CHAPTER XVII OF PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS IN THE ACCOUNTS

Section 141: Offences by companies

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

¹[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.]

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.—For the purposes of this section, —

(a) “company” means any body corporate and includes a firm or other association of individuals; and

(b) “director”, in relation to a firm, means a partner in the firm.

Footnotes in the official text

1.Ins. by s. 8, ibid. (w.e.f. 6-2-2003).

Leading cases

Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd. (2012)A company must be arraigned as an accused before its directors, signatories or officers can be prosecuted under Section 141 of the Negotiable Instruments Act; the same applies to Section 85 of the Information Technology Act.

Questions on this section

6 questions in 14 of our papers cite Section 141. Try these from the free papers:

1. Under the second proviso to Section 141(1) of the Negotiable Instruments Act, 1881, a person nominated as a Director of a company by virtue of his holding an office or employment in the Central or State Government, or in a financial corporation owned or controlled by such Government:
2. Consider the following propositions laid down in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) regarding Section 141 of the Negotiable Instruments Act, 1881: 1. The complaint must specifically aver that, at the time of the offence, the accused was in charge of, and responsible for, the conduct of the business of the company. 2. Merely being a director of the company is sufficient to make a person liable under Section 141. 3. A managing director or joint managing director is, by virtue of the office held, in charge of and responsible to the company for the conduct of its business. Which of the statements given above is/are correct?

Practise questions on Negotiable Instruments Act, 1881