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Issues: Whether the complainant proved the existence of a legally recoverable debt or liability so as to attract liability under Section 138 of the Negotiable Instruments Act, 1881, and whether the acquittal recorded by the trial court was sustainable.
Analysis: The cheque, its signature, presentation, dishonour for insufficiency of funds, and the statutory notice were not in dispute. Once the foundational facts were established, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arose in favour of the holder of the cheque. Those presumptions were rebuttable, but the accused had to raise a probable defence on a preponderance of probability. The plea that the cheque was issued only as security was not supported by evidence. The trial court did not indicate any adequate rebuttal of the statutory presumptions and erred in holding that the complainant had not established a legally enforceable liability. Service of notice stood duly inferred and required no separate adjudication.
Conclusion: The complainant proved the ingredients of the offence under Section 138 of the Negotiable Instruments Act, 1881, and the acquittal was unsustainable.
Ratio Decidendi: Where execution of the cheque and dishonour are admitted or proved, the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate in favour of the holder, and the drawer must rebut them by a probable defence to displace liability under Section 138.
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