Section 22 of the Companies Act, 2013: Execution of Bills of Exchange, Promissory Notes and Deeds
Section 22 explains when a bill of exchange, hundi or promissory note is treated as executed on behalf of a company and how a company may authorise an attorney to execute deeds. The provision recognises both express and implied authority for negotiable instruments and also deals with companies that do not have a common seal.
Meaning and scope of Section 22
Section 22 of the Companies Act, 2013 concerns the manner in which specified negotiable instruments and deeds may bind a company. A bill of exchange, hundi or promissory note can be made, accepted, drawn or endorsed for a company by a person acting under the company's authority. That authority may be express, meaning specifically conferred, or implied, meaning arising from the circumstances, office, conduct or other legally relevant facts.
The section separately permits a company to authorise a person in writing as its attorney to execute other deeds on its behalf, either generally or for specified matters, in India or outside India.
Section 22 - execution of bills of exchange, etc.
Sub-section (1): A bill of exchange, hundi or promissory note is deemed to have been made, accepted, drawn or endorsed on behalf of a company when it is so executed in the name of, on behalf of, or on account of the company by a person acting under its express or implied authority.
Sub-section (2): A company may authorise a person in writing, generally or for specified matters, as its attorney to execute other deeds on its behalf at any place in or outside India. The statutory text refers to the company's common seal, if any.
Proviso to sub-section (2): Where the company does not have a common seal, the authorisation must be made by two directors, or by a director and the Company Secretary where the company has appointed a Company Secretary.
Sub-section (3): A deed signed by the attorney on behalf of the company and under the attorney's seal binds the company.
Important amendment: The Companies (Amendment) Act, 2015 made the common seal optional for this purpose with effect from 29 May 2015. It inserted the words "if any", added the execution mechanism for a company without a common seal, and removed the former concluding reference in sub-section (3) to the deed having effect as if made under the company's common seal.
Common seal and execution through an attorney
A common seal is therefore not mandatory under Section 22 merely for authorising an attorney. If a company has no common seal, the proviso specifies who must make the written authorisation. Companies should also check their articles of association, Board authorisations, internal delegation framework and the requirements applicable to the particular instrument or transaction.
| Situation | Section 22 requirement |
|---|---|
| Bill of exchange, hundi or promissory note | Execution in the company's name, on its behalf or on its account by a person having express or implied authority. |
| Attorney appointed to execute other deeds | Written authorisation, either general or for specified matters. |
| Company has a common seal | The statutory wording permits authorisation under the common seal, if any. |
| Company has no common seal | Authorisation by two directors, or by a director and the Company Secretary wherever a Company Secretary has been appointed. |
Practical compliance points
For clear corporate records, the authority of the person signing should be identifiable from an appropriate Board resolution, power of attorney, delegation or other valid source of authority, as applicable. The instrument should clearly show that it is executed for or on behalf of the company. Where an attorney is appointed for deeds, the written authority should define whether the power is general or limited to specified matters.
Section 22 should be read with the nature of the particular instrument and any other applicable law. For example, the legal characteristics of bills of exchange and promissory notes are principally dealt with under the Negotiable Instruments Act, 1881.
2015 amendment history
The original page correctly recorded the three changes made by section 6 of the Companies (Amendment) Act, 2015 with effect from 29 May 2015: substitution of "under its common seal" by "under its common seal, if any"; insertion of the proviso for a company without a common seal; and omission of the words concerning the deed having effect as if made under the company's common seal.
Official legal resources
For the authoritative statutory text and subsequent amendments, refer to the Ministry of Corporate Affairs - Companies Act, 2013 and India Code - Companies Act, 2013.
This article is a general legal-information resource. For a transaction-specific execution question, the company's constitutional documents, authorisations and the law governing the particular instrument should also be examined.