Cheque Dishonour Presumption Rebutted When Foundational Debt Is Not Proved and Material Records Are Withheld

In a cheque dishonour prosecution, the presumption under Section 139 of the Negotiable Instruments Act, 1881 was treated as rebutted where the complainant failed to prove a pre-existing legally enforceable debt. The complainant also withheld material supporting documents, including the pro note, account ledger and income-tax records, and its agent lacked personal knowledge of the transaction. On those facts, an adverse inference was drawn under Section 114(g) of the Indian Evidence Act, 1872, and the acquittal was confirmed because the foundational liability remained unproved.

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Issues: Whether the acquittal in a prosecution under Section 138 of the Negotiable Instruments Act, 1881 was liable to be interfered with, having regard to the presumption under Section 139 and the complainant's failure to produce the pro note, account ledger, and income-tax records.

Analysis: The complaint was founded on an alleged loan and cheque dishonour, but the respondent specifically denied the underlying transaction and asserted that the cheques were only security instruments. The complainant's power agent admitted lack of personal knowledge of the transaction and undertook to produce the pro note and other supporting records, but no such documents were filed. In these circumstances, the lower courts drew an adverse inference under Section 114(g) of the Indian Evidence Act, 1872. The evidence was held insufficient to establish a pre-existing legally enforceable debt, and the presumption under Section 139 stood rebutted.

Conclusion: The acquittal was upheld and the challenge to the reversal of conviction failed.

Final Conclusion: The prosecution under Section 138 failed for want of proof of a legally enforceable debt, and the order acquitting the respondent was confirmed.

Ratio Decidendi: In a cheque dishonour prosecution, where the complainant fails to substantiate the foundational debt and withholds material documentary evidence, the presumption under Section 139 of the Negotiable Instruments Act, 1881 can be rebutted and acquittal sustained.

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