Cheque dishonour presumption can be rebutted where the complainant fails to prove financial capacity and source of funds.

In a prosecution for cheque dishonour, the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 arose because execution of the cheques was undisputed, but that presumption was rebuttable on a preponderance of probabilities. The accused successfully raised a probable defence by showing that the complainant's claimed loan lacked proved financial capacity and that the source of funds was not established. The complainant admitted he was on a modest salary and said the amount came from friends and relatives, yet he did not examine those persons or prove their contribution. An adverse inference was drawn, the presumption stood displaced, and the conviction and sentence were set aside.

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Issues: Whether the conviction for dishonour of cheque was sustainable when the accused had raised a probable defence that the complainant lacked the financial capacity to advance the alleged loan and had not established the source of funds.

Analysis: The execution of the cheques was not disputed, so the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 arose in favour of the complainant. However, that presumption is rebuttable. The accused could displace it on a preponderance of probabilities by showing that the complainant's version was improbable. The complainant admitted that he was only an operator drawing a modest salary and that the alleged loan of Rs. 19,00,000/- was raised from friends and relatives, but he did not examine those persons to prove their contribution or capacity. In the circumstances, withholding those material witnesses justified an adverse inference. The defence that the complainant had not proved financial capacity and that the loan transaction was improbable was found sufficient to rebut the presumption.

Conclusion: The conviction and sentence were unsustainable and were set aside in favour of the accused.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the presumption under Section 139 can be rebutted by a probable defence based on the complainant's own evidence, and failure to prove financial capacity or the source of funds may dislodge the presumption on a preponderance of probabilities.

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