Closed-account cheques remain actionable under cheque dishonour law, and liability presumptions require credible rebuttal evidence.

A cheque issued after closure of the drawer's bank account is treated as falling within section 138 of the Negotiable Instruments Act because a narrow reading limited to live accounts would undermine the statute's object of preserving cheque credibility in commercial transactions. The statutory presumption of liability under section 139 is rebuttable only on a preponderance of probabilities, and a bare defence that the cheque was given as security is insufficient without credible supporting evidence. The text also notes that closed-account cheques remain actionable and that rebuttal requires tangible proof.

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Issues: (i) Whether a cheque issued after the closure of the drawer's bank account falls within section 138 of the Negotiable Instruments Act, 1881. (ii) Whether the accused rebutted the presumption of liability under section 139 of the Negotiable Instruments Act, 1881.

Issue (i): Whether a cheque issued after the closure of the drawer's bank account falls within section 138 of the Negotiable Instruments Act, 1881.

Analysis: The expression "an account maintained by him" was construed in light of the statutory purpose of ensuring the credibility and efficacy of cheques in commercial transactions. A narrow reading confining the provision only to live accounts on the date of drawal was rejected as defeating the legislative object. The Court also followed the wider interpretation adopted by the Division Bench, which treated cheques issued against accounts closed prior to the date of drawal as covered by section 138.

Conclusion: Yes. A cheque issued after closure of the account remains within the sweep of section 138, and the acquittal on that ground was unsustainable.

Issue (ii): Whether the accused rebutted the presumption of liability under section 139 of the Negotiable Instruments Act, 1881.

Analysis: The accused was required to displace the statutory presumption on the touchstone of preponderance of probabilities. The defence version that the cheque had been issued to another person as security was not supported by tangible evidence. The alleged intermediary was not examined, no effective steps were shown to have been taken after notice, and the surrounding conduct did not inspire confidence. The burden under section 139 was therefore not discharged.

Conclusion: No. The presumption under section 139 was not rebutted and the finding of acquittal on that basis was set aside.

Final Conclusion: The appellate court's acquittal was reversed, the conviction recorded by the trial court was restored, and sentence including compensation was imposed.

Ratio Decidendi: For the purpose of section 138 of the Negotiable Instruments Act, 1881, a cheque drawn on an account earlier maintained by the drawer remains actionable even if the account had been closed before the date of the cheque, and the statutory presumption of liability stands unless rebutted on a preponderance of probabilities by credible evidence.

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