The Supreme Court of India in a recent judgment has extended the ambit of section 138 of the Negotiable Instruments Act, 1881, to dishonour of cheques due to mismatch of the drawer’s signature on the cheque with the specimen signature held by the bank.
In M/s Laxmi Dyechem v State of Gujarat & Ors, one of the respondents issued several cheques signed by its authorized signatory in favour of the complainant. Several of the cheques were dishonoured by the bank on the ground that the signatures on the cheques were incomplete or did not match the specimen signatures held by the bank. The cheques remained unpaid despite notice being served on the respondents under section 138 of the act.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
