An unsupported security-cheque defence does not rebut the Section 139 presumption.

The respondent alleged that she had lent the petitioner a total of Rs. 5 lakhs for her garment business and that the petitioner issued a cheque for repayment.

The cheque was dishonoured for insufficient funds, and the petitioner did not pay despite statutory notice.

The trial court convicted the petitioner under Section 138 of the Negotiable Instruments Act and imposed four months’ simple imprisonment and compensation of Rs. 5 lakhs; the appellate court affirmed the conviction.

In revision, the petitioner claimed that the cheque had been issued as security to a third party, returned after repayment, and later stolen by the respondent.

1. Whether the respondent established the foundational facts necessary to invoke the presumption under Section 139 of the Negotiable Instruments Act.

2. Whether the petitioner’s defence that the cheque was issued as security to a third party and later stolen was sufficient to rebut that presumption, warranting interference in revision.

Section 138 of the Negotiable Instruments Act applies to dishonour of a cheque for insufficiency of funds where the statutory requirements, including notice and non-payment, are satisfied.

Under Section 139, once the foundational facts—including the petitioner’s signature on the cheque, its dishonour, and non-payment after notice—are established, a presumption arises in favour of the holder.

The accused may seek to rebut that presumption by establishing a defence; the Court assessed whether the petitioner’s evidence and documents did so.

The revision was considered under Sections 397 and 401 of the Code of Criminal Procedure.

No judicial precedents were cited.

The Court found that the cheque was signed by the petitioner, was returned for insufficient funds, and remained unpaid despite statutory notice; these facts justified drawing the Section 139 presumption.

The petitioner’s sale agreement and its cancellation did not mention the cheque or establish that it had been given to the third party as security.

The third party was also not examined.

The Court therefore agreed with the lower courts that the petitioner’s defence did not rebut the presumption and found no infirmity in their concurrent findings.

It also directed the Tamil Nadu State Legal Services Authority to pay the respondent’s legal aid counsel Rs. 10,000 as fees.