Negotiable Instrument:
DEFINITION: Sect Sectio ion n 13 of the the Nego Negoti tiab able le Inst Instru rume ment nt Act, Act, 1881 1881,, defi define ness a negotiable instrument as: “A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.” [Sec. 13(1)].
Explanation: A promissory note, bill of exchange or cheque is payable to order,
which is expressed to be so payable, or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable. ‘Negoti ‘Negotiabl able’ e’ litera literally lly means means ‘transf ‘transfera erable ble’. ’. ‘Instr ‘Instrume ument’ nt’ means means a ‘document.’ Therefore, negotiable instrument means an ‘a transferable document’. Howe Howeve ver, r, it does does not not mean mean that that an inst instru rume ment nt in orde orderr to be vali valid d must must be nego negoti tiab able. le. Inst Instru rume ment ntss may may be mark marked ed ‘not ‘not nego negoti tiab able le’’ yet yet they they are are vali valid d instruments and governed by the provisions of the Act. The Act narrows down the meaning of instrument. It regulates only three types of instruments, viz., Promissory Notes, Bills of Exchange and Cheques. A negotiable negotiable instrument instrument is one which entitles entitles the holder holder to the receipt of mone money. y. It give givess him him the the righ rightt to tran transf sfer er the the same same by mere mere deli delive very ry or endorsement thereon. The negotiability of the instrument continues till its maturity.
Characteristics\Features Characteristics\Features of Negotiable Instrument: These are the following characteristics characteristics of a negotiable instrument: Property:
The possessor of the instrument is the holder and owner thereof. A negotiable instrument does not exactly give possession of the instrument, but right to property. Whosoever gets possession of the instrument becomes its owner and is enti entitle tled d to the the sum sum ment mentio ione ned d ther therein ein as the the hold holder. er. The The comp comple lete te righ rightt of ownership ownership in a negotiable negotiable instrument instrument passes passes by mere delivery delivery where instrument instrument is payable to bearer. Where instrument is payable to order, right of ownership passes by endorsement and delivery. Good Title to the Instrument: Instrument:
The holder is good faith and for value called the ‘holder in due course’ gets the instrument free from all defects of any previous holder. Rights of Holder in Due Course:
The holder in due course is not affected by certain defences which might be available against previous holder, for example, fraud, criminal, smugglers, to which he is not a party. Writing & Signature:
According to the Rules of Negotiable Instrument, it must be written and signed by all the parties according to the rules relating to the promissory notes, bills of exchange, and cheques. Payment:
A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternatives to one or two, or some of several payees [Sec. 13(2)]. Payable by legal Tender Money of India:
Neg Negot otia iabl blee Inst Instru rume ment ntss are paya payabl blee to legal legal tend tender er money of India. The liabilities of the parties of negotiable instruments are fixed in terms of legal tender money only. No Need of giving Notice:
It is not not nece necess ssar ary y to give give noti notice ce of tran transf sfer er of a negotiable instrument in his own name for the recovery of the amount mentioned therein. Consideration in the case of a negotiable instrument is presumed.
PROMISSORY NOTES;
DEFINITION: Section 4 defines a promissory notes as under: “A ‘promissory note’ is an instrument in writing (not being a bank-note or a currency-note), containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument.”
Essentials Characteristics of a Promissory Note: 1.
All kinds of negotiable instruments, including a
promissory note, must be in writing:
The promissory note must be in writing. In a oral form or promise is made, they all are excluded form this. Whatever the words may be used, it is not compulsory writing by using pen or pencil or ink pen or even may be printed or cyclostyled. But the important thing is that the words should be visible. Intention of writing, it should be clear. The instrument must contain an express or unconditional promise to pay:
It is not necessary to use the word “promise” but the intention must clearly show an ‘unconditional undertaking’ to pay the amount. It was held that absence of the word promise does not mean that a document is not a promissory note, provided it should fulfills the requirements of this section and there is clear intention on the part of the parties to treat the document as a promissory note.
•
ILLUSTRATIONS:
•
This are the promissory notes:
“I acknowledge receipt of Rs. 1,000 for value received.”
“I promise to pay B Rs. 1,000 on demand.”
“I promise to pay B or order Rs. 1,000 on demand.”
