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Issues: Whether the cheques in question were issued for a legally recoverable debt or other liability, so as to sustain conviction under the Negotiable Instruments Act, 1881.
Analysis: The signature on both cheques was admitted and the cheque amounts were not disputed, which attracted the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 that the instruments were issued for consideration and in discharge of a legally enforceable debt or liability. The cheques were presented within time, dishonoured for insufficiency of funds, and statutory notice was found to have been duly issued and served within the prescribed period. The defence evidence did not rebut the statutory presumptions, as the witness examined for the defence was not directed to the existence of liability and the plea that the cheques were given as security remained unproved.
Conclusion: The cheques were held to have been issued for a legally recoverable debt or other liability, and the conviction under Section 138 of the Negotiable Instruments Act, 1881 was upheld.
Ratio Decidendi: Once execution of the cheque is admitted and the cheque is dishonoured after due presentation and notice, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate in favour of the holder, and the burden shifts to the accused to rebut the existence of a legally enforceable debt or liability.
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