|Consider the following statement:|
|1. Criminal proceedings for dishonouring of cheque can be initiated only in case the cheque is dishonoured because of insufficient amount in the account.|
|2. Signatures do not match', also implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour, and hence liable for criminal proceedings.|
|Which of the above statements is or are correct?|
C) Only 1
D) Only 2
Correct Answer: D
Solution :[d] Supreme Court set aside the verdict of Gujarat High Court, which had held that criminal proceedings for dishonouring of cheque can be initiated only in case the cheque is dishonoured because of insufficient amount in the account, as it held that criminal proceedings can also be initiated in case the cheque issued by a person gets dishonoured on the basis of mismatch of the bank holder's signature. The apex court, however, said that in such cases of dishonouring of cheques, the account holder must be given a notice and an opportunity to arrange the payments before initiation of criminal proceedings against him.
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