138 of negotiable instruments act
Suresh
(Querist) 11 July 2013
This query is : Resolved
Whether the director of a company is liable for the issuance of a cheque bounced by the managing director of a company?
Guest
(Expert) 11 July 2013
Directors can be made liable individually or severally for bouncing of cheque, if the cheque is issued on behalf of the company, as the Board of Directors act on behalf of the company.
Anirudh
(Expert) 11 July 2013
Section 141 of the Negotiable Instruments Act provides as under:
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.
(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 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.
