Rebuttable presumption under Negotiable Instruments law: probable defence and surrounding circumstances can defeat cheque liability proof.

Once execution of the cheque and signature are admitted, Sections 118(a) and 139 of the Negotiable Instruments Act create a rebuttable presumption that the cheque was issued for consideration and in discharge of a debt or liability. The accused need only raise a probable defence on a preponderance of probabilities, including from the complainant's own evidence and surrounding circumstances, to shift the burden back. On the facts, the accused relied on a prior smaller loan, a settlement memorandum, a police complaint about missing cheques, and circumstances suggesting post-repayment presentation. The complainant then failed to prove the alleged loan transaction with reliable material, so the statutory presumptions were rebutted and the acquittal was restored.

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Issues: Whether the accused had rebutted the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881 so as to justify acquittal under Section 138 of the Negotiable Instruments Act, 1881, and whether the High Court was correct in reversing the acquittal.

Analysis: Once execution of the cheque and signature are admitted, Sections 118(a) and 139 raise a rebuttable presumption that the cheque was issued for consideration and towards discharge of a debt or liability. The accused is not required to disprove the prosecution case beyond reasonable doubt and may rebut the presumption by bringing on record a probable defence on a preponderance of probabilities, including from the complainant's own evidence and surrounding circumstances. On the facts, the accused showed a prior smaller loan, a settlement reflected in a memorandum, a police complaint regarding missing cheques, and circumstances suggesting that the cheque was presented after the alleged repayment. The complainant, after the burden shifted back, did not establish the alleged loan transaction with reliable supporting material.

Conclusion: The accused succeeded in rebutting the statutory presumptions and the complainant failed to prove the debt and liability beyond reasonable doubt. The acquittal was restored and the conviction set aside.

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