Cheque issued as security, not for debt: Section 138 not applicable. High Court upholds acquittal.

The court held that the cheque was issued as security, not for an existing debt, thus not falling under Section 138. The respondent rebutted the presumption under Section 139. The High Court upheld the acquittal, stating the lower court's findings were not perverse or unreasonable.

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Issues Involved:
1. Whether there was an existing debt or liability.
2. Whether the cheque was issued as security or for discharging a liability.
3. Applicability of Section 138 of the Negotiable Instruments Act, 1881.
4. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act, 1881.
5. Scope of High Court's interference in an appeal against acquittal.

Detailed Analysis:

1. Existing Debt or Liability:
The appellant argued that the Additional Sessions Judge erred in concluding there was no existing debt or liability. The appellant's counsel highlighted the complainant's cross-examination, where it was admitted that there was an existing debt, and the cheque was issued for discharging this liability. The respondent, however, contended that the cheque was issued as security and not for an existing debt.

2. Cheque Issued as Security or for Liability:
The complainant argued that even if the cheque was issued as security, it would still attract liability under Section 138. The respondent countered that the cheque was issued as security with an understanding that it would not be deposited. Evidence showed that the accused had a running account with the complainant, and payments were made by demand drafts, not cheques. The court found that the cheque was issued as security and not meant to be deposited.

3. Applicability of Section 138:
Section 138 of the Negotiable Instruments Act, 1881, deals with dishonor of cheques for insufficiency of funds. The court noted that for Section 138 to apply, the cheque must be issued towards an existing debt or liability. The evidence indicated that the cheque was issued as security, not for an existing debt, thus Section 138 was not applicable.

4. Rebuttal of Presumption under Section 139:
Section 139 presumes that the holder of a cheque received it for discharging a debt or liability. The respondent successfully rebutted this presumption by showing that the cheque was issued as security. The court noted that the rebuttal does not need to be beyond reasonable doubt but on the preponderance of probability, which the respondent achieved through cross-examination and documentary evidence.

5. Scope of High Court's Interference:
The respondent argued that the High Court's interference in an appeal against acquittal is limited and should only occur if the lower court's judgment is perverse or unreasonable. The court agreed, stating that the Additional Sessions Judge's findings were neither perverse nor unreasonable and thus upheld the acquittal.

Conclusion:
The court concluded that the cheque in question was issued as security and not for an existing debt or liability, thus not attracting the penal provisions of Section 138. The respondent successfully rebutted the presumption under Section 139. The High Court found no reason to interfere with the Additional Sessions Judge's judgment and dismissed the appeal.

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