Statement 1 is incorrect. While the Ryotwari system involved direct settlement with the cultivator (ryot), it often fixed high revenue demands, and exemptions or reductions during bad harvests were not guaranteed and depended on administrative discretion, often leading to hardship. Statement 2 is correct. The Permanent Settlement introduced by Cornwallis in Bengal included a strict 'Sunset Clause'. If the Zamindar failed to pay the fixed revenue by the specified date (sunset of the last day of payment), his Zamindari rights were forfeited, and the estate was auctioned off.