Cheque dishonour liability upheld as statutory presumptions stood unrebutted and Section 269SS did not defeat recovery.

In a prosecution under Section 138 of the Negotiable Instruments Act, the statutory presumptions under Sections 118 and 139 operated in favour of the complainant once money advancement, cheque issuance, dishonour for insufficiency of funds, and service of notice were shown. The accused's plea of theft and forged signatures failed because it was unsupported by any police complaint, stop-payment instruction, or convincing rebuttal on a preponderance of probabilities, so cheque liability was established. Section 269SS of the Income-tax Act did not defeat enforceability of the loan claim, because any cash-loan irregularity did not bar the lender from recovering the amount or justify acquittal. The complaint succeeded and the conviction was affirmed.

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Issues: (i) Whether the complainant proved that the cheque amounts were issued in discharge of a legally enforceable debt and whether the accused rebutted the presumptions under the Negotiable Instruments Act, 1881; (ii) Whether the cash loan transaction could be rejected on the basis of Section 269SS of the Income-tax Act, 1961.

Issue (i): Whether the complainant proved that the cheque amounts were issued in discharge of a legally enforceable debt and whether the accused rebutted the presumptions under the Negotiable Instruments Act, 1881.

Analysis: The evidence established advancement of money, issuance of cheques by the accused, dishonour of the cheques for insufficiency of funds, and service of statutory notice. The accused's defence of theft and forged signatures was not supported by any police complaint, stop-payment instruction, or convincing proof. The statutory presumptions under Sections 118 and 139 operated in favour of the complainant, and the accused failed to rebut them on the test of preponderance of probabilities.

Conclusion: The ingredients of Section 138 were proved and the accused was liable to be convicted.

Issue (ii): Whether the cash loan transaction could be rejected on the basis of Section 269SS of the Income-tax Act, 1961.

Analysis: Section 269SS prohibits acceptance of loan or deposit in cash by the taker and does not bar the lender from recovering the amount advanced. A violation, if any, would not defeat the enforceability of the cheque liability in the present proceedings. The reliance placed on the income-tax provisions to discredit the complainant's case was therefore misplaced.

Conclusion: Section 269SS did not bar the complainant's claim or justify acquittal.

Final Conclusion: The acquittal was unsustainable, the complaint under Section 138 succeeded, and the conviction and sentence were affirmed in consequence of the findings recorded on the cheque liability and the inapplicability of the income-tax objection.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, the drawer's statutory presumptions stand unless rebutted by probable evidence, and Section 269SS of the Income-tax Act does not prevent recovery of a cash loan by the lender.

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