In Brief
Two cheques worth Rs. 37 lakh and Rs. 14 lakh were dishonoured by the respondent, who claimed they were given as security for an old 1995 loan, not as payment for investment capital in a company. The Trial and Sessions Courts convicted him under Section 138 of the Negotiable Instruments Act, finding the cheques were issued for a legal debt. The High Court reversed this, accepting the respondent's security argument. The Supreme Court restored the conviction, holding that Section 139 creates a statutory presumption that signed cheques discharge legal debts. The respondent failed to prove the cheques were security—his own promissory note said "loan," and his claim that he requested return of cheques from 1995 lacked credibility. The Court rejected the High Court's approach of accepting mere doubts as sufficient rebuttal.
The lawyer headnote and full judgment text are available to registered users.