amit ankit

Section 138 of N.I Act applicable to company

Posted by amit ankit on in General blogging

Can anyone please advise on sec 138, if a PDC cheque is bounced on account of EMI, signed by a director of a pvt limited company, the loan was a commercial loan by the bank, wherein due to business loss the company could not pay the EMI amount when due. the cars were repossessed and sold by the bank for a considerable amount, can the director be prosecuted for cheque bounce under sec 138 and what are the implications of sec 142 of N.I Act.

Comments

manishmin 11 Oct 2010, 19:14
+1 -0
Dear Mr. Kevin,
Your matter does not fall under the category of offences u/s 138 of the Negotiable Instrument Act so just don't worry. It may be proceeded under recovery cases only.
The courts have set precedents in such matters and also distinguished what may be termed "liability" u/s 138 and security otherwise falling out side of the said section.

Please follow this case Ramkrishna Urban Co Operative vs Shri Rajendra Bhagchand Warma on 16 February, 2010, N THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD, CRIMINAL APPLICATION NO. 898 OF 2009, PRONOUNCED ON : 16.02.2010.
anil3411 24 Oct 2010, 01:00
+1 -0
Pvt Ltd company, was raided by sales tax, two directors had accepted tax evaded against unregistered suppliers, and given PDC for tax evaded, other directors were not aware of facts, tax evaded against unregistered purchase are also proprietorship company of two directors who accepted tax liabilities. Complain made to sales tax offices and Deputy commissioner, but no action, and cheque returned due to insufficient balance and operation stop by directors. case file u/s 138, please inform what to do.
manishmin 28 Oct 2010, 23:27
+0 -0
Without knowing full facts of the matter, it is not proper to advise on anything still what seems here that you had made stop payment against the tax liability which you had promised to fulfilled but eventually did not do so.
Thus you are liable for prosecution u/s 138 of NI act.

Still at the time of hearing of the case, you depose before the court taht you are agreed to pay the said amount and pay it off. The case then would be disposed off.

In spite of the fact that the liability is against the Company, the directors who were in charge of those transactions shall be prosecuted.
Commenting is closed for this article.