Unaccounted cash loan cannot support a legally enforceable debt claim under cheque dishonour law; leave to appeal refused.

A cheque issued against an unaccounted cash loan, not disclosed in income tax returns, was held not to be issued in discharge of a legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881. Section 139 raises only a rebuttable presumption that the cheque was issued for a debt or liability; it does not make an underlying illegal or unrecoverable liability legally enforceable. The admitted cash nature of the loan rebutted the presumption on a preponderance of probabilities, so the acquittal was rightly recorded and leave to appeal was refused.

---

---

Issues: Whether leave to appeal against acquittal should be granted in a complaint under Section 138 of the Negotiable Instruments Act, 1881 when the admitted loan amount was an unaccounted cash amount not disclosed in income tax returns, and whether such liability could be treated as a legally enforceable debt.

Analysis: The applicant admitted that the entire loan amount was paid in cash, was unaccounted, and had not been disclosed to the Income Tax authorities even by the time evidence was recorded. The legal requirement under Section 138 is that the cheque must have been issued in discharge of a legally enforceable debt or liability. Section 139 raises only a presumption that the cheque was issued for discharge of debt or liability, and not a presumption that the underlying debt itself is legally recoverable. The presumption can be rebutted on a preponderance of probabilities, and the factual admission regarding an unaccounted cash loan was sufficient to rebut the presumption in the present case. An unaccounted cash liability cannot be treated as a legally enforceable liability within the meaning of the provision.

Conclusion: The cheque was not shown to have been issued in discharge of a legally enforceable debt, and the acquittal was correctly recorded. Leave to appeal was refused.

---