Security cheque for investment does not attract Section 138 where no legally enforceable debt is proved.

A cheque issued only as security for an investment, where the agreed return period had not matured, was not treated as issued in discharge of a legally enforceable debt. The transaction documents and the complainant's own notices and e-mails described the arrangement as an investment, so the statutory presumption under Section 139 stood rebutted. On those facts, criminal liability under Section 138 of the Negotiable Instruments Act could not be sustained, and the acquittal was upheld.

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Issues: Whether the cheque was issued in discharge of a legally enforceable debt or only as security for an investment, and whether the conviction under Section 138 of the Negotiable Instruments Act could therefore be sustained.

Analysis: The Memorandum of Understanding described the transaction as an investment for business development, with the cheque issued to secure the agreed return after 90 days. The complainant's own notices and e-mails referred to the amount as an investment, and the cheque was issued before the agreed period matured. On these facts, the presumption under Section 139 stood rebutted, and the cheque was treated as a security instrument rather than as payment towards a legally recoverable debt.

Conclusion: The cheque was not shown to have been issued in discharge of a legally enforceable debt. The conviction under Section 138 was unsustainable, and the acquittal was upheld.

Ratio Decidendi: A cheque issued only as security for an investment, where the agreed period has not matured and no legally enforceable debt is established, does not attract criminal liability under Section 138 of the Negotiable Instruments Act once the presumption is rebutted.

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