Statutory presumptions in cheque dishonour cases prevail once cheque execution is admitted; bare denial of security cheque fails.

The article explains that the absence of the full trial court record, including the complainant's Section 200 CrPC statement, did not by itself vitiate the appeal or cause material prejudice where the appellate record contained the relied-upon documents and the accused had notice of the dispute. It also states that, in a Section 138 NI Act prosecution, once issuance and signature of the cheque are admitted, the statutory presumptions under Sections 118 and 139 operate for the holder, and the accused must rebut them on a preponderance of probabilities. A bare denial or unsupported plea that the cheques were only security cheques was insufficient on the stated facts, leading to reversal of the acquittal and conviction.

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Issues: (i) Whether the absence of the trial court record and proceedings, particularly the complainant's statement under Section 200 of the Code of Criminal Procedure, 1973, vitiated the appeal or prejudiced the accused; (ii) Whether the accused successfully rebutted the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 by pleading that the cheques were security cheques and that no goods were supplied, so as to sustain the acquittal.

Issue (i): Whether the absence of the trial court record and proceedings, particularly the complainant's statement under Section 200 of the Code of Criminal Procedure, 1973, vitiated the appeal or prejudiced the accused.

Analysis: The appellate record contained the material documents relied upon in the judgment, and the statement recorded under Section 200 is only the substance of the pre-cognizance examination. Such a statement is not substantive evidence for contradicting the complainant in appeal. The accused had notice of the appeal and the nature of the dispute, and the omission to produce the full record did not materially prejudice the defence.

Conclusion: The absence of the full record and proceedings did not vitiate the appeal or cause material prejudice to the accused.

Issue (ii): Whether the accused successfully rebutted the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 by pleading that the cheques were security cheques and that no goods were supplied, so as to sustain the acquittal.

Analysis: Once issuance and signature of the cheques were admitted, the presumptions under Sections 118 and 139 operated in favour of the holder. In a prosecution under Section 138, the accused may rebut those presumptions on a preponderance of probabilities, including by relying on the complainant's materials, but a bare denial is insufficient. The admitted business dealings, acknowledged statement of account, undisputed invoices and challans, and the absence of rebuttal evidence did not support the plea that the cheques were merely security instruments or that no legally enforceable debt existed. The trial court had ignored the statutory presumptions and erroneously insisted on proof of the entire underlying transaction as if no presumption existed.

Conclusion: The accused failed to rebut the presumptions, and the acquittal was unsustainable.

Final Conclusion: The appeal succeeded, the acquittal was set aside, and the respondents were convicted for dishonour of cheque under Section 138 of the Negotiable Instruments Act, 1881.

Ratio Decidendi: In a Section 138 prosecution, once the cheque and signature are admitted, the statutory presumptions under Sections 118 and 139 operate in favour of the holder, and the accused must rebut them on a preponderance of probabilities; a mere denial or unsupported plea of security cheque does not displace the presumption of a legally enforceable debt.

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