# Execution of Bills of Exchange, Hundi, Promissory Note — Section 22
## The Four Rules
### 1. Negotiable Instruments
A bill of exchange, hundi, or promissory note of a company shall be dealt with by any person acting under its authority — express or implied.
### 2. Power of Attorney (Deeds)
A company may, by a writing under its common seal (if any), authorise any person — generally or for specified matters — as its attorney to execute deeds on its behalf, in or outside India.
### 3. Where Company Has No Common Seal
If a company does not have a common seal, the authorisation above shall be made by:
Two directors, OR
One director and the Company Secretary (where a CS has been appointed).
BUT — if the company chooses to have a common seal, it must affix the seal for specified matters and execution of deeds on behalf of the company.
### 4. Effect of Deed by Attorney
A deed signed by such an attorney on behalf of the company, under his seal, shall bind the company.
## Common Seal — Old vs Current Position
The Companies (Amendment) Act, 2015 made the common seal optional. Section 22 therefore caters to BOTH scenarios:
Company with common seal: Use the seal.
Company without common seal: Two directors / Director + CS sign in lieu of the seal.
Worked example
### Example 1
Example 1 (with common seal): ABC Ltd. wishes to authorise Mr. P to execute a property purchase deed in Mumbai. The Board issues a power of attorney under the common seal of the company. Mr. P, acting under this authority and signing under his own seal, executes the deed — the deed binds ABC Ltd.
### Example 2
Example 2 (without common seal): PQR Ltd. has opted not to have a common seal. To authorise Mr. Q to execute a lease deed, the company's two directors sign the power of attorney (alternatively, one director + the Company Secretary, if one is appointed). The instrument is validly executed and binds the company.
### Example 3
Example 3: A clerk of the company, with implied authority from the Board, signs a routine promissory note in favour of a supplier. This is valid under Section 22(1) — a negotiable instrument may be dealt with by any person acting under the company's express or implied authority.
⚠️ Common exam mistakes
Assuming a common seal is mandatory — after the 2015 amendment, it is optional, and Section 22 provides an alternative (two directors / director + CS).
Confusing authority to deal with negotiable instruments (express OR implied authority sufficient — Sec 22(1)) with authority to execute DEEDS (requires formal writing — Sec 22(2)/(3)).
Forgetting that the attorney must sign the deed under HIS OWN seal for it to bind the company.
Thinking that a company without a common seal cannot execute deeds abroad — Section 22 expressly permits execution in or outside India.
Bare-Act text Section 22 · Companies Act, 2013 · click to expand
Section 22 — 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 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.