Cheque as security, not debt repayment, rebutted presumptions and sustained acquittal in dishonour prosecution.

In a Section 138 NI Act prosecution, the statutory presumptions under Sections 118 and 139 were rebutted where the accused showed a probable defence that the cheque was issued only as a security instrument in a sale transaction. The complainant's suppression of the prior dealings, including the registered sale agreement, power of attorney, cancellation, and related civil proceedings, weakened the claim of a legally enforceable debt. The trial court's finding that the cheque was not issued in discharge of an enforceable liability and that the complainant had not approached the court with clean hands was held to be a plausible view, so the acquittal was not interfered with.

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Issues: Whether the cheque was issued towards a legally enforceable debt or liability and whether the acquittal recorded by the trial Court required interference in appeal.

Analysis: The cheque dishonour and statutory notice were not sufficient by themselves to warrant reversal where the appellant failed to disclose the prior transaction between the parties and suppressed material facts relating to the registered sale agreement, power of attorney, cancellation of power of attorney, and connected civil proceedings. The respondent produced documentary evidence showing that the cheque was issued as a security instrument in the course of the sale transaction, and that defence was found to be probable. In proceedings under Section 138 of the Negotiable Instruments Act, 1881, the statutory presumption under Sections 118 and 139 operates, but it remains open to the accused to rebut it on a preponderance of probabilities. On the evidence, the trial Court's view that the cheque was not issued in discharge of a legally enforceable debt and that the complainant had not come with clean hands was a plausible view.

Conclusion: The cheque was not proved to have been issued in discharge of a legally enforceable debt or liability, and the acquittal did not call for interference.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the statutory presumption may be rebutted by a probable defence showing that the cheque was issued as security and not towards an enforceable debt, and an appellate court will not disturb an acquittal based on a plausible appreciation of evidence.

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