The courts must give effect to the presumption under Section 139 of the Negotiable Instruments Act and interpret the Act's provisions in line with its objective to restore the credibility of cheques as a trustworthy substitute for cash payment.

Dr. AR. Lakshmanan, J. : This appeal is preferred by the appellant/complainant against the order of the High Court of Judicature at Bombay, Panaji Bench in Criminal Appeal No. 37/1995 whereby the High Court confirmed the order of acquittal dated 25.8.1995 passed by the Judicial Magistrate, First Class in Pvt. N. C. Case No. 149/93/8 for offence punishable under Section 138 of the Negotiable Instruments Act.

2. The brief facts leading to the filing of the present appeal are as follows :

The respondent issued 10 post-dated cheques of Rs. 40,000/- each in favour of the appellant totalling Rs. 4 lakhs for payment towards the liability of the amount misappropriated from the funds of the appellant-Company. The respondent wrote a letter to the appellant denying liability to pay the aforesaid sum for the reasons given in the letter dated 12.2.1993 (Annexure P-1). The appellant deposited the first cheque for encashment. The said cheque was dishonoured by the Bank on the ground that the respondent had issued instructions to stop payment. The appellant sent a legal notice to the respondent regarding the dishonour of the cheque demanding payment of Rs. Goa Plast (P) Ltd. versus Chico Ursula D'Souza

40,000/- within 15 days. As the respondent did not comply with the aforesaid notice, a complaint was filed against the respondent under Section 142 of the Negotiable Instruments Act (hereinafter referred to as "the Act") for offence punishable under Section 138 of the Act. According to the appellant, the respondent/accused was working as Managing Director of the appellant-Company. The services of the respondent were discontinued from the month of July, 1992. The appellant examined its General Manager on their behalf to prove the complaint. The respondent in defence did not examine any witness. The respondent also did not step in the witness box so as to subject himself to the cross-examination. He only brought on record the letter dated 12.2.1993 written by him to the company. True copy of the advice from the Bank dated 12.4.1993, true copy of the complaint dated 6.3.1996 and true copy of the deposition have been marked as Annexures P-2, P-3 and P-4.

3. The learned Judicial Magistrate, First Class vide order dated 25.8.1995 acquitted the respondent holding that the petitioner failed to prove the liability and also holding that the respondent had rebutted the statutory presumption under Section 139 of the Act. Aggrieved by the said order, the appellant preferred Criminal Appeal No. 37 of 1995 to the High Court of Judicature at Bombay which also dismissed the appeal holding that the appellant had failed to prove the liability on the part of the respondents to pay the sum in question. Aggrieved by the judgment and order dated 12.1.1996 of the High Court of Bombay in Criminal Appeal No. 37/1995, the present appeal was preferred by the appellant.

4. We heard Shri Dhruv Mehta, learned counsel appearing for the appellant and Shri A. K. Sanghi, learned counsel appearing for the respondent.

5. Shri Dhruv Mehta, learned counsel appearing for the appellant submitted that the presumption has to be rebutted by the leading evidence and not by mere explanation or statement and that mere issuance of a cheque in favour of the appellant-Company is sufficient to show that the respondent/accused owes liabilities of the appellant-Company. While construing provisions of Section 138 of the Act, besides the fact that the cheque issued by the respondent was dishonoured, nothing further is required to be proved by the complainant and it is for the accused to rebut the presumption under Section 139 of the Act. He would further submit that merely by sending a letter or a communication to the appellant-Company is not sufficient unless and until the presumption is rebutted by leading evidence and that the presumption cannot be said to be rebutted. Shri Dhruv Mehta would further urge that it was incumbent on the respondent/accused to examine Rajan Kinnerkar as the re