Section 138 cheque liability sustained as statutory presumption stood unrebutted and security-cheque defence failed.

Section 138 liability was upheld because the complainant proved foundational facts, triggering the statutory presumption under Section 139, and the accused failed to rebut it on a balance of probabilities. The Court accepted that the cheque was issued for presentation if agreed instalments were not paid by the due date, rejected the plea that it was only a security cheque, and held that prior part-payments did not establish full discharge of the liability within the statutory time. The acquittal was set aside and conviction under Section 138 of the Negotiable Instruments Act was sustained.

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Issues: Whether the acquittal for an offence under Section 138 of the Negotiable Instruments Act was liable to be reversed on the ground that the cheque in question was issued in discharge of a legally enforceable debt and that the defence of prior part-payment did not negative liability.

Analysis: The complainant was entitled to rely on the statutory presumption under Section 139 once the foundational facts were proved. The accused could rebut that presumption by showing, on a balance of probabilities, that the cheque was not issued towards an enforceable liability or that the amount due under it had already been discharged. On the evidence, the Court accepted that the cheque was handed over with the understanding that it would be presented if the agreed instalments were not paid by the due date. The plea that the cheque was only a security cheque was rejected. The Court further held that prior part-payments could be taken into account, but the accused failed to prove that the full amount due under the cheque had been discharged within the statutory time. The conviction under Section 138 was therefore warranted.

Conclusion: The acquittal was set aside, and the accused was held guilty and convicted under Section 138 of the Negotiable Instruments Act.

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