Statutory presumptions under cheque dishonour law prevailed where the accused failed to prove a security cheque defence.

In a prosecution under the Negotiable Instruments Act, admission of cheque execution and signatures, together with proof of dishonour, notice and non-payment, triggered the statutory presumptions in favour of the cheque holder. The accused failed to rebut those presumptions with cogent evidence. A plea that the cheque was only a security cheque for an earlier loan, or that the debt had already been repaid, did not succeed because the record did not satisfactorily prove discharge of liability or return of the cheque. The ingredients of the offence under Section 138 were therefore established and the acquittal was held unsustainable.

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Issues: Whether, in a prosecution under Section 138 of the Negotiable Instruments Act, the accused successfully rebutted the statutory presumptions by pleading that the cheque was a security cheque issued against an earlier loan that had already been repaid.

Analysis: The cheque issuance and signatures were admitted, and dishonour, notice, and non-payment were proved. Once these foundational facts stood established, the presumptions under the Negotiable Instruments Act operated in favour of the holder of the cheque. The accused, who set up the defence that the cheque was only a security cheque and that no legally enforceable debt subsisted, was required to rebut the presumptions by cogent evidence. The record did not show satisfactory proof that the cheque had been returned or that the pleaded earlier loan had been fully discharged in a manner sufficient to displace the statutory presumption. The court also relied on the settled position that a signed blank cheque or a security cheque, if voluntarily handed over, does not by itself negate liability when the underlying liability is established and the cheque is presented within the legal framework of Section 138.

Conclusion: The accused failed to rebut the statutory presumptions and the defence of security cheque did not succeed. The ingredients of the offence under Section 138 of the Negotiable Instruments Act were proved, and the acquittal was unsustainable.

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