Statutory presumption of debt under cheque dishonour law upheld where security defence and partial interest payments failed.

Where execution of the cheque and its dishonour for insufficiency of funds were proved, the statutory presumption of a legally enforceable debt under the Negotiable Instruments Act operated in favour of the complainant. The admitted money receipt and the accused's Section 313 CrPC admissions supported the loan transaction, while the defence failed to rebut the presumption with cogent evidence. The plea that the cheque was issued only as security was rejected because no repayment or other material showed that liability had ceased before presentation. Partial payment of interest and the absence of a written agreement did not displace the complainant's case, and the acquittal was set aside.

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Issues: Whether the acquittal under Section 138 of the Negotiable Instruments Act, 1881 was unsustainable in view of the admitted loan transaction, the statutory presumptions under Sections 138 and 139, the defence that the cheque was issued as security, and the alleged partial payments of interest.

Analysis: The admitted execution of the money receipt and the accused's admissions under Section 313 of the Code of Criminal Procedure, 1973 supported the existence of a loan transaction. The Court held that once the cheque was proved and dishonoured for insufficiency of funds, the presumption under Section 139 of the Negotiable Instruments Act, 1881 operated in favour of the complainant. The accused failed to rebut that presumption by cogent evidence. The plea that the cheque was issued only as security was not accepted, as the record did not establish any repayment or other altered situation disabling presentation of the cheque. Partial payment of interest did not negate the subsisting liability, and the absence of a written agreement or supporting proof from the defence did not displace the complainant's case.

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

Ratio Decidendi: Once execution of the cheque and dishonour are proved, the statutory presumption of a legally enforceable debt applies, and a drawer alleging security issuance or prior discharge must rebut that presumption by credible evidence showing that no liability subsisted on the date of presentation.

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