Security cheque still attracts Section 138 when the underlying liability remains unpaid and the statutory presumption stands unrebutted.

A signed cheque raises a rebuttable presumption of legally enforceable liability under Sections 118 and 139 of the Negotiable Instruments Act, 1881, and that presumption is displaced only by credible evidence. The accused admitted his signatures but failed to support the claim that the cheque was issued merely as security, with no reliable proof of repayment, no complaint of misuse or non-return, and defence evidence found inconsistent. Even if treated as a security cheque, it can still attract Section 138 where the underlying liability remains unpaid. The conviction and sentence under Section 138 were upheld.

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Issues: Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 could be set aside on the plea that the cheque was a security cheque and that the statutory presumption stood rebutted.

Analysis: The accused admitted his signatures on the cheque. A joint reading of Sections 118 and 139 of the Negotiable Instruments Act, 1881 raises a presumption that the cheque was issued towards discharge of a legally enforceable debt or liability. The defence that the cheque had been issued merely as security was not supported by any document or reliable proof of repayment of the alleged earlier loan. No complaint was made regarding misuse or non-return of the cheque, and the defence evidence was found inconsistent with the accused's own statement. Even on the assumption that the cheque was a security cheque, such a cheque can still be used towards discharge of an existing liability when the debt remains unpaid.

Conclusion: The statutory presumption was not rebutted, and the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881 were upheld.

Ratio Decidendi: A signed cheque raises a rebuttable presumption of liability under Sections 118 and 139 of the Negotiable Instruments Act, 1881, and a security cheque will also attract Section 138 where the underlying liability remains unpaid and the drawer fails to rebut the presumption with credible evidence.

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