Section 138 liability can arise for sister concerns through a common director when debt and liability are proved and presumption remains unrebutted.

A cheque issued by one sister concern through a common director can attract criminal liability under section 138 of the Negotiable Instruments Act when the cheque is issued in discharge of a proved debt or other liability arising from supplies made to another concern. The Court treated the arrangement between the parties as sufficient to establish the debt-liability nexus, and held that separate corporate personality did not defeat liability once that nexus was shown. The statutory presumption under section 139 operated in favour of the holder and remained unrebutted on the record, so the accused could not avoid liability merely by pointing to the two companies as separate legal entities.

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Issues: Whether cheques issued by one sister concern, through a common director, could attract criminal liability under section 138 of the Negotiable Instruments Act when they were issued in discharge of liability arising from supplies made to another sister concern, and whether the statutory presumption under section 139 stood rebutted.

Analysis: The liability under section 138 is not confined to cases where the drawer personally received the goods or where the cheque was issued for the drawer's own direct supplies. Where the evidence showed an understanding between the parties that payment for goods supplied to one concern would be made by the other sister concern, and the cheques were signed by a common director, the cheques were treated as having been issued towards discharge of a debt or other liability. Section 139 raised a presumption that the cheques were issued for such discharge, and that presumption was rebuttable. On the record, the accused did not rebut the presumption, and the fact that the two companies were separate legal entities did not defeat the statutory liability once the debt-liability nexus was established.

Conclusion: The acquittal was set aside, and the accused who signed the cheques was held guilty under section 138 of the Negotiable Instruments Act; the presumption under section 139 operated in favour of the holder.

Ratio Decidendi: A cheque drawn by a sister concern through a common director can attract section 138 liability if it is issued in discharge of a proved debt or other liability, and the statutory presumption under section 139 will prevail unless rebutted by the drawer.

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