“I acknowledge myself to be indebted to B in Rs. 1,000 to paid on
demand, for value received.”
interest”.
“Received “Received from X Rs. 1,000, which which I promise promise to pay on demand with
This are not the promissory notes:
“I acknowledge receipt of Rs. 1,000.” “I owe you Rs. 1,000.” “Mr. Prakash Rs. 1,000.” A document which is a receipt for money paid by cheque and which incidentally contains a promise to repay the amount is not a promissory note, as there is no intention of creating a negotiable instrument at all.
Unconditional:
The undertak undertaking ing to pay must must be defini definite te and uncondit uncondition ional. al. If the promise is uncertain or conditional, the negotiable instrument is not valid. Hence, promissory notes, payable on the death of a person or persons, or at a particular place, place, or after a specified specified time, are valid notes, notes, under Section 5 (2). At a particular particular place or at a specified time. A promise given for an executed consideration. Any promise to pay an instrument on lapse of certain period, after a specified event which is certain to happen. •
Valid Conditional Promissory Notes:
“I promise to pay B Rs. 1000, three days after the death of X.
“I promise to pay B Rs. 1000 at Mumbai.”
“I promise to pay B Rs. 1000 on 31 st December 1977.” 4.
The pr p romissory no n ote mu m ust be b e si s igned by b y th t he ma m aker,
otherwise, it is incomplete and of no effect with free consent:
Pers Person on must must sign sign the the inst instru rume ment nt with with the the phys physica icall lly y and and mentally act with an intention to sign without the signature the instrument is not valid person must sign with a free consent. 5.
Both th the dr drawer an and th the pa payee mu must be be in indicated or or
designated with certainty on the face of the promissory note:
Where two or more persons sign the promissory note, their liabilities will be joint and several. Two distinct persons should fill in the role of a maker and payee. A note cannot be made payable to the maker himself. However, if the maker
endorses the note, it is then valid. A note may be made payable to two or more persons jointly. Payee must be a certain person. If he is capable of being ascertained where he is misnamed or wrongly described, he will be a certain person. For example:
A promissory note payable to “my only niece living in England” is a valid promissory note. Specific Sum:
The sum payable must be certain and must not be capable of contingent subtractions or additions. Illustrations:
I promise to pay A Rs. 1000 and all other sums due to him. I promise to pay A Rs. 2000 together with the fine according to the rule. The sum payable under a promissory note is certain in the following cases:
When it is payable with interest. However, if the rate of interest is not mentioned in the instrument, it is not a promissory note.
When it is payable by installments, with a provision that on default of payment of an installment, the balance unpaid shall become due (Sec. 5).
Thus, the act does require that the amount should be stated in both words
and figures form. 7.
Promise to pay must be money only:
A promis promissor sory y note note should should contai contains ns only only paymen paymentt of money rather than any thing else or other than the money. Illustrations:
“I promise to pay B Rs. 100 in cash and Rs. 199 worth of cosmetics.” “I promise to pay B Rs. 299 and to deliver him my black horse.” “I promise to pay B Rs. 999 in Government Bonds.” “These above are all invalid promissory notes.” 8.
Stamping:
As in every instrument which is legal, there are certain formalities which are compulsory should be included and such formalities are date, place, cons consid ider erati ation on,, etc etc shou should ld be ment mentio ione ned d in the the inst instru rume ment nt.. With Withou outt all all this this formalities, the instrument is said to be invalid.
Types of Promissory Notes: There are four kinds of promissory notes, and they are
1.
1.
Promissory notes payable on demand;
2.
Promissory notes payable after date;
3.
Joint promissory notes; and
4.
Joint and several promissory notes.
Promissory notes payable on demand:
When the drawer or you can say the maker gives an unconditional undertaking, under his signature, to pay on demand certain sum of money to the payee, it is called a promissory note payable on demand. In such a note, no time is fixed for payment. Specimen of a Promissory Note Payable on Demand
Mumbai, 1 st June, 1999
Rs. 5,000/-
On Demand, I promise to pay Prakash or order the sum of rupees five thousand with interest at 18 per cent per annum, for value received.
Sd/-
Stamp XYZ
To Prakash, Empty Stomach, Mumbai 400 052.
2.
