P.J.AGRO TECH LIMITED vs WATER BASE LIMITED

The Supreme Court addressed the applicability of Section 138 of the Negotiable Instruments Act, 1881, in a case where the Appellants were wrongfully implicated in a cheque dishonor case. The Court held that for a company to be liable under Section 138, the cheque must be issued on behalf of the company and signed by its authorized signatories, which was not the case here as the cheque was issued from a personal account of an employee. Consequently, the Court quashed the proceedings against the Appellants, establishing that personal liability cannot be imposed on a company for actions of its employees without proper authorization.