Security cheques and rebuttal of Section 139 presumption defeated the cheque dishonour prosecution; acquittal was upheld.

The statutory presumption under Section 139 of the Negotiable Instruments Act remained rebuttable, and the record showed the cheques were described in the settlement agreement as security for the settlement amount rather than as payment of a proved debt. The complainant failed to produce material establishing financial capacity, cheque-wise particulars, or the alleged expenditure in income tax returns, which created serious doubt about the asserted liability. The defence version of stop-payment instructions and security cheques was supported by the evidence, so the presumption stood rebutted and the offence under Section 138 was not proved beyond reasonable doubt; the acquittal was upheld.

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Issues: Whether the cheques were issued towards discharge of a legally enforceable debt and whether the acquittal of the accused called for interference.

Analysis: The complaint was founded on the presumption under Section 139 of the Negotiable Instruments Act, 1881, but that presumption remained rebuttable. The settlement agreement relied upon by the complainant showed that the cheques were described as security for the settlement amount, while the document did not contain the cheque numbers, dates, or exact cheque-wise breakup later relied upon. The complainant also failed to produce supporting material showing financial capacity or withdrawal of the alleged large amount, and the omission to reflect the alleged expenditure in the income tax returns created a serious doubt about the existence of the asserted liability. The record further supported the defence version that stop-payment instructions had been issued after disputes arose, and the accused adduced material to show that the cheques were given as security and not in discharge of a proven debt.

Conclusion: The presumption stood rebutted and the complainant failed to establish the offence under Section 138 of the Negotiable Instruments Act, 1881 beyond reasonable doubt. The acquittal was upheld.

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