Once the Section 139 presumption is rebutted, the complainant must prove lending capacity and a legally enforceable debt.

The respondent alleged that the petitioner borrowed ₹9,00,000 in cash in March 2015 and issued a cheque dated 28 October 2015 towards repayment.

The cheque was returned with the endorsement “payment stopped by the drawer,” and the petitioner did not pay after statutory notice.

The petitioner’s defence was that he had borrowed only ₹1,50,000 in July 2014, had given a signed blank cheque as security, and the respondent later misused it.

The Trial Court convicted the petitioner under Section 138 of the Negotiable Instruments Act; the appellate court affirmed the conviction.

The petitioner challenged those concurrent findings in revision under Sections 397 and 401 CrPC.

Whether the petitioner rebutted the statutory presumption that the cheque was issued towards a legally enforceable debt or liability.

Whether the respondent, after the presumption was rebutted, established his capacity to lend ₹9,00,000 in cash and that the cheque represented a legally enforceable debt.

The Court applied Section 138 of the Negotiable Instruments Act, under which a person may be convicted for dishonour of a cheque issued towards a legally enforceable debt or liability, and the statutory presumption applicable to a signed cheque.

The Court proceeded on the principle that the accused may rebut that presumption by raising a probable defence; once rebutted, the evidential burden shifts to the complainant to establish the debt and, in the circumstances of this case, the capacity to advance the claimed amount.

The revision was considered under Sections 397 and 401 CrPC.

No precedents were cited in the judgment.

The Court found that the petitioner raised a probable defence through his bank statement, the Bank Manager’s evidence, and the sequence of cheque numbers: the cheque immediately before the disputed cheque had been used on 14 July 2014, and the cheque immediately after it on 17 July 2014.

Those facts supported the petitioner’s account that the disputed cheque was given as security for the July 2014 loan; the evidence that the parties’ transactions were conducted through banks and that the petitioner had stopped payment further supported that defence.

The Court therefore held that the statutory presumption had been rebutted, shifting the burden to the respondent.

Although the respondent said he had borrowed from his sister and sold property to obtain the money, he produced no documents substantiating those claims.

The Court concluded that he had not established his capacity to lend the sum or that the cheque was issued for a legally enforceable debt.

It set aside the finding of guilt, acquitted the petitioner of the offence under Section 138 of the Negotiable Instruments Act, and allowed the criminal revision.