Cheque dishonour presumptions and deemed service of notice apply when execution and liability are admitted.

Notice sent by registered post to the drawer's correct address attracts the presumption of service under Section 27 of the General Clauses Act read with Section 114 of the Evidence Act, unless a reliable denial is shown. A written agreement acknowledging receipt of money, together with post-dated cheques, supports the existence of a legally enforceable debt or liability for the purposes of Section 138 of the Negotiable Instruments Act. Once execution of the cheques and the underlying transaction are admitted, the presumptions under Sections 118 and 139 arise, and the drawer must rebut them with a probable defence; a bare challenge to financial capacity raised late is insufficient.

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Issues: (i) Whether statutory notice under Section 138 of the Negotiable Instruments Act, 1881 was duly given. (ii) Whether the Respondent owed a legally enforceable debt or liability. (iii) Whether the Respondent rebutted the presumption under Section 139 of the Negotiable Instruments Act, 1881.

Issue (i): Whether statutory notice under Section 138 of the Negotiable Instruments Act, 1881 was duly given.

Analysis: Notice sent by registered post to the Respondent's correct address attracted the presumption of service under Section 27 of the General Clauses Act, 1897, read with Section 114 of the Indian Evidence Act, 1872. The Respondent's denial of service was found unreliable, especially since the same address had been furnished by him in the written agreement and the notices had been received by close family members. The contrary view of the trial court was held to be erroneous.

Conclusion: The requirement of giving notice was held to be satisfied.

Issue (ii): Whether the Respondent owed a legally enforceable debt or liability.

Analysis: The written agreement executed by the Respondent contained an express acknowledgment of receipt of money and an undertaking to repay. The issuance of three post-dated cheques further supported the existence of liability. The court held that the defence of coercion was unproved and that the liability was legally enforceable within the meaning of the explanation to Section 138 of the Negotiable Instruments Act, 1881.

Conclusion: The existence of a legally enforceable debt or liability was proved.

Issue (iii): Whether the Respondent rebutted the presumption under Section 139 of the Negotiable Instruments Act, 1881.

Analysis: Once execution of the cheques and the underlying transaction were admitted, the statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arose in favour of the holder. The Respondent did not discharge the burden of rebuttal by bringing on record a probable defence. The challenge regarding the complainant's financial capacity and source of funds was treated as a new plea raised for the first time in appeal and was rejected. The finding of rebuttal by the trial court was held to be perverse.

Conclusion: The Respondent failed to rebut the statutory presumption.

Final Conclusion: The acquittals were set aside, the Respondent was convicted under Section 138 of the Negotiable Instruments Act, 1881, and the sentences of imprisonment and compensation were imposed by the appellate court.

Ratio Decidendi: Where a cheque is issued and its execution is admitted, a statutory presumption of legally enforceable liability arises, and notice sent to the drawer's correct address is deemed duly served unless the drawer rebuts service and liability by a probable defence.

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