Chapter XVII - Of Penalties in Case of Dishonour of Certain Cheques for Insufficiency of Funds in the Accounts
Section 141
Section 141: Offences by companies
Section 141 addresses the company and individual responsibility arising when the section 138 offender is a company, using specific role, timing and conduct tests.
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Need advice on Section 141?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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:
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.
Key rule and applicability
Subsection (1) concerns people who, when the offence occurred, were in charge of and responsible to the company for conducting its business, as well as the company. Subsection (2) separately addresses proved consent, connivance or attributable neglect by a director, manager, secretary or other officer.
Limits and related provisions
Do not treat every employee, shareholder or director as automatically liable merely by title. Apply the statutory role and conduct tests, the lack-of-knowledge or due-diligence proviso, and the express nominated-director protection where its conditions are met. A complaint also requires analysis of the company’s prosecution, the necessary allegations and applicable judicial precedent; this page does not replace that case-specific assessment.
Hypothetical business example
Hypothetical: a company cheque is dishonoured and a supplier considers proceeding against several people. The supplier maps each person’s role at the offence date, relevant involvement and company records before deciding which statutory basis is alleged, instead of copying a list of every director.
Practical decision flow
Identify the drawer company and check the underlying section 138 conditions.
Create a role-and-date record for each proposed individual, supported by reliable company documents.
Separate subsection (1) responsibility from subsection (2) consent, connivance or neglect and examine the stated provisos.
Practical checklist
Do
- Identify the drawer company and check the underlying section 138 conditions.
- Create a role-and-date record for each proposed individual, supported by reliable company documents.
- Separate subsection (1) responsibility from subsection (2) consent, connivance or neglect and examine the stated provisos.
Avoid
- Do not treat every employee, shareholder or director as automatically liable merely by title. Apply the statutory role and conduct tests, the lack-of-knowledge or due-diligence proviso, and the express nominated-director protection where its conditions are met. A complaint also requires analysis of the company’s prosecution, the necessary allegations and applicable judicial precedent; this page does not replace that case-specific assessment.
Glossary
- Company
- For this section, a body corporate including a firm or other association of individuals.
- Connivance
- The participation or acquiescence alleged under subsection (2), requiring proof in the case.
Frequently asked questions
Does the section cover a partnership firm?
Yes. Its definition of company includes a firm, and director in relation to a firm means a partner.
Does a person’s director title alone reproduce the full statutory test?
No. The applicable role, timing, conduct and proviso requirements must be examined.
Is lack of knowledge an automatic assertion that ends liability?
The first proviso requires the person to prove lack of knowledge or the exercise of all due diligence as stated in the provision.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026