Summary
The Supreme Court restored the trial court’s conviction and fine for dishonour of two cheques after rejecting the drawer’s explanation that old blank security cheques had been misused. Admitted signatures, the corresponding promissory note and the evidence of the underlying liability attracted the statutory presumption, which the unsupported and discredited defence failed to rebut.
Issues
- Whether the drawer rebutted the presumption that the signed cheques were issued for a legally enforceable debt or liability.
Provisions considered
- Section 139, read with Section 138, Negotiable Instruments Act, 1881Applied the rebuttable presumption of discharge of legally enforceable liability following admitted signatures and issuance; the particular security-cheque defence lacked credible support. (¶¶ 8, 9, 10)
Held
- Once a cheque has been signed and issued in favour of its holder, Section 139 raises a rebuttable presumption that it discharges a legally enforceable debt or liability. The drawer’s account of a different purpose must credibly rebut that presumption. (¶¶ 8, 9)
- The promissory note covered the cheque amounts and recorded a loan. The claimed 1995 security arrangement was disbelieved because no return was sought for seven years; the later return letter was an afterthought. The alleged employee’s account of filling the promissory note was also discredited by the evidence. (¶¶ 8(i), 8(ii), 8(iii), 8(iv))
- The complainants established the existing liability and the drawer failed to rebut the presumption. The High Court’s reversal of the concurrent findings could not stand. (¶¶ 9, 10)
Result
Appeals allowed. High Court revision order set aside; trial court’s order of conviction and fine restored.