Statutory presumption in cheque dishonour cases remains unless rebutted by probable evidence; former partners escape vicarious liability.

Admission of the cheque and signatures triggered the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, placing the burden on the accused to rebut liability with probable evidence. Mere denial in a reply notice or cross-examination was treated as insufficient, and the trial court was criticised for misapplying the reverse onus. On the facts, the presumption was held unrebutted and liability under Section 138 was sustained against respondents 1 to 3. Separately, respondents 4 to 6 were found to have ceased as partners before the transaction, so vicarious liability could not be fastened on them.

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Issues: (i) Whether the presumption under Sections 118 and 139 of the Negotiable Instruments Act stood rebutted so as to sustain the trial court's acquittal of respondents 1 to 3 under Section 138 of the Negotiable Instruments Act; (ii) Whether respondents 4 to 6 were liable as partners of the firm for the cheque dishonour prosecution.

Issue (i): Whether the presumption under Sections 118 and 139 of the Negotiable Instruments Act stood rebutted so as to sustain the trial court's acquittal of respondents 1 to 3 under Section 138 of the Negotiable Instruments Act.

Analysis: Once execution of the cheque and signatures were admitted, the statutory presumption arose that the cheque was issued for discharge of a debt or liability. The defence version that the cheque and promissory note were given as security to another finance concern was not probabilised by cogent evidence. Mere denial in the reply notice and in cross-examination was held insufficient to rebut the presumption. The trial court was found to have misapplied the legal burden and to have treated the matter as if the complainant had to prove the liability ab initio despite the statutory reverse onus.

Conclusion: The presumption was not rebutted and the acquittal of respondents 1 to 3 was set aside. They were held guilty under Section 138 of the Negotiable Instruments Act.

Issue (ii): Whether respondents 4 to 6 were liable as partners of the firm for the cheque dishonour prosecution.

Analysis: The evidence showed that respondents 4 to 6 had ceased to be partners prior to the relevant period, and the documents produced supported their non-participation in the firm at the time of the transaction. On that factual foundation, vicarious liability could not be fastened upon them for the alleged offence.

Conclusion: Respondents 4 to 6 were acquitted and the appeal was dismissed as against them.

Final Conclusion: The conviction under Section 138 was sustained only against respondents 1 to 3, while respondents 4 to 6 stood exonerated, and the matter was kept pending for the limited purpose of sentence-related proceedings.

Ratio Decidendi: In a cheque dishonour prosecution, admission of the cheque and signature triggers the statutory presumption under Sections 118 and 139, and the accused must rebut it by probable evidence; mere denial is insufficient, and appellate interference with acquittal is justified where the trial court's view is perverse or based on misapplication of the statutory burden.

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