Offences by companies
Section 141 of the Negotiable Instruments Act, 1881 deals with offences by companies. 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 s The Act came into force on 01 Mar 1882.
(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:
1[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.
Section 141, The Negotiable Instruments Act, 1881 (Act 26 of 1881).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla
Court's Decision & Legal Precedent
DATE VERIFIED 2005-09-20 Judgment of Main Case order-9.pdf (not same-date order-10 ROP). Three-judge bench (Sabharwal/Arun Kumar/Srikrishna), Crl A 664/2002. For NI Act s.141, the complaint must specifically aver that at the time of the offence the accused was in charge of and responsible for the conduct of the company's business; mere directorship is not enough and there is no deemed s.141 liability of a director as such. Managing Director / Joint MD may be proceeded against on that office, subject to the s.141(1) proviso. Leftover SMS Pharmaceuticals 2005 retry succeeded on a labelled Judgment.
On this section: Complaint under s.141 must specifically aver that the accused was in charge of and responsible for the company's business; mere directorship is not a deemed liability.
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Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd.
Court's Decision & Legal Precedent
For s.141 NI Act vicarious liability, the company must be arraigned as an accused. Directors cannot be prosecuted in isolation without the company.
On this section: Vicarious s.141 liability requires the company on the array; prosecution of officers alone is incompetent.
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P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd.
Court's Decision & Legal Precedent
Judgement order-22.pdf 2021-03-01. Nariman J. reportable (digitally signed 2021.03.01). DATE-CHECK false positive on supply/dishonour dates 2015–17 in the facts; body is the 2021 IBC-14/NI-138 judgment. Isolates IBC 14: a 138 proceeding against the corporate debtor is covered by the s.14 moratorium and stays during CIRP; the stay does not automatically extend to directors/persons in charge under 141. Existing combined rows already map this CNR to ni-act 138/141; this pass adds the IBC 14 row. Map insolvency-bankruptcy-code-2016 14 cited. Do not pad NI 138/141 (already filled). Not a new CNR.
On this section: Moratorium does not automatically wipe s.141 liability of persons in charge / directors.
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Naresh Kumar Gupta vs Sood Resins and Polymers
Court's Decision & Legal Precedent
Section 138/141 proceedings under the Negotiable Instruments Act against a corporate debtor are covered by the moratorium provision in Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016, as such proceedings are 'proceedings' within the meaning of that section. The moratorium applies only to the corporate debtor and not to natural persons (Directors and officers) who can continue to be prosecuted under Section 141 of the Negotiable Instruments Act. The rules of statutory construction (noscitur a sociis and ejusdem generis) cannot be applied to restrict the meaning of 'proceedings' in Section 14(1)(a) when the expression is designedly wide and the object of the statute is clear - which is to preserve the corporate debtor's assets during the insolvency resolution process.
On this section: Analyzed to determine that company must be arraigned as accused for vicarious liability of Directors to attach
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Jik Industries Ltd. vs Amarlal V. Jumani
Court's Decision & Legal Precedent
Approval and sanction of a scheme of compromise and arrangement under Section 391 of the Companies Act, 1956 does not have the effect of automatically compounding an offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. The offence, if committed prior to the scheme, does not stand automatically compounded by virtue of the scheme sanction. Compounding of criminal offences, including those under the NI Act, requires the explicit consent of the complainant or person aggrieved, and this consent cannot be assumed or implied from the sanction of a corporate restructuring scheme. The statutory procedure for compounding prescribed in Section 320 of the Criminal Procedure Code, 1973 applies to compounding of NI Act offences despite the non obstante clause in Section 147 of the NI Act, as Section 147 only makes offences compoundable but does not prescribe the mode and manner of such compounding.
On this section: Read together with Section 138; Court applied this in context of criminal complaint under NI Act
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Madhav Saran Agarwal vs Msx Mall Pvt. LTD
Court's Decision & Legal Precedent
Section 138/141 proceedings under the Negotiable Instruments Act against a corporate debtor are covered by the moratorium provision in Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016, as such proceedings relate to transactions evidencing debt of the corporate debtor and result in depletion of its assets through compensation orders, thereby directly impacting the object of the moratorium which is to preserve the corporate debtor's assets during the insolvency resolution process so it can continue as a going concern and be rehabilitated. However, the moratorium applies only to the corporate debtor and not to natural persons (Directors/officers) in charge of and responsible for the conduct of the business of the corporate debtor, who remain liable to prosecution under Section 138/141 as the corporate debtor is a necessary party to such proceedings.
