Cheque dishonour liability under Section 138 applies to a guarantor's cheque when statutory presumption remains unrebutted.

A cheque signed by the accused guarantor and dishonoured for insufficiency of funds attracted Section 138 of the Negotiable Instruments Act because it was issued towards an existing loan liability arising from his guaranty for his son's borrowing. The court held that, once issuance and signature were admitted, the statutory presumption of a legally enforceable debt arose in favour of the cheque holder. The accused failed to produce material sufficient to rebut that presumption. The cheque was therefore treated as issued in discharge of a legally recoverable liability, and the conviction was not interfered with.

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Issues: Whether dishonour of the cheque issued by the guarantor for repayment of the loan liability of his son attracted Section 138 of the Negotiable Instruments Act, 1881, and whether the statutory presumption stood rebutted.

Analysis: The cheque was admittedly signed by the accused and was dishonoured for insufficiency of arrangement. The evidence showed that the accused had stood as guarantor for the loan taken by his son, that the loan amount had fallen due, and that the son had failed to repay the instalments. On these facts, the cheque was issued towards discharge of an existing financial liability and not merely as a casual or unenforceable security instrument. Once issuance and signature were admitted, the presumption of a legally enforceable debt arose in favour of the holder of the cheque. The accused did not bring forward material sufficient to rebut that presumption.

Conclusion: The cheque was issued in discharge of a legally recoverable liability, the ingredients of Section 138 of the Negotiable Instruments Act, 1881 were satisfied, and the conviction required no interference.

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