Execution of Bills of Exchange and Deeds (Section 22)
# Execution of Bills of Exchange, etc. — Section 22
Section 22 of the Companies Act, 2013 deals with the execution of negotiable instruments and deeds by or on behalf of a company.
## 1. Bills of Exchange, Hundi and Promissory Notes
A bill of exchange, hundi, or promissory note is deemed to have been made, accepted, drawn or endorsed on behalf of a company if it is made, accepted, drawn or endorsed in the name of, or on behalf of, or on account of, the company by any person acting under its authority, express or implied.
Key point: Either express or implied authority is sufficient — a formal Board resolution is not always required.
## 2. Execution of Deeds Through Attorney
A company may, by writing under its common seal (if any), authorise any person, either:
Generally, OR
In respect of specified matters,
to act as its attorney to execute other deeds on its behalf, in any place either in or outside India.
## 3. Where a Company Has No Common Seal
If the company does not have a common seal, the above authorisation shall be made by:
Two directors, OR
One director and the Company Secretary, where the company has appointed a CS.
However, if the company chooses to have a common seal, then it must affix the common seal for specified matters and execution of deeds on behalf of the company.
## 4. Effect of Deed Executed by Attorney
A deed signed by such an attorney on behalf of the company and under his seal shall bind the company as if it had been executed by the company itself.
## Summary Table
Instrument / Act
Mode of Execution
Bill of exchange, hundi, promissory note
By any person acting under express or implied authority of the company
Authorisation of attorney (with common seal)
Writing under the common seal
Authorisation of attorney (no common seal)
Signed by 2 directors, OR 1 director + Company Secretary
Deed executed by attorney
Binds the company if signed by attorney under his seal
Worked example
### Example 1
Example 1 — Implied authority for promissory note:
The Managing Director of LMN Ltd., who routinely manages the company's day-to-day finances, signs a promissory note on behalf of the company without an explicit Board resolution.
Answer: Under Section 22(1), a promissory note is validly executed if made by any person acting under express or implied authority. The MD's role gives implied authority. The promissory note binds the company.
### Example 2
Example 2 — Authorising an attorney without a common seal:
PQR Ltd. has no common seal. It wishes to authorise Mr. X to execute property purchase deeds in Dubai on its behalf.
Answer: Under the proviso to Section 22(2), since PQR Ltd. has no common seal, the authorisation must be signed by two directors or by one director and the Company Secretary (if a CS is appointed). The authorisation in writing, so signed, will validly empower Mr. X as the attorney.
⚠️ Common exam mistakes
Assuming a Board resolution is always required for bills of exchange — implied authority is sufficient under Section 22(1).
Forgetting that the common seal is now optional — if absent, two directors (or 1 director + CS) must sign the authorisation.
Believing the attorney's authority is confined to India — the section expressly permits execution of deeds 'in or outside India'.
Overlooking that if the company does keep a common seal, it must still be affixed for deeds and specified matters.
Bare-Act text Section 22 · Companies Act, 2013 · click to expand
Section 22 of the Companies Act, 2013 — Execution of bills of exchange, etc.:
(1) A bill of exchange, hundi or promissory note shall be deemed to have been made, accepted, drawn or endorsed on behalf of a company if made, accepted, drawn, or endorsed in the name of, or on behalf of or on account of, the company by any person acting under its authority, express or implied.
(2) A company may, by writing under its common seal, if any, authorise any person, either generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any place either in or outside India:
Provided that in case a company does not have a common seal, the authorisation under this sub-section shall be made by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary.
(3) A deed signed by such an attorney on behalf of the company and under his seal shall bind the company.