A Promissory Note Payable after Date:
When When the the mak maker or draw drawer er pro promise mises, s, under nder his signature to pay certain sum of money to the payee, at a future date, say for
example, example, three months after date, it is called a promissory promissory note, note, payable after date, or at a future date.
Specimen of a Promissory Note Payable after Date
Mumbai, 1 st June, 1999
Rs. 5,000/-
Three months after date, I promise to pay Srichand Rohra or Bearer/Order the sum of rupees five thousand, for value received.
Sd/To Srichand Rohra, Jai Palace, Mumbai 400 052. 3.
Joint Promissory Notes:
When When a prom promis isso sory ry note note is made made by two two or more more persons jointly, it is known as a joint promissory note. In such a case, the liability lia bility of the makers (Promisers) is joint and collective towards the payee, i.e., in case of a default, the payee can take legal action one or all of them. If he elects to take action against one of the promisers, it is deemed to be action against all of them. He cannot, in that case, take action against the remaining promisers. The payee has only one right of action. Joint promissory notes may be payable on demand or after date. Following is a specimen of a joint promissory note: Specimen of a Joint Promissory Note
Rs. 5,000/-
Mumbai, 1 st June, 1999
We jointly promise to pay on demand to the Bank of India, or order, the sum of Rs. 5,000/- (Rupees five thousand) only for value received with interest at 10 per cent per annum.
Sd/1. Signature: Address:
Signature: Address:
Stamp
4.
Joint and Several Promissory Notes:
When When a prom promis isso sory ry note note is made made by two two or more more persons persons jointly and severally, severally, it is called a joint and several promissory promissory notes. notes. The promisers of such a promissory note are not only collectively liable to the payee but they are also separately and individually liable to him. In other words, the payee has more than one right of action against the promisers. He can take actiona.
Against all the promisers simultaneously, or
b.
Against any one of them, or
c.
Against one promiser after another till the full amount of the note is recovered. A joint and several promissory note may be payable on dema demand nd or after after date date.. In Indi India, a, there there is no diffe differe renc ncee in pract practice ice betw betwee een n a join jointt promissory note and joint and several promissory notes. A holder of a joint promissory note may, therefore, treat it as a joint and several promissory note and accordingly pro proce ceed ed as (1) (1) agai agains nstt any any one one of the the prom promis iser ers, s, or (2) (2) agai agains nstt all all of them them simultaneously, or (3) against one promiser after another till the full amount of the note is recovered. Specimen of a Joint and Several Promissory Notes
Mumbai, 1 st June, 1999
Rs. 5,000/-
We jointly and severally, promise to pay on demand to the Bank of India, or order, the sum of Rs. 5,000/- (Rupees five thousand) only for value received with interest at 10 per cent per annum. 1. Signature………… Mumbai, Rs. 5,000/Address………….. 1st June, 1999 2. Signature………… Address………….. We jointly promise to pay on demand to the Bank of India, or order, the 3. Signature………… sum of Rs. 5,000/- (Rupees five thousand) only for value received with interest at Address………….. 10 per cent per annum.
Sd/1. Signature: 2 re: Address:
Signature: Address:
BILLS OF EXCHANGE:
DEFINITION: “Sec “Secti tion on 5 defi define ness a bill bill of exch exchan ange ge as an inst instru rume ment nt in writing containing an unconditional order, signed by the maker, directing a certain person, to pay a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument.”
Essentials\Characteristics Essentials\Characteri stics of Bill of Exchange: The following are the essentials of a bill of exchange: Writing:
A bill of exchange, is like a promissory note, must be in writing. It may be written in any language and in any form. It should be with the requirements of Section 5. The provisions of promissory notes relating to writing, as discussed above, are also applicable to bills of exchange. Parties:
There are generally three parties to a bill of exchange, known as: Drawer, Drawee and Payee.
Drawer:
The drawer is a person, who makes the bill of exchange, or who gives the order to the drawee to pay a certain sum of money to the payee. Drawee:
The drawee is a person, who is directed by the drawer to pay the money to the payee.
