Statutory presumption in cheque dishonour cases must be applied, and failure to examine demand notice can vitiate the judgment.

In a prosecution under Section 138 of the Negotiable Instruments Act, the statutory presumption under Section 139 had to be applied unless rebutted, and the trial court erred by placing the burden on the complainant despite unchallenged invoices and challans. The finding that no debt or liability existed was therefore unsustainable. The judgment also failed to examine the validity and service of the demand notice, which is an essential statutory requirement for such an offence. On that basis, the acquittal was set aside and the complaint was remitted for fresh disposal after hearing the parties.

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Issues: (i) Whether the acquittal under Section 138 of the Negotiable Instruments Act, 1881 could stand when the trial court failed to apply the statutory presumption under Section 139 and ignored the unchallenged documentary evidence. (ii) Whether the trial court's failure to consider the validity and service of the demand notice vitiated the judgment and required remand.

Issue (i): Whether the acquittal under Section 138 of the Negotiable Instruments Act, 1881 could stand when the trial court failed to apply the statutory presumption under Section 139 and ignored the unchallenged documentary evidence.

Analysis: Section 139 creates a presumption of law that the cheque was received in discharge of a debt or liability unless the contrary is proved. The complainant had adduced invoices and challans, and the defence did not even challenge the documentary evidence in cross-examination or establish the plea that the cheques were issued only as security. The trial court, however, did not apply the statutory presumption and wrongly placed the burden on the complainant to prove the debt by affirmative evidence.

Conclusion: The acquittal could not be sustained on this ground, and the finding on absence of debt or liability was held to be unsustainable.

Issue (ii): Whether the trial court's failure to consider the validity and service of the demand notice vitiated the judgment and required remand.

Analysis: The notice preceding prosecution is an essential component of an offence under Section 138 of the Negotiable Instruments Act, 1881. The impugned judgment did not examine the legality, validity, sufficiency, or service of the demand notice, leaving an essential statutory requirement unaddressed. In those circumstances, the judgment was found to be incomplete and unsatisfactory for final disposal on merits.

Conclusion: The judgment was set aside and the complaint was remitted to the trial court for fresh disposal after hearing the parties.

Final Conclusion: The appeal succeeded and the matter was sent back for reconsideration by the trial court in accordance with law.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the statutory presumption under Section 139 must be applied unless rebutted, and a judgment that ignores this presumption and leaves the issue of demand notice unexamined cannot be sustained.

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