M/S LAXMI DYECHEM vs STATE OF GUJARAT .

The Supreme Court held that the dishonour of a cheque due to mismatched signatures does not fall under the penal provisions of Section 138 of the Negotiable Instruments Act, 1881. The Court clarified that Section 138 is applicable only when a cheque is dishonoured for insufficient funds or exceeds the arrangement made with the bank. Consequently, the High Court's decision to quash the complaints was upheld, affirming that the prosecution was legally impermissible in this context.