A probable defence based on cumulative circumstances can rebut the Section 139 presumption.

The complainant alleged that the accused borrowed ₹3.33 crore in cash on 4 November 2011, agreeing to pay 18% interest, and later issued a cheque for ₹4,02,93,000 towards repayment.

The cheque was dishonoured with the endorsement “Payment Stopped by Drawer”; the Trial Court convicted the accused under Section 138 of the Negotiable Instruments Act, 1881, and the Appellate Court affirmed the conviction.

In revision, the accused relied on complaints made before presentation of the cheque alleging its misuse, his stop-payment instruction, his denial of the cheque signature, and evidence of a consultancy relationship between the parties.

He also challenged the complainant’s account of the loan, including the absence of security or satisfactory evidence of the source and capacity to advance the cash.

A connected Criminal Original Petition sought release of money deposited by the accused during suspension of sentence.

1. Whether the accused rebutted the statutory presumptions under Sections 118(a) and 139 of the NI Act by raising a probable defence that the cheque was not issued towards a legally enforceable debt or liability.

2. Whether the concurrent conviction under Section 138 of the NI Act could be sustained when the complainant failed to establish the alleged loan after the statutory presumption was rebutted.

3. Whether the connected petition seeking release of the deposited amount remained maintainable after the accused’s acquittal.

Section 138 of the NI Act penalises dishonour of a cheque issued for discharge, wholly or partly, of a legally enforceable debt or liability.

Sections 118(a) and 139 require presumptions of consideration and of the cheque having been received towards such debt or liability, but those presumptions are rebuttable.

The accused may rebut them on a preponderance of probabilities, either through direct evidence or by relying on circumstances on record; the accused need not disprove the debt beyond reasonable doubt.

Once a probable defence rebuts the presumption, the evidentiary burden shifts to the complainant to establish the legally enforceable debt or liability.

The judgment identifies no specific precedent as the basis of this rule.

The Court considered the accused’s pre-presentation complaints alleging misuse of the cheque, the stop-payment instruction and the “Payment Stopped by Drawer” endorsement as circumstances supporting his defence; it also held that failure to reply to the statutory notice did not prevent him from disputing the signature at trial.

The Court further relied on the complainant’s cross-examination, including the lack of security or documentary evidence for the substantial cash loan, the absence of a satisfactory account of his financial capacity and source of funds, and the admitted consultancy relationship between the parties.

Taken together, these circumstances raised a probable defence and rebutted the statutory presumptions.

The complainant then failed to prove the alleged loan by cogent evidence, so the conviction could not stand.

It directed that he be set at liberty, cancelled any bail bond, and ordered any fine paid to be refunded.

The connected Criminal Original Petition was dismissed as infructuous following the acquittal; the Trial Court was nevertheless directed to permit the accused to withdraw the amount deposited, together with accrued interest, without notice to the complainant.