Cheque dishonour presumption under the NI Act upheld, with security cheque defence and notice challenge rejected.

Once the drawer admitted the cheque signature, the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act operated in favour of the complainant, and the accused had to rebut them on a preponderance of probabilities. The defence that the cheque was only a security cheque, that the complainant lacked financial capacity, and that notice was not received failed because the explanation was found inherently improbable, the dishonour memo was supported by the Section 146 presumption, and service of notice was presumed when sent by registered post to the correct address. A security cheque still attracts Section 138 when it represents an enforceable liability. Conviction and sentence were upheld.

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Issues: Whether the conviction for dishonour of cheque under Section 138 of the Negotiable Instruments Act, 1881 could be sustained despite the defence that the cheque was issued as security, the complainant had not proved financial capacity, and notice was allegedly not received.

Analysis: The signature on the cheque was not disputed, and therefore the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operated in favour of the complainant. The burden shifted to the accused to rebut the presumptions by establishing a probable defence on the touchstone of preponderance of probabilities. The defence version was found inherently improbable, including the explanation regarding Ashok Kumar and the alleged handover of the cheque. The complaint was not required to prove the source of funds or financial capacity as in a civil recovery action once the statutory presumption arose. The cheque was dishonoured for insufficient funds, and the presumption under Section 146 of the Negotiable Instruments Act, 1881 supported the dishonour memo. Service of notice was presumed because it was sent to the correct address by registered post, and the accused did not make payment within the statutory period after summons. A cheque issued as security does not escape Section 138 where the liability had matured and remained unpaid.

Conclusion: The defence failed to rebut the statutory presumptions, and the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881 were upheld.

Ratio Decidendi: Once the drawer admits the signature on the cheque, presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arise and the accused must rebut them by a probable defence on a preponderance of probabilities; even a security cheque attracts Section 138 if it represents an enforceable liability when presented.

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