Statutory presumption in cheque dishonour cases survives unless rebutted by probable defence; income-tax non-disclosure does not defeat liability.

In cheque dishonour proceedings, the statutory presumption that a cheque was issued for a legally enforceable debt or liability operates once execution is proved, and the accused must rebut it by a probable defence on the preponderance of probabilities. The accused's claim that the cheques were forcibly taken was found inconsistent and insufficient, so the presumption remained unrebutted and the conviction was restored. Alleged non-disclosure of the cash advance in income-tax records did not, by itself, render the debt unrecoverable or defeat cheque liability, because the income-tax restriction was directed at the recipient of the loan or deposit and did not negate enforcement of the underlying obligation.

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Issues: (i) Whether the accused had rebutted the statutory presumption under the negotiable instruments law by showing a probable defence; (ii) Whether alleged non-disclosure of the cash advance in income-tax records and the provisions relating to cash loans under the Income-tax Act could defeat enforcement of the cheque liability.

Issue (i): Whether the accused had rebutted the statutory presumption under the negotiable instruments law by showing a probable defence.

Analysis: Once execution of the cheques was shown, the presumption operated in favour of the complainant that the cheque was issued towards a legally enforceable debt or liability. The defence that the cheques were forcibly taken was found improbable in view of the admitted payment of one cheque and the offer to pay another amount in connected proceedings. The evidence relied upon by the accused was found inconsistent and insufficient to dislodge the presumption on the standard of preponderance of probabilities.

Conclusion: The accused failed to rebut the statutory presumption, and the conviction under the cheque dishonour provision was restored.

Issue (ii): Whether alleged non-disclosure of the cash advance in income-tax records and the provisions relating to cash loans under the Income-tax Act could defeat enforcement of the cheque liability.

Analysis: The statutory restriction in the income-tax provision concerned the recipient of a loan or deposit and did not create any rule making the lender's advance unrecoverable. The earlier view treating non-disclosure of cash advances as fatal was held not to govern the case, especially after the later Supreme Court authority on presumption under the negotiable instruments law. Failure to show the advance in books of account or income-tax returns, by itself, was not treated as destroying enforceability of the debt.

Conclusion: The income-tax provisions did not bar recovery or negate the cheque liability.

Final Conclusion: The acquittal was set aside and the conviction for cheque dishonour was restored on the footing that the presumption of liability remained unrebutted and the income-tax objections were legally irrelevant to the enforceability of the debt.

Ratio Decidendi: In a prosecution for cheque dishonour, the statutory presumption that the cheque was issued for a legally enforceable debt or liability can be displaced only by a probable defence on the standard of preponderance of probabilities, and income-tax non-disclosure of the cash advance does not by itself make the debt legally unrecoverable.

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