Whether director is liable if the cheque issued on behalf of company is dishonored?
Under section 141(1) of the Negotiable Instruments Act, when a company commits an offence under section 138, every person who, at the time of the offence, was in charge of…
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Whether director is liable if the cheque issued on behalf of company is dishonored?
Answer and explanation
Correct answer A
Under section 141(1) of the Negotiable Instruments Act, when a company commits an offence under section 138, every person who, at the time of the offence, was in charge of and responsible to the company for the conduct of its business is deemed guilty. A director is therefore liable "if he was in charge of and responsible for the conduct of the business of the company", not merely because he holds that title, and he may prove lack of knowledge or due diligence; section 141(2) separately covers consent, connivance or neglect.
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