Cheque dishonour presumptions rebutted where complainant failed to prove legally enforceable debt and security-cheque defence succeeded.

In a cheque dishonour prosecution, admitted cheques and signatures attracted the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881, but the accused rebutted them by showing a probable defence on a preponderance of probabilities. The complainant's financial capacity was supported by bank records, yet the alleged cash loan remained doubtful because the supporting undertakings were not produced, the payment circumstances were improbable, the transaction was not reflected in income-tax returns, and part repayment was not satisfactorily proved. The defence that the cheques were earlier security cheques issued in connection with a chit fund was found plausible, so the complainant failed to establish a legally enforceable debt and the dismissal of the complaint was upheld.

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Issues: Whether the complainant proved a legally enforceable debt and whether the accused rebutted the statutory presumptions arising from the admitted cheques.

Analysis: The cheques and signatures were admitted, attracting the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881. The complainant established financial capacity through bank statements, but capacity alone did not conclusively prove that the cash was actually advanced as a loan. The alleged loan transaction was found doubtful because the claimed supporting undertakings were not produced, the circumstances of payment were improbable, the loan was not reflected in the income-tax returns, and there was no satisfactory proof of part repayment or the surrounding transaction details. The accused's defence that the cheques were earlier security cheques issued in connection with a chit fund was found to be a probable defence on the material on record, sufficient to rebut the presumption on a preponderance of probabilities.

Conclusion: The complainant failed to establish the existence of a legally enforceable debt, and the accused successfully rebutted the statutory presumption; dismissal of the complaint was upheld.

Ratio Decidendi: In a cheque dishonour prosecution, once signatures are admitted the statutory presumption arises, but it stands rebutted if the accused shows a probable defence from the evidence on record and the complainant fails to prove the underlying liability.

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