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Issues: (i) whether dishonour of a cheque issued as security, and not towards discharge of a legally enforceable debt or liability, attracts liability under Section 138 of the Negotiable Instruments Act; (ii) whether the allowance of secondary evidence of the cheque was legally justified and, if not, whether the acquittal still required interference.
Issue (i): whether dishonour of a cheque issued as security, and not towards discharge of a legally enforceable debt or liability, attracts liability under Section 138 of the Negotiable Instruments Act
Analysis: The material on record showed that the complainant had sought blank cheques and bank guarantee as security against seed supply. The drawer's reply and the surrounding correspondence supported the defence that the cheque was furnished as security. A cheque issued only as security, and not for an existing legally enforceable debt or liability, does not by itself satisfy the ingredients of the offence. The presumption under Section 139 is rebuttable, and on the facts proved the accused had raised a probable defence sufficient to displace the prosecution case.
Conclusion: The issue was answered against the appellant and in favour of the respondents.
Issue (ii): whether the allowance of secondary evidence of the cheque was legally justified and, if not, whether the acquittal still required interference
Analysis: An application to lead secondary evidence must satisfactorily explain non-production of the primary evidence and should ordinarily be supported by proper particulars and affidavit. The application in the present case was inadequately supported and was allowed in a cursory manner. Even so, the appellate court found that the trial court's ultimate view on the merits was correct, and the defect concerning secondary evidence did not warrant reversal of the acquittal.
Conclusion: The issue was answered against the appellant and in favour of the respondents.
Final Conclusion: The acquittal was upheld because the cheque was treated as security and the prosecution failed to establish liability under the penal provision, while no interference was called for on the evidentiary objection as the ultimate result remained correct.
Ratio Decidendi: A cheque issued merely as security, without proof of a legally enforceable debt or liability at the time of dishonour, does not attract Section 138 of the Negotiable Instruments Act, and the statutory presumption may be rebutted on a preponderance of probabilities.
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