Presumption under the Negotiable Instruments Act remained unrebutted; conviction restored under cheque dishonour law, with reduced imprisonment.

The statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act was not rebutted where the cheque was dishonoured for insufficiency of funds and the defence relied only on denial, a reply notice and oral evidence, without material showing forgery, theft or misuse. Mere denial of the debt was held insufficient to displace liability under Section 138 on a preponderance of probabilities. The lower appellate court erred in treating the defence as adequate and in interfering with the trial court's conviction. The conviction was restored, while the substantive imprisonment was reduced to two months and the compensation was maintained.

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Issues: Whether the accused had rebutted the statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act so as to displace liability under Section 138 of the Negotiable Instruments Act.

Analysis: The cheque was dishonoured for insufficiency of funds and not for signature mismatch. The defence rested mainly on denial, reply notice, and oral evidence, without material to show that the cheque was forged, stolen, or otherwise misused. Mere denial of the debt was insufficient to rebut the presumption on a preponderance of probabilities. The lower appellate court erred in treating the defence as sufficient and in interfering with the trial court's conviction. The sentence was, however, modified having regard to the time elapsed and the nature of the transaction.

Conclusion: The presumption was not rebutted and the conviction under Section 138 of the Negotiable Instruments Act was restored, with the substantive imprisonment reduced to two months while the compensation was maintained.

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