**Core Concept**
The underlying principle in this question is the legal definition of causing hurt by dangerous weapons or means, as per the Indian Penal Code (IPC). Section 322 IPC specifically deals with voluntarily causing grievous hurt by dangerous weapons or means.

**Why the Correct Answer is Right**
The correct answer is based on the legal definition of causing hurt by dangerous weapons or means. In this scenario, Mr. Y caused multiple incised wounds on the face of Mr. Z using a knife, which is considered a dangerous weapon. According to Section 322 IPC, any person who voluntarily causes grievous hurt by dangerous weapons or means is liable for arrest. The term "grievous hurt" refers to severe injuries that can cause permanent damage or disfigurement, such as incised wounds.

**Why Each Wrong Option is Incorrect**
**Option A:** This option is incorrect because Section 324 IPC deals with voluntarily causing hurt by dangerous weapons or means with the intent to cause death or grievous hurt, which is not applicable in this scenario.

**Option B:** This option is incorrect because Section 325 IPC deals with voluntarily causing grievous hurt, but it does not specifically mention the use of a dangerous weapon or means.

**Option D:** This option is incorrect because Section 326 IPC deals with voluntarily causing grievous hurt by dangerous weapons or means with the intent to cause grievous hurt, which is not applicable in this scenario.

**Clinical Pearl / High-Yield Fact**
In cases of assault with a weapon, the intent of the perpetrator is crucial in determining the appropriate section of the IPC to be applied.

**Correct Answer: C. Section 322 IPC.**