Statutory presumptions under cheque dishonour law prevail when issuance and signatures are admitted, and a security-cheque defence may fail.

Admission of issuance and signatures on the cheques triggered the statutory presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, placing the burden on the accused to rebut them on a preponderance of probabilities. The defence that the cheques were blank security cheques did not, by itself, displace those presumptions where contemporaneous meeting minutes and a subsequent letter supported outstanding liability and part-payment; a security cheque issued in relation to an admitted liability may be presented towards discharge of that liability. The Delhi HC held that the acquittal rested on a misapplication of the burden of proof, set it aside, and convicted the accused under Section 138 read with Section 141, with sentencing remanded.

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Issues: Whether the acquittal under Section 138 of the Negotiable Instruments Act, 1881 was sustainable when the drawer admitted issuance and signatures on the cheques, and whether the defence of blank security cheques rebutted the statutory presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881.

Analysis: Admission of execution of the cheques attracted the statutory presumptions that the cheques were issued for consideration and in discharge of a debt or liability. The burden then shifted to the accused to rebut those presumptions on a preponderance of probabilities. The defence that the cheques were blank and issued as security did not by itself displace the presumptions, particularly where the contemporaneous meeting minutes and subsequent letter evidenced outstanding liability and supported issuance towards part-payment. A security cheque, if issued in relation to an admitted liability, can be presented towards discharge of that liability. The acquittal was based on a misapplication of the statutory burden and an incorrect insistence that the complainant first prove legally enforceable debt beyond the framework of Sections 118(a) and 139.

Conclusion: The acquittal was set aside, the appeals were allowed, and the accused were convicted under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881; the matter was remanded for sentencing.

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