Section 22 of CA 2013 : Section 22: Execution Of Bills Of Exchange, Etc

Explanation using Example

Imagine that XYZ Pvt. Ltd. needs to issue a promissory note to a supplier, ABC Enterprises, promising to pay a sum of money for goods supplied. John, the Finance Manager of XYZ Pvt. Ltd., is authorised by the company's board of directors to handle such financial documents. John creates the promissory note in the name of XYZ Pvt. Ltd. and signs it. Since John is acting under the company's authority, which is implied by his role as Finance Manager, the promissory note is deemed to have been made on behalf of XYZ Pvt. Ltd. according to section 22(1) of the Companies Act, 2013.

Furthermore, XYZ Pvt. Ltd. wants to enter into a lease agreement for a new office space in another city. The company does not have a common seal. To execute this deed, the board of directors passes a resolution authorising Jane, a director, and the Company Secretary to sign the lease agreement. They both sign the lease agreement, which is now legally binding on XYZ Pvt. Ltd., as per section 22(2) of the Act. The lease agreement, signed by Jane and the Company Secretary, will hold the company accountable for its terms because of section 22(3).