Execution of Bills, Hundis and Deeds by Authorised Attorney (Section 22)
# Execution of Bills, Hundis and Deeds (Section 22)
## A. Negotiable Instruments — When Deemed Made by Company
A bill of exchange, hundi, or promissory note is deemed made/accepted/drawn/endorsed on behalf of a company if done:
1. In the name of the company, AND
2. By a person with express or implied authority (acting 'on behalf or on account of the company')
Both conditions must be satisfied for binding effect.
## B. Execution of Deeds — Where Company Has a Common Seal
A company may authorize any person to execute deeds on its behalf by writing under its common seal.
Scope of Authorization:
Can be general (any deed) or specific (a particular matter)
Valid both in India and outside India
## C. Execution of Deeds — Where Company Has NO Common Seal
(Common seal became optional after the 2015 amendment.)
Where the company has dispensed with the common seal, authorization for a deed must be made by:
2 directors, OR
1 director + Company Secretary (only if a CS has been appointed)
## D. Binding Effect
> A deed signed by an authorized attorney under his seal, on behalf of the company, will bind the company as if executed by the company itself.
## Comparison Chart
Instrument
Authority Required
Mode
Bill of exchange / Hundi / Promissory note
Express or implied authority
Done in company's name
Deed (with common seal)
Authorization under common seal
General or specific
Deed (no common seal)
2 directors OR 1 director + CS
Written authorization
## Memory Hook
"Seal it OR Two-sign it (or 1+CS)."
Worked example
### Example 1
Example 1: ABC Ltd has no common seal. The MD alone signs a power of attorney to execute a sale deed. Is it valid?
Answer: No. Where the company has no common seal, authorization requires (i) two directors OR (ii) one director + Company Secretary. Single MD signature is insufficient.
### Example 2
Example 2: A promissory note is signed by the accountant of XYZ Ltd in his own name (without indicating company). Is the company bound?
Answer: No. Section 22 requires the negotiable instrument to be made/endorsed in the name of the company AND by a person with express or implied authority. Personal signature without naming the company does not bind XYZ Ltd.
### Example 3
Example 3: ABC Ltd authorizes Mr. P under its common seal to execute property deeds in Singapore. Is this valid?
Answer: Yes. Authorization under common seal may be valid in India or outside India, and may be general or specific.
⚠️ Common exam mistakes
Assuming common seal is mandatory — since 2015 amendment, it is optional.
Forgetting that ONE director alone (without CS or another director) cannot authorize a deed when company has no seal.
Missing the dual requirement for negotiable instruments — must be in company's name AND signed with authority.
Confusing Section 22 (execution) with Section 21 (authentication of documents) — different scopes.
Bare-Act text Section 22 · Companies Act, 2013 · click to expand
22. (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 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.