Cheque dishonour cases require proof of loan transaction and financial capacity before relying on statutory presumption of liability.

In a cheque dishonour prosecution, the statutory presumption under negotiable instruments law cannot stand alone where the accused raises a probable defence challenging the complainant's capacity to advance the alleged loan. The complainant must first prove the foundational cash transaction and financial capacity to lend the cheque amount, especially where no supporting document is produced and the alleged source of funds remains unsubstantiated. On these facts, the accused rebutted the presumption on a preponderance of probabilities, the appellate finding was held unsustainable, and the conviction was set aside with acquittal restored.

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Issues: Whether the accused had rebutted the statutory presumption under the negotiable instruments law and whether the complainant proved financial capacity to advance the cheque amount so as to sustain the conviction under Section 138.

Analysis: The complainant's version was that a cash loan of Rs. 9 lakhs was advanced and the cheque was issued towards discharge of that liability. The defence consistently disputed the existence of a legally enforceable debt and questioned the complainant's source of funds from the stage of notice itself. The evidence showed that no supporting document was produced to establish the alleged cash transaction or the complainant's ability to advance such a large amount. The complainant admitted that no other document existed for the alleged loan and that no proof was produced regarding the claimed agricultural holding or income. In such circumstances, the statutory presumption could not be invoked in isolation without proof of the basic transaction and financial capacity.

Conclusion: The finding of the appellate court was unsustainable. The complainant failed to prove the fundamental fact of financial capacity and the accused had rebutted the presumption on a preponderance of probabilities. The conviction was set aside and the acquittal was restored.

Final Conclusion: The revision succeeded and the acquittal of the accused in the cheque dishonour prosecution stood restored.

Ratio Decidendi: When the accused raises a probable defence questioning the complainant's capacity to advance the alleged loan, the complainant must establish the foundational transaction and financial capacity for the cheque amount before relying on the statutory presumption of liability.

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