Admission of signatures and debt in a settlement agreement precludes rebuttal of Section 139 NI Act presumption.

The petitioners (accused) challenged their conviction under Section 138 of the Negotiable Instruments (NI) Act in three complaint cases.

The complainant alleged that after an agreement to sell a flat in 2001, the accused requested to utilize the rental income as a loan for their company (Vasu Tech Ltd.), issuing post-dated cheques, promissory notes, and acknowledgments as security.

Eight cheques were eventually dishonored due to "Insufficient Funds".

The Trial Court convicted the petitioners on 11.10.2012, sentencing Petitioner No. 1 to one-year imprisonment and a fine/compensation of ₹50 lakhs per case.

The Appellate Court upheld the conviction on 30.09.2024 but modified the sentence to a consolidated compensation of ₹1 crore.

The petitioners contended the transactions were actually cash loans and the documents were mere collateral security.

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

Whether the revisional court should interfere with the concurrent findings of the lower courts in the absence of patent illegality or perversity.

Whether the Appellate Court was justified in modifying the specific sentence/compensation structure imposed by the Trial Court.

The court primarily applied Section 138 of the Negotiable Instruments Act, 1881, which defines the offense of cheque dishonor, and Section 139, which mandates a presumption that the holder of a cheque receives it for the discharge of a debt or liability.

It relied on Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (2023) to outline the essential ingredients of the offense.

The court further applied Section 118 of the NI Act regarding the presumption of consideration.

The principle that revisional jurisdiction is limited to examining the legality and propriety of findings rather than re-appreciating evidence.

The Court observed that since Petitioner No. 1 admitted his signatures on the cheques, the statutory presumption under Section 139 stood triggered, shifting the burden of proof to the accused.

The Court found the "security cheque" defense implausible because the petitioner admitted to the handwritten assignment of rent in the sale agreement and the encashment of initial consideration cheques.

Critically, the petitioner admitted during cross-examination that a liability of ₹2 to ₹2.5 crores existed at the time of presentation.

The Court also highlighted a 2009 Memorandum of Understanding (MOU) where the petitioner had expressly acknowledged the liability for all eight cheques to seek leniency in a previous sentencing.

The Court ruled that the petitioner could not resile from these admissions, and the failure to reflect the alleged "cash loans" in books of accounts further weakened the defense.

The Court held that the petitioners failed to rebut the statutory presumption and that the complainant proved all ingredients of Section 138.

However, the Court set aside the Appellate Court’s modification of the sentence, finding it lacked cogent reasoning, and restored the Trial Court's original order on sentence dated 31.10.2012, which required Petitioner No. 1 to pay ₹50 lakhs compensation in each of the three cases.