Section 141 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
When the drawer of a dishonoured cheque is a company, section 141 decides who besides the company can be proceeded against. It names every person who was in charge of, and responsible to the company for, the conduct of its business when the offence was committed, and it separately reaches a director, manager, secretary or other officer where consent, connivance or neglect is proved. If a notice has come to you or your company in a cheque case, our reply to legal notice team can help you prepare a response. This article follows the consolidated text of the Act consulted (position stated as from 26 December 2015).
If the person committing an offence under section 138 is a company, then the company and every person in charge of, and responsible to the company for the conduct of, its business at the time of the offence are deemed guilty (sub-section (1)). A person is not liable if he proves lack of knowledge or all due diligence. A Government nominee director is protected by the second proviso. Under sub-section (2), a director, manager, secretary or other officer is also deemed guilty on proof of consent, connivance or neglect. "Company" includes a firm, and "director" of a firm means a partner.
Sub-section (1): the company and the persons in charge
The text: "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."
Three elements fix who is reached.
| Element | What the text says |
|---|---|
| The offence | An offence under section 138 where the person committing it is a company |
| The persons | Every person who was "in charge of" and "responsible to the company for the conduct of the business" |
| The time | "At the time the offence was committed" |
The words are joined by "and": a person must have been both in charge of the business and responsible to the company for its conduct. Sub-section (1) lists no job titles. The offence and its conditions are in our post on section 138.
The first proviso: knowledge and due diligence
The first proviso says nothing in the sub-section renders 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". The words "if he proves" place that showing on the person who relies on it. The text does not say what documents or steps make up "due diligence".
The second proviso: nominee directors
The second proviso covers a person "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". Such a person "shall not be liable for prosecution under this Chapter". The proviso protects a nominee by reason of that office or employment; it does not speak of directors appointed in any other way.
Sub-section (2): consent, connivance or neglect
Sub-section (2) begins "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", that 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".
Note the differences from sub-section (1):
- It names "director, manager, secretary or other officer".
- It turns on proof of consent, connivance or neglect, and it says "it is proved".
- It speaks of "any offence under this Act", while sub-section (1) speaks of an offence under section 138.
The Explanation: "company" and "director"
The Explanation says that for this section, "company" means "any body corporate and includes a firm or other association of individuals", and "director", in relation to a firm, "means a partner in the firm". So the section can reach a firm or association, and a partner is treated as the director of a firm.
How this fits with the rest of the Act
The Act's rules on agents signing instruments are in sections 27 to 29, and a corporation's capacity to make an instrument is in section 26. The presumption in favour of the holder is in section 139, and the court is chosen under section 142. See also service of documents on a company.
Section 141 refers to "this Chapter", but the copy consulted does not print where a Chapter begins or ends, so no Chapter number is given. Check current procedural law for any step in court; nothing later than the sources consulted is covered.
Work out your dates
The company is liable only if the section 138 periods were met. Check the dates of presentment, the bank's information, the notice and its receipt with our cheque bounce notice calculator.
Common mistakes
- Reading sub-section (1) as making every director liable; it names those in charge of and responsible for the conduct of the business at the time of the offence.
- Forgetting that the first proviso puts the burden of proving lack of knowledge or due diligence on the person who relies on it ("if he proves").
- Treating a Government nominee director like any other; the second proviso applies to such nominees.
- Confusing sub-section (1) with sub-section (2), which depends on proof of consent, connivance or neglect.
Need help responding to a notice?
If you are a director, partner or officer named in a cheque notice, the timing and wording of the reply matter. Our reply to legal notice service reviews the notice, the company's role and the papers, and drafts the response.
Key takeaways
- Where a company commits a section 138 offence, the company and persons in charge of and responsible for its business at that time are deemed guilty.
- The person may escape by proving lack of knowledge or all due diligence.
- Nominee directors from Government or government-owned financial corporations are protected by the second proviso.
- Sub-section (2) reaches a director, manager, secretary or other officer on proof of consent, connivance or neglect.
Read next
- Section 138: cheque bounce offence
- Section 139: presumption in favour of the holder
- Interim compensation under section 143A
- Reply to a section 138 notice: draft for the drawer
Disclaimer: Based on the consolidated text of the Negotiable Instruments Act, 1881 consulted (stated as from 26 December 2015), as read on 2 October 2026. Later amendments and procedural law should be checked in their current form. This article is general information, not legal advice.