Criminal proceedings in case of Cheque signature mismatch: SC

December 5, 2012

As per the Supreme Court’s recent ruling, a person may be liable to criminal proceedings if a cheque issued by him gets dishonored mismatch with the specimen signature available with the bank.

The court left behind the verdict of Gujarat High Court which had held that criminal proceedings for dishonoring of cheque can be initiated only when the cheque is dishonored because of insufficient amount in the bank account and not in case where a cheque is returned due to mismatch of signature of account holder.

The court reffered to Section 138 of Negotiable Instrument Act to reach the verdict. The court said “Just as dishonor of a cheque on the ground that the account has been closed is a dishonor falling in the first contingency referred to in Section 138 of Negotiable Instrument Act, so also dishonor on the ground that the ’signatures do not match’ or that the ‘image is not found’, which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonor within the meaning of Section 138 of the Act”.

The apex court, however, said that before initiation of criminal proceedings, the account holder must be given a notice and an chance to make the payments.

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