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    Question

    Under Section 138 of the NI Act, the penalty for

    'Dishonour of Cheque' for insufficiency of funds can be: 
    A Fine up to the amount of the cheque. Correct Answer Incorrect Answer
    B Imprisonment up to 1 year. Correct Answer Incorrect Answer
    C Imprisonment up to 2 years and/or fine up to twice the amount of the cheque. Correct Answer Incorrect Answer
    D Permanent cancellation of the bank account. Correct Answer Incorrect Answer
    E No criminal liability, only a civil fine. Correct Answer Incorrect Answer

    Solution

    Section 138 provides for criminal liability for cheque bounce due to insufficient funds, with a maximum of 2 years in jail or a fine up to double the cheque amount.

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