Thu. Apr 22nd, 2021

Section 141 of The Negotiable Instruments Act, 1881

2 min read

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 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:

[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 attribute 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 purpose of this section. –

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

(b) “Director”, in relating to a firm, means a partner in the firm.

 

Comment

  i.        The effect of reading section 141 is that when the company is the principal offender under section 138 of the Act and the remaining persons are made offenders by virtue of the legal fiction created by the Legislature as per section. Hence the actual offence should have been committed by the company, and then alone the other two categories of persons can also become liable for the offence liable for the offence; Anil Hada v. Indian Acrylic Ltd., AIR 2000 SC 145.

  ii.        Notice which was issued by the respondent on account of dishonor of the cheque having been issued to the petitioner in his individual capacity and not having been issued to the drawer thereof, no offence can be said to have been s=committed by the company and, therefore, the petitioner cannot be proceeded against in his capacity of being the director of the said company by taking recourse to section 141 of the Act; Amit J. Bhalla v. Rajneesh Agarwal, (2000) 99 Comp Cas 130.

 

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