Payee:
According to the section 7 of the Act defines ‘Payees’ as the person name named d in the the inst instru rume ment nt,, to whom whom or to whos whosee orde orderr the the mone money y is, is, by the the instrument directed to be paid. All All thes thesee part partie iess must must be name named d or othe otherw rwis isee indi indica cate ted d with with reasonable certainty. Sometimes the drawer and the payee are the same persons, as for example, where a bill is drawn “pay to me or my order.” But the drawer and the drawee cannot be the same, because there cannot be an order to oneself. Drawee and Acceptor:
The drawer or the payee, who is in possession of the bill, is call called ed the the hold holder. er. The hold holder er must must be pres presen entt the the bill bill to the the draw drawee ee for for his his acceptance. When the drawee accepts the bill, he becomes the acceptor. Which means one person can plays the two roles at a time of drawee and acceptor. Order to Pay:
The bill of exchange must contain an order by the drawer to drawee to pay certain sum of money under any circumstances. The order must be imperative; it should not be in a request form. An Unconditional Order to Pay:
The bill of exchange must contain an order for promise to pay certain amount it should be unconditional. If there is conditional order which is invalid means their should not be like that if this event is happen then only I will pay to you, it is invalid. Conditional bill should not be their because it is invalid. 6.
Signed by Drawer:
The bill of exchange must be signed by the drawer. Payee must be certain:
It must be payable to a definite person or his order. The payee must be certain. Bill may be made payable to two or more payees jointly or in the alternative. Stamping:
Bill of exchange is chargeable with stamp duty.
Types of Bills of Exchange: There are five types of bills of exchange namely, (1) bill of exchange payable on demand. (2) bill of exchange payable after date, (3) inland bill bill of exchan exchange, ge, (4) foreign foreign bill bill of exchan exchange, ge, and (5) accomm accommoda odatio tion n bill bill of exchange.
1.
A Bill of Exchange Payable on Demand:
When a bill is made payable on demand, or at sight, or on presentment, it is known as a bill of exchange payable on demand. Following is a specimen of a bill of exchange payable on demand: Mumbai, 20 th August, 1999
Rs. 20,000/-
On demand, pay to Prof. P.P. Prakash, or order, a sum of rupees twenty thousand only for value received. For Airedale & Company, Sd/Partner 420, P.P. Road, Mumbai 400 004. To Prof. P.P. Prakash, 25, Raja Mahan, Mumbai 400 001.
Accepted Sd/R S T 21-8-1999 A bill bill of exch exchan ange ge paya payabl blee to beare bearerr on dema demand nd is
illegal under Section 25 of the Indian Paper Currency Act and also under Section 31(2) of the Reserve Bank of India Act, 1934. Hence, such a bill cannot be drawn by a firm or an individual. 2.
A Bill of Exchange Payable After Date:
When a bill is made payable after the expiry of a stipulated period, or payable so many days after sight, it is known as a bill of exchange payable after date, or a time bill.
Mumbai, th Foll Follow owin ing g are a coup couple le of speci specime mens ns of bill bi s August, of exch exchan ange ge Rs. 20,000/20lls 1999 payable after date and after sight:
Three months after pay M.N. Patel, 12 V.P. Road, Surat, or order, the sum of rupees ten thousand only for value received. Sd/A.G. Joshi, 245, Mahatma Gandhi Road, Mumbai 400 001. To M.N.Patel 15, Netaji Subhash Lane, Surat.
Accepted Sd/B.K. Shah 10-6-1999
In the above bill, A.G. Joshi is the drawer; B.K. Shah is the drawee who has accepted the bill; therefore acceptor; and M.N. Patel is the payee. The bill is made payable after date.
3.
An Inland Bill of Exchange:
An Inland Bill of Exchange is one, which is— a.
Drawn and made payable in India, or b. b.
Draw Drawn n in in Ind India ia on a resi resid dent ent of of Ind India ia thou though gh the the pla place ce of paym ayment ent may may
be outside India. For example, a bill of exchange, drawn by a merchant in Mumbai upon another merchant in Calcutta, made payable in India, is inland bill. Similarly, a bill of exchange, drawn by a merchant in Chennai upon another merchant in Delhi and payable in Washington, is an inland bill.
4.
A Foreign Bill of Exchange:
A foreign bill of exchange is one, which is – a.
Drawn Drawn in in India India and made made payab payable le in in some some other other coun country try other other than than India. India.
b. b.
