Cheque dishonour presumption under the Negotiable Instruments Act prevails unless the security-cheque defence is credibly rebutted.

Where issuance of cheques, the underlying transaction, dishonour, and statutory notice are admitted, the presumption under Section 139 of the Negotiable Instruments Act operates in favour of the complainant. A bare assertion that the cheques were issued only as security, without credible rebuttal material such as a written agreement or other convincing evidence, is insufficient to displace that presumption. Parallel civil proceedings do not negate criminal liability for dishonoured cheques. On that reasoning, the ingredients of Section 138 were treated as satisfied and the acquittal was liable to be set aside.

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Issues: Whether the acquittal for the offence under Section 138 of the Negotiable Instruments Act, 1881 required interference on the ground that the cheques were issued towards repayment of the amount received and not merely as security.

Analysis: The amount of Rs. 10 crores received by the accused, the issuance of the two cheques, their dishonour, and the statutory notice were not in dispute. The defence that the cheques were only security cheques was not supported by any probable material, and no written agreement or other convincing evidence was produced to displace the statutory presumption. In the absence of a successful rebuttal, the presumption under Section 139 operated in favour of the complainant, and the ingredients of Section 138 stood satisfied. The existence of parallel civil proceedings did not alter the criminal liability arising from the dishonoured cheques.

Conclusion: The acquittal was liable to be set aside and the accused was held guilty under Section 138 of the Negotiable Instruments Act, 1881.

Ratio Decidendi: Once issuance of the cheque and the underlying transaction are admitted, the statutory presumption of liability under the Negotiable Instruments Act applies, and the accused must rebut it on the preponderance of probabilities with credible material; a bare plea that the cheque was issued as security is insufficient.

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