Admission of signature triggers statutory presumption of legally enforceable debt regardless of security cheque defense.

Respondent No. 2 (complainant), representing Shah Investors Home Ltd., filed a complaint under Section 138 of the Negotiable Instruments Act (NI Act) against the applicant and his father.

The complainant alleged that the parties had outstanding dues of Rs. 1,50,000 from share investment and broking transactions, for which the applicant issued a cheque that was subsequently dishonoured due to "insufficiency of funds".

The Metropolitan Magistrate, Ahmedabad, convicted the applicant on 30.03.2009, sentencing him to one year of simple imprisonment and a fine.

This conviction was upheld by the Additional Sessions Judge on 23.06.2009.

The applicant moved the High Court in revision, contending that no transaction existed and that the cheque was issued merely as "security" for obtaining a business franchise.

1. Whether the applicant successfully rebutted the statutory presumptions under Sections 118 and 139 of the NI Act regarding the existence of a legally enforceable debt.

2. Whether a cheque issued as "security" is exempt from the penal provisions of Section 138 of the NI Act.

3. Whether the High Court, in exercise of its revisional jurisdiction under Sections 397 and 401 of the CrPC, can reappreciate evidence in the face of concurrent findings by lower courts.

The court primarily applied Section 138 of the NI Act regarding the dishonour of cheques issued for the discharge of any debt or liability.

It relied on the statutory presumptions under Section 118 (presumption of consideration) and Section 139 (presumption in favour of holder) of the NI Act.

The court cited Kalamani Tex v. P. Balasubramanian [(2021) 5 SCC 283], establishing that once a signature is admitted, the court must presume the cheque was issued for a legally enforceable debt.

It further referenced Amit Kapoor v. Ramesh Chander [(2012) 9 SCC 460] to define the narrow scope of revisional jurisdiction, which prohibits interference with concurrent findings of fact unless they are perverse.

The court noted that the applicant did not dispute the issuance of the cheque or the signature thereon.

Consequently, under Section 139 of the NI Act, the burden of proof shifted to the accused to rebut the presumption of a legally enforceable debt through a "probable defence".

The court found that the applicant failed to provide such a defence, especially since he did not reply to the initial demand notice.

Regarding the "security" argument, the court held that even if a cheque is issued as security for future payment, it is governed by Section 138 once the liability is triggered.

The court observed that the complainant’s account statements proved a substantial debt owed by the applicant’s father, which the applicant (as the son) sought to partially discharge.

As the lower courts had properly appreciated the evidence, and no patent illegality was shown, the High Court declined to substitute its own view for the concurrent findings of the trial and appellate courts.

It held that the applicant failed to rebut the statutory presumptions and that the "security cheque" defence was legally insufficient to escape liability under Section 138.

The court vacated the interim relief and directed the applicant to surrender to the trial court to serve the remainder of his sentence.