Rebuttable presumption for cheque liability: security cheque defence succeeded, and acquittal under negotiable instruments law was upheld.

The statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act operate once cheque execution is shown, but they are rebuttable on a preponderance of probabilities. Here, the accused successfully raised a probable defence that the dishonoured cheque was a blank security cheque, supported by repayment evidence and surrounding circumstances, while the complainant failed to explain earlier cheques allegedly issued and encashed. The trial court's assessment of evidence was found sound and not perverse, so the cheque was treated as not issued in discharge of a legally enforceable debt. The acquittal under Section 138 of the Negotiable Instruments Act was upheld.

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Issues: Whether the cheque in question was issued in discharge of a legally enforceable debt or only as a security cheque, and whether the acquittal under Section 138 of the Negotiable Instruments Act, 1881 called for interference in appeal.

Analysis: The statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operates in favour of the holder of the cheque once execution is shown, but it is rebuttable on the standard of preponderance of probabilities. The accused may rebut the presumption by relying on the evidence on record and surrounding circumstances, and the burden then shifts back to the complainant to establish the debt and liability. In the present case, the complainant failed to give a convincing explanation for the two earlier cheques allegedly issued by the accused and encashed by him. The accused's version that the dishonoured cheque was a blank security cheque, coupled with the evidence of repayment and the surrounding circumstances, was found to be a probable defence. The appreciation of evidence by the trial court was held to be sound and not perverse.

Conclusion: The cheque was found to be a security cheque and not one issued in discharge of a legally enforceable debt. The acquittal under Section 138 of the Negotiable Instruments Act, 1881 was upheld.

Ratio Decidendi: The presumption under Sections 118 and 139 of the Negotiable Instruments Act, 1881 is rebuttable on a preponderance of probabilities, and a cheque issued as security without proof of a subsisting legally enforceable debt does not attract Section 138.

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