Difference between section 138 and section 141 of negotiable Instrument Act 1881 with example

Difference between section 138 and 141 of negotiable act in india

Section 138 and Section 141 of the Negotiable Instruments Act, 1881, deal with the legal liabilities of individuals and entities in case of dishonor of a negotiable instrument like a cheque in India.

 

 

Section 138:

Section 138 of the Negotiable Instruments Act pertains to the offense of dishonor of a cheque for insufficiency of funds or if it exceeds the amount arranged to be paid by the drawer's account.

When a cheque is dishonored under these circumstances, the holder of the cheque can issue a notice to the drawer demanding payment within 15 days from the receipt of the notice.

If the drawer fails to make the payment within the stipulated 15-day period, the holder can initiate legal proceedings by filing a complaint before a Magistrate within 30 days from the expiry of the notice period.

The penalty for an offense under Section 138 may include imprisonment for a term that may extend to two years or with a fine that may extend to twice the amount of the cheque or both.

Section 141:

Section 141 deals with the liability of companies and other entities in case of an offense under Section 138 (dishonor of cheque).

According to Section 141, if the offense is committed by a company, every person who was in charge of and responsible for the conduct of the business of the company at the time of the offense may be deemed liable.

This includes the company's directors, managers, secretaries, or any other officer who was responsible for the company's affairs during the time the offense occurred.

The individuals mentioned above will be held liable unless they can prove that the offense was committed without their knowledge or that they exercised all due diligence to prevent the commission of the offense.

In summary, Section 138 deals with the offense of dishonor of a cheque, while Section 141 deals with the liability of individuals in case the offense is committed by a company. Both these sections are essential in addressing issues related to negotiable instruments like cheques and aim to ensure prompt payment and legal protection for holders of such instruments.