Statutory notice and presumptions under the Negotiable Instruments Act failed where debt and service were not proved.

Service of statutory notice under the Negotiable Instruments Act was not proved where the notice was returned with an endorsement of absence and the evidence did not show deliberate avoidance or further effective steps to secure service. In a Section 138 prosecution, the complainant must first establish foundational facts before the presumptions under Sections 118 and 139 arise, and the drawer may rebut them on a preponderance of probabilities. The court found that the alleged loan was not proved with specificity, no supporting agreement was produced, payment of the loan amount was not satisfactorily shown, and the surrounding circumstances supported the defence version that the cheques related to business dealings rather than a legally enforceable debt. The presumption was therefore rebutted and the acquittal remained undisturbed.

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Issues: (i) Whether service of the statutory notice under the Negotiable Instruments Act was duly proved. (ii) Whether the cheques were issued in discharge of a legally enforceable debt or liability and the statutory presumption stood rebutted.

Issue (i): Whether service of the statutory notice under the Negotiable Instruments Act was duly proved.

Analysis: The notice was returned with an endorsement of absence. The evidence accepted by the Court showed that the drawer was away for about fifteen days and the endorsement did not establish deliberate avoidance of service. In the absence of further steps to secure service, the Court accepted the finding that due service was not established beyond doubt.

Conclusion: Service of the statutory notice was not proved against the respondent.

Issue (ii): Whether the cheques were issued in discharge of a legally enforceable debt or liability and the statutory presumption stood rebutted.

Analysis: Under Section 138 and the presumptions under Sections 118 and 139, the holder must establish the foundational facts, after which the drawer may rebut the presumption on a preponderance of probabilities. The Court found that the complainant failed to prove the alleged loan with specificity, there was no supporting agreement, the evidence did not satisfactorily show payment of the alleged loan amount, and the surrounding circumstances supported the defence version that the cheques were linked to business dealings rather than an enforceable debt. On that basis, the presumption was treated as rebutted.

Conclusion: The cheques were not proved to have been issued in discharge of a legally enforceable debt or liability, and the presumption stood rebutted.

Final Conclusion: The appeal failed and the acquittal was left undisturbed because the essential ingredients of the offence under Section 138 were not established.

Ratio Decidendi: For an offence under Section 138 of the Negotiable Instruments Act, the complainant must prove that the cheque was issued towards a legally enforceable debt or liability and the accused may rebut the statutory presumption by showing a probable defence on the preponderance of probabilities.

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