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Issues: (i) Whether the cheque liability stood rebutted so as to defeat the presumptions under the Negotiable Instruments Act; (ii) Whether the acquittal could be sustained on the evidence on record.
Issue (i): Whether the cheque liability stood rebutted so as to defeat the presumptions under the Negotiable Instruments Act.
Analysis: Once execution of the cheque was admitted, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operated in favour of the holder. The accused was required to raise a probable defence supported by cogent evidence to displace the presumption that the cheque was issued for discharge of a debt or liability. The defence version that the cheque was only a security cheque and that a smaller loan had been repaid was not accepted as sufficient rebuttal on the evidence adduced.
Conclusion: The presumptions under Sections 118 and 139 were not rebutted and the cheque was held to have been issued in discharge of a legally enforceable liability.
Issue (ii): Whether the acquittal could be sustained on the evidence on record.
Analysis: In an appeal against acquittal, interference is warranted where the trial court's view is perverse or based on a misapplication of the governing legal presumption. The trial court was found to have misconstrued the presumption under Section 139 and to have wrongly placed the burden on the complainant despite admitted execution of the cheque. The appreciation of evidence by the trial court was therefore held unsustainable.
Conclusion: The acquittal was set aside and the accused was convicted.
Final Conclusion: The complaint under Section 138 succeeded, the presumption in favour of the cheque holder was restored, and the conviction and sentence imposed by the appellate court followed from the proved dishonour of the cheque and the failure of the accused to rebut liability.
Ratio Decidendi: Where execution of a cheque is admitted, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate in favour of the holder, and the drawer must rebut them by a probable defence supported by cogent evidence; a blank or security cheque does not by itself displace the presumption.
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