On this section: Analyzed to show vicarious liability of Directors and officers; company must be party to proceeding
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Thermax Ltd. vs K. M. Johny
Court's Decision & Legal Precedent
A dispute arising purely from contractual obligations, even when it results in financial loss to the claimant, cannot be converted into a criminal offense under Sections 405, 406 or 420 IPC without establishing the essential ingredient of dishonest intention at the inception of the transaction. The appropriate remedy for breach of contract is a civil suit for damages, not criminal prosecution. When a complainant has previously filed identical complaints with police authorities which were investigated and closed as civil in nature, and thereafter files another complaint before a Magistrate suppressing such material facts and seeking criminal investigation, such action constitutes abuse of process of law. In the absence of specific statutory provision imposing vicarious liability on company directors and managers, they cannot be prosecuted under IPC sections for acts of the company. Section 34 IPC requires prior concert or meeting of minds with prearranged plan, which must be evident from the complaint itself.
On this section: Liability of company officers in cheque dishonor - Cited as example of specific statutory provision imposing vicarious liability on company officers. IPC sections 405 and 420 have no such provision.
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Mainuddin Abdul Sattar Shaikh vs Vijay D Savli
Court's Decision & Legal Precedent
The drawer of a dishonoured cheque is solely and personally liable under Section 138 of the Negotiable Instruments Act, 1881, irrespective of whether the cheque was drawn on a personal account or for discharging company obligations. The liability is determined by strict interpretation of the statutory provision, which makes the drawer alone liable for the offence. Criminal and quasi-criminal provisions must be strictly construed, and proceedings cannot be used to impose liability on persons not intended by the statute to be liable. A Managing Director or Joint Managing Director need not be specifically averred in the complaint to be incharge of and responsible for company affairs; their position itself establishes this fact, making them liable under Section 138 even when the company is not a party.
On this section: Liability of company and persons in charge of company affairs when cheque is drawn by a company. Court noted that this section specifically provides for liability of company and incharge persons when cheque is drawn by the company itself, which is not applicable when cheque is drawn by individual in personal capacity.
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Sunil Bharti Mittal vs Cbi
Court's Decision & Legal Precedent
In the absence of a specific statutory provision creating vicarious criminal liability, mere position as a director or controlling authority of a company does not automatically make an individual criminally liable for corporate offences. An individual director can be made accused along with a company only if there is sufficient evidence of: (1) active personal role in committing the alleged offence, (2) knowledge of the wrongful act, and (3) criminal intent. The principle of 'alter ego' in corporate criminal liability operates only in one direction - the criminal intent and acts of persons controlling the company are imputed to the company, NOT vice versa. A trial court, while exercising its power to summon non-named accused persons under Section 190 CrPC, must record specific satisfaction based on material on record showing the individual's involvement, and must give reasons in its order explaining how the evidence establishes criminal culpability. A bare application of the 'alter ego' doctrine without examining specific material against the individual or without statutory provision creating vicarious liability is legally incorrect and renders the summoning order bad in law.
On this section: Section 141 creates a statutory fiction of vicarious liability where if a company commits an offence under Section 138, certain categories of persons in charge are also deemed liable. The court cited this as an example of statutory vicarious liability that must be specifically created by law.
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Ajoy Acharya vs State Bureau of Investigation against
Court's Decision & Legal Precedent
When a public servant holds multiple offices and is accused of abuse of one office, sanction for prosecution is mandatory only from the authority competent to remove him from that specific office which he is alleged to have misused. If the public servant has relinquished the office allegedly abused before charge sheet is filed, no sanction is required at all, despite his continuing to hold other public offices. The requirement of sanction serves to prevent frivolous prosecutions of the specific office abused; once that office is relinquished, the protection becomes inapplicable. To require sanction from authorities controlling other unrelated offices held simultaneously would pervert the legislative intent and convert the sanction requirement into a rogue's charter enabling evasion of prosecution.
On this section: Relied upon by Acharya to argue he was not in charge of MPSIDC's day-to-day business; Court rejected reliance as misconceived since Acharya charged with allowing resolution's passage, not implementing it
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Jugesh Sehgal vs Shamsher Singh Gogi
Court's Decision & Legal Precedent
Where a complaint under Section 138 of the Negotiable Instruments Act discloses from its own pleadings that the cheque was not drawn on an account maintained by the accused, thereby failing to satisfy the first essential ingredient of the statutory offence, the continuance of proceedings constitutes an abuse of the court process and the High Court should exercise its inherent jurisdiction under Section 482 CrPC to quash such complaint, as the case against the accused cannot be proved regardless of evidence led at trial.
