution for issuing a cheque which was dishonoured for want of credit in the bank can be initiated only against the person who issued the cheque and not against the company or directors who were not aware of it. It quashed the Madras High Court order to try the company, the chairman and the managing director in judgment, PJ Agro Tech Ltd. Vs Water Base Ltd. The two companies have entered into an agreement for distribution of prawn feed in Andhra Pradesh. However, it did not succeed and PJ Agro authorized the other company to collect its due from customers who has not paid for the goods. It appointed a coordinator for the purpose. He issued a cheque to Water Base which bounced, leading to the filing of charges under The Negotiable Instrument Act. The Supreme Court explained that the coordinator might have issued the cheque for the benefit of PJ Agro, but the directors of the latter company were not responsible for the default.

THE COMPANIES BILL, 2008 ON ITS WAY

On Thursday, 23rd Oct. 2008 The Company Bill, 2008 was tabled on the Parliament. If the bill gets enacted then new Company Act 2008 will supersede the current Act. According to Corporate Affairs Minister Mr. Prem chand Gupta the new act would make things simpler. In the year 1956 their were 36,000 companies whereas in 2007 their were 7.5 lacs.

HISTORY

In India Ist Companies Act was passed in 1850. There after Company Act, 1866 was enacted & then followed by the Company Act 1913 which was replaced by the present The Company Act 1956. The Company Act 1999, 2000, 2002 had amended the Company Act, 1956.

WHAT’S NEW?

The Company Bill, 2008 paves way to:

  1. One Person Company (OPC).
  2. Limited Liability Partnership (LLP).

  3. Appointment of 33% independent directors on board.

  4. Many more……..