General Studies · Negotiable Instruments Act

Examine the following statements regarding the legal and operational framework of the Cheque Truncation System (CTS) and the Negotiable Instruments Act: Statement 1: The introduction of CTS has effectively modified the traditional definition of presentation of a cheque, as physical movement is replaced by electronic image transmission. Statement 2: Under Section 6 of the Negotiable Instruments Act, a cheque in electronic form includes an exact mirror image of a paper cheque generated in a secure system. Statement 3: Truncation can be performed by the collecting bank or clearing house, and the physical instrument is kept in safe custody for the prescribed retention period. Statement 4: If a cheque is returned in CTS clearing due to insufficient funds, the return memo along with the image/copy is sufficient to enable legal action under Section 138. Statement 5: The paying bank has the right to call for the physical cheque for verification if it has reasonable doubt regarding its genuineness. Statement 6: The clearing house uses MICR line data for routing, while the actual payment decision is based on the visual inspection of the digital image. Statement 7: In case of a discrepancy between the amount in words and figures, Section 18 mandates that the amount stated in words shall be the amount undertaken to be paid. Which of the following is a correct logical conclusion regarding these statements?