Drawn Drawn upo upon n a pers person on who who is is a resi reside dent nt of of a fore foreig ign n coun countr try. y.
Cheques: Definition: Section 6 defines a cheque as under: “A cheque is a bill of exchange, drawn on a specified banker and not expressed to be payable otherwise than on demand.”
Definition: “Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of the instrument.
Essentials\Characteristics Essentials\Characteri stics of a Cheque: Instrument in Writing:
A cheque must be writing. It can be written in ink, ball point pen, typed or even printed. The ink used for writing the cheque should not be easily erasable. erasable. Any overwriting overwriting or alteration will make the cheque cheque dishonor. dishonor. Oral orders are not considered as cheques. Unconditional Order:
In cheq cheque ue ther theree must must be an orde orderr by a depo deposi sito tor r (drawer) on its bank (drawee) for paying money to the holder (payees) and order should should be unconditio unconditional. nal. A cheque cheque containing containing conditional conditional order is dishonour dishonoured ed by the bank. Payable on Demand:
A cheque when presented for payment must be paid on demand. If cheque is made payable after the expiry of certain period of time then it will not be require. Certain Sum of Money:
Cheque must be for money only and it must be written in words and figures. If the amount in words and figured will differ from each other or if there will be insufficient balance in the account then the cheque will be dishonoured.
Payee must be Certain:
The payee of the cheque should be certain person i.e. either real person or artificial person e.g. Joint Stock Company. The name of payee must be written on the cheque or it can be made payable to bearer.
Types of Cheques: There are two types of cheques:
1)
Those
which
are
uncrossed
are
popularly known as “bearer” or open cheques; and 2)
1)
Crossed Cheques.
Bearer Ch Cheques or or Op Open Ch Cheques:
Bear Bearer er or open open cheq cheque uess are are paya payabl blee at the the counter of drawee banker on presentment. As the bearer cheques carry risk of being lost or stolen and the finder may be able to get it encashed, crossing of cheques avoids such a contingency and secures payment.
2)
Crossed Cheques:
Crossing of cheques is of different types:
I.
Cheq Chequ ues crosse ossed d gen geneerall rally y (Se (Sec. c. 123 &126 &126)).
A cheque is crossed generally when; It has two parallel lines marked across its face; or It bears an abbreviation “& Co.” between the parallel line; or It bears the words “not negotiable” between the two parallel lines (Sec. 123).
A cheque crossed generally will be paid to the banker through which it is presented. It is a direction to the drawee banker to pay the sum only through a banker. Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker (Sec. 126).
Specimens of General Crossing
II. Cheques Cheques crossed crossed specia specially lly (Secs (Secs.. 124 & 126): 126):
When When a cheq cheque ue is cros crosse sed d by two two para parall llel el transverse lines and also the name of the banker is written between the two parallel lines, with or without the words, ‘not negotiable’ it is called “special crossing” (Sec. 124). It is to be payable to that person only on which the bill is drawn which means it is not a risky document as Bearer Cheque is. The banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed or his agent for collection (Sec. 126). It will paid only when presented by the banker. Specimens of Special Crossing
Payment of cheque crossed especially more than once (Sec. 127):
A cheq cheque ue canno cannott be cross crossed ed more more than than once once specially, except the banker on whom it is crossed specially can cross it again to his
agent for purpose of collection only. If the cheque is crossed especially more than once, the banker has a right to refuse payment thereof. III.
Cheques cr crossed ‘A ‘A/c. Pa Payee’:
Ofte Often n cheq cheque uess are cros crosse sed d with with two two para parall llel el transverse lines and in between the two parallel lines the words “a/c payee” or “a/c payee only” are written. This means that the proceeds of the cheque are to be credited to the account of the payee only. This type of crossing is also called “Res “Restri tricti ctive ve cross crossin ing” g”.. Inse Insert rtio ion n of word wordss “A/c “A/c.. Paye Payee” e” does does not not rest restri rict ct its its negotiability. It serves a good protection to drawer from loss or theft. Specimens of Cheques Crossed A/c Payee Or Restrictive Crossing
IV.
