A cheque can be signed only by the people your bank has on record as authorised to operate that account, and only in the way the account's mandate allows. On a personal account that is you. On a joint account it depends on the operating instruction you chose when you opened it. On a company, partnership or LLP account it is whoever the board or partners have authorised in writing, with whatever limits they set.
Get this wrong and the cheque is returned even if the signature itself is perfect. In India, signature returns have their own reason codes: "signature not as per mandate" (code 14) and "authority to operate account not received" (code 16) are both common on business accounts.
Joint accounts: either or survivor, jointly, and the rest
When you open a joint account, the bank asks how it will be operated. The common options in India and the Gulf are:
| Mandate | Who can sign a cheque | If one holder dies |
|---|---|---|
| Either or survivor | Either holder alone | The survivor can continue operating |
| Anyone or survivor(s) | Any one of three or more holders | Survivors continue |
| Former or survivor | Only the first-named holder while alive | The second holder takes over |
| Jointly (all to sign) | All holders, on every cheque | Operations usually stop until the bank's succession process is complete |
Two practical points. First, "either or survivor" is convenient but means either holder can empty the account. Second, a "jointly" account is the safest but the slowest: every cheque needs every signature, and a holder who is travelling holds up every payment.
UAE note. Since 1 October 2020, the amended Article 379 of the UAE Commercial Transactions Law requires the remaining holders or heirs to tell the bank within 10 days if a joint account holder dies or loses legal capacity. The bank then restricts withdrawals up to that person's share until the courts settle it. A survivor clause does not mean the whole balance stays freely available. See the UAE cheque guide for more on how cheques work there.
Company, partnership and LLP cheques
Companies
A company acts through its board. When the account is opened, the board passes a resolution naming the authorised signatories and the rules for signing. The bank keeps the resolution with the specimen signatures. Indian banks typically ask for a certified copy of the resolution with the company's incorporation documents. Gulf banks ask for the trade licence, the memorandum or articles of association, and often a power of attorney where the signatory is not a shareholder or manager named in the licence.
Partnerships
Partnership accounts are usually opened on a letter or mandate signed by all partners, setting out which partners may sign and whether alone or together. Banks also take the partnership deed. If a partner retires, the bank needs fresh instructions, and until it has them it may treat the existing mandate as still in force.
LLPs
An Indian LLP works like a company: the designated partners pass a resolution under the LLP agreement naming the signatories. In the Gulf, a limited liability company (LLC) is not the same thing as an Indian LLP. It is a company, and its signing authority comes from its licence, articles and any power of attorney.
Sole proprietors and HUFs
A proprietor signs personally, usually above the business name or stamp. On an Indian Hindu Undivided Family account, the karta signs on behalf of the HUF.
Signing rules: one signature, two signatures and limits
Business mandates are rarely "anyone can sign anything". Typical patterns:
- Any one signatory for all amounts. Simple, and weak as a control.
- Any two jointly. The common default for companies.
- Category signatories. One "A" signatory plus one "B" signatory, so a senior person is always involved.
- Amount limits. One signature up to a set amount, two above it, and a named director above a higher threshold.
- Restricted purposes. Some signatories may sign only salary cheques or only for a specific account.
Splitting a large payment into several cheques just under the single-signature limit breaches the spirit of the mandate. Banks and auditors notice it.
Changing the mandate
When a signatory leaves, joins or changes role, update the bank first. Do not just start using a new signature. The usual steps are:
- Pass a new board resolution or partner letter revoking the old authority and naming the new signatory, with the signing rules.
- Submit it with identity documents and specimen signatures (in the Gulf, typically passport and Emirates ID or residence permit copies).
- Wait for the bank's confirmation before issuing cheques signed by the new person.
- Review cheques already signed by the outgoing signatory but not yet presented, especially post-dated cheques. Whether the bank honours them after the change depends on its rules, so ask, and replace them if needed.
Cheques signed by someone whose authority has not reached the bank, or has been withdrawn, come back as "signature to operate account not received" or "authority to operate account not received" (codes 15 and 16).
What the bank actually checks
- The signature against the specimen. In image-based clearing this is done from the scanned image, so a rushed or partial signature is more likely to fail.
- The mandate. Right person, right number of signatories, within the amount limit.
- Authority still current. No revocation on file, and the account not frozen or in succession.
- Company stamp, where the mandate requires one. Some business mandates, particularly in the Gulf, specify signature plus company stamp.
- Alterations. Under India's CTS rules, any change other than the date means a fresh cheque, however many people initial it.
Who is liable if a business cheque bounces
General information, not legal advice. Laws and bank rules change; check with your bank or a qualified lawyer for your situation.
India. Section 141 of the Negotiable Instruments Act extends a Section 138 offence by a company to the people who were in charge of and responsible for its business when the offence was committed. The Supreme Court has repeatedly held that a title alone is not enough: the complaint must show the person's actual role. In March 2024, in Susela Padmavathy Amma v. Bharti Airtel, it declined to proceed against a director without such averments. See cheque bounce law in India.
UAE. The cheque amendments in force since 2 January 2022 say that the person in charge of a company's actual management is not punished for a cheque offence unless they knew of it or committed it for their own or another's benefit. Where individual liability is not established, the company can face a higher fine. The Central Bank of the UAE's FAQ on the cheque amendments sets this out. The current Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) took effect on 2 January 2023, so check its exact wording with a lawyer. Other Gulf states have their own rules. See bounced cheque law in the GCC.
Controls that make signing safer
- Never pre-sign blank cheques, even for a signatory who travels. Use a second signatory or a temporary mandate instead.
- Separate preparing from signing. The person who prepares the cheque should not be the only person who approves it.
- Attach a voucher. A payment voucher with Prepared By, Approved By and Received By blocks shows who did what. ChequeMaster prints these on A4. See printing cheque vouchers.
- Sign printed cheques, not handwritten ones. When the details are printed, the signatory checks clear typed text rather than someone's handwriting. ChequeMaster prints the details only. Signing stays with your authorised signatories.
