Cheque dishonour presumption under the NI Act upheld; unsupported lost-cheque defence failed and conviction was restored.

In a Section 138 NI Act prosecution, admitted execution of the cheque triggered the presumptions under Sections 118 and 139 in favour of the complainant. The accused's plea that the cheque was lost failed because it was unsupported by any independent evidence, police complaint, bank record, or witness testimony, and did not rebut the presumption on a preponderance of probabilities. The appellate court was held to have wrongly shifted the burden onto the complainant on financial capacity and to have ignored settled cheque dishonour principles. The acquittal was set aside, conviction restored, and substantive imprisonment replaced by fine while compensation was maintained.

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Issues: Whether the acquittal recorded in the appeal was sustainable in a prosecution under Section 138 of the Negotiable Instruments Act, 1881, and whether the conviction and sentence recorded by the trial court required restoration or modification.

Analysis: The cheque, signature, dishonour, statutory notice, and reply were established, and the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operated in favour of the complainant once execution of the cheque was admitted. The accused's defence that the cheque had been lost remained unsupported by any independent evidence, police complaint, bank proof, or witness testimony, and therefore did not rebut the presumption on a preponderance of probabilities. The appellate court was found to have misdirected itself by placing an unwarranted burden on the complainant regarding financial capacity and by disregarding the settled principles governing cheque dishonour cases.

Conclusion: The acquittal was set aside, the conviction under Section 138 of the Negotiable Instruments Act, 1881 was restored, and the substantive imprisonment was substituted by a fine while confirming the compensation.

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