Cheq Chequ ue be bearin ring ‘No ‘Nott Neg Nego otia tiable ble’ (S (Sec. ec. 130 130): ):
A cheque crossed generally or specially may bear additional words ‘not negotiable’. A person taking a cheque crossed generally or specially bearing in either case the words ‘not negotiable’ shall not have and shall not be capable of giving a better title to the transferee than that which the person from whom he took it had. It will be observed that writing the words ‘not negotiable’ is a type of special crossing or general crossing. Cheques crossed generally or specially, can be added with the words “not negotiable”. The words “not negotiable” are not the same thing as special crossing, because in a special crossing, the banker on whom it is drawn shall not pay it otherwise than to the banker on whom it is crossed or his agent for collection. When the cheque is marked with the words “not negotiable” in addition to the special crossing, it deprives the cheque of its main feature of negotiability. V.
Crossing af after is issue (S (Sec. 12 125):
Crossing of cheque other than that authorized by the act is unlawful. The following crossings are permissible: Where a cheque is uncrossed, the holder may cross it generally or specially. Where a cheque is crossed generally, the holder may cross it specially. c.
Where a cheque is crossed generally or specially,
the holder may add the words “not negotiable.” d.
Where a cheque is crossed specially, the banker to
whom it is crossed may again cross it specially to another banker or his agent, for collection.
“Criminal Action against Dishonour Cheque”
1.
Imprisonment, or or Fine, or or Both, fo for dishonour of Certain Ch Cheques
for Insufficient Funds (Sec. 138):
Sec. 138 lays down that where any cheque, drawn by a person, on an account, maintained by him with a banker, for payment of any amount of money to another person, from and out of that account, for the discharge, in whole or in part, of any debt or other liability, is returned by the Bank unpaid because – I.
The amo amount of money, standing to the credi edit of that acco ccount, is
insufficient to honour the cheque or, I I.
It ex excee ceeds the am amount, arr arranged to be paid from that acco ccount by by an
agreement made with that Bank, or, III. III.
Ins Instru tructio ction ns wer weree iss issue ued d to the the ban bank k for for sto stop p pay paymen ment, such uch pers perso on shal shalll
be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished – With imprisonment for a term extending to one year, or, With fine, which may extend to twice the amount of the cheque, or. With both. The following three conditions, however, are required to be fulfilled to constitute the said offence under Sec. 138.
I.
The The chequ chequee must must have have been been prese present nted ed to the the bank bank withi within n a period period of six six mont months hs from from the the date, date, on which which,, it was was draw drawn, n, or, or, with within in the the perio period d of its its vali validi dity ty,, whichever is earlier I I.
The payee, or the holder in due course of the cheque, as
the case may be must have made a demand for the payment of the said amount of money, by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank, regarding the return of the cheque as unpaid; and I I I.
The drawer of such cheque must have failed to make the
payment of the said amount of money to the person within fifteen days of the receipt of the said notice.
2.
Presumption in Favour of Holder (Sec. 139):
It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature, referred to in section 138, for the discharge, in whole or in part, of any debt, or their liability. 3.
Defence, which may not be allowed in Any Prosecution, Under Section 138:
Sec. Sec. 140 lay lays, down own that that it shal shalll not be a defen efence ce in a prosecution for an offence under section 138 that the drawer had no reason to bel believ ieve, e, when when he issu issued ed the the cheq cheque ue,, that that the the cheq cheque ue may may be dish dishon onou oure red d on presentment for the reasons, stated in section 138. 4.
Such Offences by Companies:
If the person, committing an offence under section 138, is a company, company, every person, who at the time of commissio commission n of the said offence, 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 [Sec. 141(1)]. 5.
Liability of of Di Director, Ma Manager, Se Secretary, or or ot other Of Officer of of th the
Company [Sec. 141(2)]:
Notwithstanding anything contained in sub-section (1), where any offence, under this Act, has been committed by 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 offic er, shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 6.
Cognisance of Offences:
Sec. 142 says that notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), -I.
No cour courtt shall shall take take cogni cognizan zance ce of any offe offenc ncee punis punisha habl blee under under Secti Section on 138 138
except upon a complaint, in writing, made by the payee, or as the case may be, the holder in due course of the cheque. II. II.
Such Such comp compla lain intt is made made withi within n a period period of of one mon month th of the the date date,, on whic which, h,
the cause of action arises, under clause (c) of the provision to section 138.
