On the expiry of the 15 days period from the receipt of the said notice within which the drawer fails to make the payment he shall be deemed to have committed an offence which shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the cheque.

It shall not be a defense in a prosecution for an offence that the drawer had no reasons to believe when he issued the cheque that the cheque may be dishonored on presentment for the reasons stated in section 138 ( Sec 140). Where the drawer intimates the payee not to present the cheque and issues stop payment instructions it has been held by Supreme Court In Modi cements Ltd v/s Kuchil Kumar Nandi reported in 1998 (3) SCC 249 that once the cheque is issued an on presentation it is dishonored penal provision is attracted. Stop payment instructions cannot obviate the offence under Sec 138 if otherwise made out.

The dishonoring of the cheque on the ground that the account is closed is the consequences of the act of the drawer rendering his account to a cipher. Dishonor of the cheque by a bank on the ground that the account is closed would be covered by the phrase the amount of money standing to the credit of that account is insufficient to honor the cheque.

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 inc 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. No person shall however be liable for punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commissions of such offence.

Where a person is nominated a director of a company by virtue of his holding any office of employment in the Central Government or State Governments 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.

Where any offences 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 nay 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:

A company shall include a firm or other association of individuals. A director in relation to a firm means a partner in the firm.

Where the person raises a defense that he was not in charge of the company when the cheque was presented it is held that such a defense can be proved only in evidence

A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. It is necessary to aver that at the time the offences was committed, the persons accused was in charge of and responsible for the conduct of business of the company. In case of managing director or joint managing director of a company or signatory of the cheque absence of such as averment is not fatal as these persons could be proceeded against even in absence of such averments.

Complaint against a partner of a firm to whom no particular act is specifically attributed is not maintainable.

The drawer of the cheque is the sole offender. But by virtue of section 141 three categories of persons are brought within the purview of the penal liability. They are (1) the company which committed the offence (2) everyone who was in charge of an was responsible for the business of the company and (3) any other person who is a director or a manager or a secretary or officer of the company with whose connivance or due to whose neglect the company has committed the offences if the drawer of a cheque happens to be justice person like a body corporate.

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