Presumption of debt in cheque cases According to the Negotiable Instruments Act, once a cheque has been signed and issued in favour of the holder, it is presumed that it was issued in discharge of a debt or liability. But if the cheque bounces for want of sufficient fund in the account, the person who signed it can escape consequences only if he can prove that it was not issued to fulfil some debt or liability but was for some other purpose like security for a loan.
However, there was a difference of opinion on this point between the Madras High Court and the courts below. The high ...
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