On this section: Cited in context of vicarious liability. The High Court had allowed quashing petition for three co-accused on ground they were not shown to be vicariously liable under Section 141 NI Act.
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Abk Enterprises Pvt. LTD vs Trade Wings Hotels LTD
Court's Decision & Legal Precedent
When a complainant in a criminal case seeks to withdraw the underlying criminal complaint at the appellate stage, the appellate court may permit such withdrawal, and the pending criminal appeals become devoid of any live matter requiring adjudication, warranting disposal of the appeals.
On this section: Related provision under which the criminal complaint was filed; The exact application is not detailed in the order
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Ajit B Kerkar vs Trade Wings Hotels LTD
Court's Decision & Legal Precedent
When a complainant seeks withdrawal of a criminal complaint, the Supreme Court has the discretion to permit such withdrawal, resulting in the disposal of criminal appeals challenging the proceedings initiated on that complaint, as the subject matter of the appeal ceases to exist.
On this section: Related offense provisions cited in the cognizance order and challenged in this appeal
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Abilio Dsouza vs Adarsh Yeshwant Shet Mayekar
Court's Decision & Legal Precedent
A sole proprietor can file a criminal complaint under Section 138 of the Negotiable Instruments Act in his individual capacity for cheques issued in the name of his sole proprietorship concern, as a sole proprietorship does not constitute a separate juristic person and does not fall within the ambit of Section 141 of the NI Act. The complaint is maintainable when the sole proprietor is the sole beneficiary and manager of the proprietorship account, and the cheques are issued in discharge of a legally enforceable debt. All ingredients of Section 138 NI Act are satisfied when: (i) valid cheques are drawn on the account of the drawer; (ii) cheques are for payment of money; (iii) cheques are issued in discharge of debt or liability; (iv) cheques are returned unpaid; and (v) demand notice is served and payment is not made within 15 days. The presumption under Section 139 NI Act applies unless rebutted by the accused.
On this section: Discussed in context of whether sole proprietorship concern falls within its ambit; court held that sole proprietorship does not attract Section 141
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GUJARAT ALKALIES AND CHEMICALS LTD. vs M/S AMINEX ALKALIES LTD
Court's Decision & Legal Precedent
Payments made subsequent to the filing of a criminal complaint under Section 138, without specific evidence linking them to the dishonored cheque in question, do not exonerate the accused from criminal liability existing on the date of filing.
On this section: Vicarious liability of company directors.
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Urvashi Kavit Palicha vs State of Maharashtra
Court's Decision & Legal Precedent
Criminal proceedings under Section 138 of the NI Act against a director must be quashed if clear, unimpeachable statutory records (like MCA DIR-12) prove the director resigned prior to the date of the offense.
On this section: Offenses by companies and vicarious liability of directors.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments …
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… Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments …
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… Thus, for the period of moratorium, since no Section 138/141 proceeding can continue or be initiated against the corporate debtor because of a statutory bar, such proceedings can be initiated or continued against the persons mentioned in Section 141(1) and (2) of the Negotiable Instruments Act. This being the case, it is clear that the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments …
Questions about Section 141
What have the courts held on Section 141 of the Negotiable Instruments Act?
S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (20 Sep 2005) is the leading judgment on this section among those set out below: Complaint under s.141 must specifically aver that the accused was in charge of and responsible for the company's business; mere directorship is not a deemed liability. Another 15 judgments on this section are set out below, 13 of them from the Supreme Court. They run from 2005 to 2025.
How do I find court cases under Section 141 of the Negotiable Instruments Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: NI Act 141, section 141 NI Act, section 141 of the Negotiable Instruments Act. People searching for it also type ni act 141 bangla and negotiable instruments act 141 and 142. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 16 reported judgments on this section are set out on this page, beginning with S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (20 Sep 2005).
What should I read with Section 141 of the Negotiable Instruments Act, and has it changed?
Its own text turns on section 138 (Dishonour of cheque for insufficiency, etc., of funds in the account), so none of them can safely be read on its own.
When did Section 141 of the Negotiable Instruments Act come into force?
Section 141 of the Negotiable Instruments Act, cited as NI Act 141, came into force on 01 Mar 1882, having been enacted on 09 Dec 1881. It is in force as at the date shown on this page.
Other sections of this Act
- 138. Dishonour of cheque for insufficiency, etc., of funds in the account312 words
- 142A. Validation for transfer of pending cases299 words
- 143. Power of Court to try cases summarily297 words
- 143A. Power to direct interim compensation291 words
- 142. Cognizance of offences290 words
- 84. When cheque not duly presented and drawer damaged thereby279 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.