Section 141 of the Negotiable Instruments Act deals with vicarious liability when the drawer of the dishonoured cheque is a company or firm, not a natural person. It says that along with the company, every person who at the time of the offence was in charge of and responsible for the conduct of its business can also be prosecuted, subject to the statutory defence that the offence occurred without his knowledge or despite due diligence.
Interview answer
“Section 141 NI Act applies where the offence under Section 138 is committed by a company or firm. In that situation, not only the company, but also those persons who were, at the relevant time, in charge of and responsible for the conduct of its business are deemed guilty; further, any director, manager, secretary or officer whose consent, connivance or neglect led to the offence can also be liable. Mere designation is not enough; the complaint must contain specific averments showing responsibility at the time of commission.”
Points to stress
Section 141 creates vicarious criminal liability in cheque dishonour cases involving companies.
Liability is on the company as principal offender and on responsible officers only if statutory conditions are met.
A non-signatory director is not automatically liable; there must be clear pleading that he was both in charge of and responsible for the business at the relevant time.
A defence is available if the person proves lack of knowledge or due diligence.
A crisp line for oral finish: “So, Section 141 is the provision that lifts liability from the juristic person to the human agency actually controlling its business, but only on specific pleadings and proof.”
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