Cheque dishonour presumption can be rebutted by a probable defence and lack of lender financial capacity.

Admission of a cheque signature under the Negotiable Instruments Act attracted the presumption in favour of the holder, but that presumption remained rebuttable on a preponderance of probabilities. The accused successfully raised a probable defence by relying on the surrounding circumstances of the alleged loan, including the absence of contemporaneous documents, no prior business relationship, and the improbability of an unsecured cash loan of that nature. The complainant also failed to establish financial capacity to advance the loan or show that the transaction was one of ordinary prudent conduct. On that basis, the conviction could not be sustained and the acquittal was upheld.

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Issues: Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 could be sustained when the accused admitted the cheque signature but raised a probable defence and the complainant failed to establish financial capacity and the surrounding circumstances of lending.

Analysis: Admission of signature attracted the statutory presumption under Section 139, but the presumption was rebuttable on a preponderance of probabilities. The accused relied on the circumstances of the transaction, including the absence of any contemporaneous document, the lack of prior business relationship, the absence of collateral security for a large cash loan, and the materials elicited from the complainant's cross-examination. The complainant did not produce any document to show financial capacity to advance the alleged loan and did not establish the transaction as one made in the ordinary course of prudent conduct. The appellate court's assessment that the defence version created a probable rebuttal was found to be justified.

Conclusion: The conviction was not sustainable and the complainant's challenge failed; the acquittal recorded by the first appellate court was upheld.

Final Conclusion: The appeal was dismissed and the judgment of the first appellate court setting aside the conviction and sentence was confirmed.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the accused may rebut the presumption under Section 139 by showing a probable defence on a preponderance of probabilities, and where the complainant fails to prove financial capacity and the surrounding circumstances make the alleged loan improbable, conviction cannot be sustained.

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