Rebuttable presumption in cheque cases: plausible defence and weak proof of funds sustained acquittal under the Negotiable Instruments Act.

Section 139 of the Negotiable Instruments Act creates a rebuttable presumption that cheque issuance was for a legally enforceable debt or liability, but the accused can rebut it on a preponderance of probabilities by raising a probable defence. Here, admission of signatures, dishonour, and notice service attracted the presumption, yet the defence that the cheques were issued as security, the loan had been repaid in cash, and the complainant's account of separate cash transactions was doubtful was found plausible. The complainant also failed to prove the source and availability of funds. In leave-to-appeal proceedings, the acquittal under Section 138 was not shown to suffer from substantial or compelling error, so interference was declined.

---

---

Issues: Whether the accused had rebutted the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 by raising a probable defence, and whether the acquittal under Section 138 of the Negotiable Instruments Act, 1881 called for interference in leave-to-appeal proceedings.

Analysis: The Respondent admitted execution of the promissory note, agreement, and signatures on the cheques, and the dishonour of the cheques and issuance of notice were established. This attracted the presumption that the cheques were issued towards a legally enforceable debt or liability. The presumption under Section 139 is rebuttable, and the accused was required only to raise a probable defence on a preponderance of probabilities. The defence that the transaction was a security arrangement, that the loan had been repaid in cash, that coloured photocopies of documents were returned, and that the complainant's version of two separate cash transactions was doubtful, was found to be plausible. The complainant also failed to satisfactorily prove the source and availability of funds and the alleged separate transactions. In an appeal against acquittal, interference is warranted only on substantial and compelling reasons, and a plausible view in favour of the accused is not to be disturbed.

Conclusion: The statutory presumption stood rebutted, the complainant failed to establish the offence under Section 138 of the Negotiable Instruments Act, 1881, and no ground for interference with the acquittal was made out. Leave to appeal was declined.

---