Dear Sridhar,
Thank you for your query! I am Aadil and I will try to answer your question.
The short answer to your question is YES. You file a case against both the company and the director.
The legislation that governs all the laws and rules regarding cases of cheque bounce is the Negotiable Instruments Act of 1881. The same act defines a cheque bounce in its section 138 as when a cheque drawn by a person on an account he maintains with a banker, for the purpose of fulfilling any debt or liability, is returned by the bank unpaid, either due to insufficient funds or because it exceeded the amount agreed to be paid by the bank from the account as per any agreement made with the bank.
If the offence of cheque bounce was committed by a company, section 141 of the same act prescribes the people to be held liable. In a case where a company commits the offence of cheque bounce, all the people responsible for the conduct of business of the company, including the director, manager, secretary, or other officer of the company, shall be held liable, along with the company itself. Any individual working for the company may exclude themselves from liability by proving that the said offence was committed without their knowledge, or that they had exercised due diligence to prevent the occurrence of such an offence.
If such an offence is committed by a company, it is a criminal offence and can be punished as per the punishments prescribed in section 138 of the Negotiable Instruments Act, 1881. Therefore, the convicted individual may be imprisoned for a term not more than two years, or be ordered to pay a fine that can extend up to twice the amount given in the bounced cheque, or both. A court fee must be paid for a suit of cheque bounce, and such fee varies from case to case and the money given in the cheque that was bounced.
I hope this helps. Thank you for your time and patience!
Regards,
Aadil
