Statutory presumptions under the Negotiable Instruments Act remain unrebutted where the defence is unsupported by probable evidence.

Where execution of a cheque is admitted, presumptions under sections 118(a) and 139 of the Negotiable Instruments Act arise in favour of the holder, and the accused must rebut them by making a probable defence on a preponderance of probabilities. A bare claim that the cheque was issued in connection with an oral plot-sale arrangement, supported only by testimony without personal knowledge and without credible documentary material, was held insufficient. Once the presumptions remained unrebutted, the cheque was treated as issued towards a legally enforceable liability, the acquittal was found vitiated by legal error, and conviction under section 138 was sustained.

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Issues: (i) Whether the accused rebutted the statutory presumptions arising under the Negotiable Instruments Act by setting up a probable defence that the cheque was issued in connection with an oral agreement to sell a plot. (ii) Whether the acquittal suffered from an error of law in the appreciation of the statutory presumptions and the accused was liable to be convicted under section 138 of the Negotiable Instruments Act.

Issue (i): Whether the accused rebutted the statutory presumptions arising under the Negotiable Instruments Act by setting up a probable defence that the cheque was issued in connection with an oral agreement to sell a plot.

Analysis: The signature on the cheque was admitted and the statutory presumption under sections 118(a) and 139 stood activated. The accused was not bound to enter the witness box, but where a specific defence of an oral agreement and misuse of a blank cheque is taken, the defence must still be made probable on the touchstone of preponderance of probabilities. The evidence of the accused's father was found insufficient, as he had no personal knowledge of the transaction and the defence was unsupported by any documentary or other credible material. The Court held that the suggested plot transaction, the handing over of a signed blank cheque, and the alleged non-production of documents did not probabilize the defence.

Conclusion: The accused did not rebut the statutory presumptions, and the defence was not proved to be probable.

Issue (ii): Whether the acquittal suffered from an error of law in the appreciation of the statutory presumptions and the accused was liable to be convicted under section 138 of the Negotiable Instruments Act.

Analysis: Once the presumptions remained unrebutted, the cheque was to be treated as issued towards discharge of a legally enforceable debt or liability. The Court held that the trial Magistrate erred in treating the complainant's evidence and the absence of accounts or income-tax reflection as sufficient to displace the statutory presumption. The acquittal was therefore vitiated by a serious error of law, and interference in appeal was warranted despite the usual caution against upsetting an acquittal.

Conclusion: The acquittal was set aside and the accused was convicted under section 138 of the Negotiable Instruments Act.

Final Conclusion: The appeal succeeded, the acquittal was reversed, and the conviction and sentence imposed by the High Court were sustained on the basis of unrebutted statutory presumptions.

Ratio Decidendi: Where the execution of a cheque is admitted, the presumptions under sections 118(a) and 139 operate in favour of the holder, and the accused can displace them only by raising a probable defence on preponderance of probabilities; a bare or unsupported explanation does not rebut the presumption of a legally enforceable debt or liability.

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