This appeal is preferred by the complainant in a prosecution under Section 138 of the Negotiable Instruments Act, against the acquittal of the respondent/accused by the learned Magistrate.

2. The complainant alleged that the accused had borrowed an amount of Rs.1,75,000/- in two installments of Rs.50,000/ and Rs.1,25,000/- and had issued Exts.p3 and P4 cheques for the due discharge of the said legally enforceable debt/liability. The said cheques when presented for encashment were dishonoured by the Bank on the ground of insufficiency of funds. The complainant caused registered notices of demand to be issued to the accused as insisted by law. These notices were duly served and acknowledged, but there was no response. No payment was made as demanded. It is in these circumstances that the complainant came to Court with the complaint. In this appeal we are not concerned with the acquittal of the accused in respect of the allegations regarding Ext.P3 cheque. The acquittal in respect of Ext.P4 cheque for Rs.1,25,000/- alone is assailed in this appeal.

3. Cognizance was taken. The accused entered appearance. She denied the offence alleged against her. Thereupon the complainant was directed to adduce evidence in support of her case. She examined herself as PW1 and proved Exts. P1 to P11. On her side the accused examined herself as DW1 and the Manager of the drawee Bank as DW2 Exts.D1 to 3 were marked.

4. The accused admitted the issuance of Ext.P4 cheque. According to her, she had borrowed an amount of Rs.1,25,000/- in connection with her business. Deducting the interest, only an amount of Rs.1,00,000/- was actually paid to her. The specific understanding was that the principal amount of Rs.1,25,000/- shall be repaid in 10 installments of Rs.1,25,000/- each. The complainant had insisted and the accused had handed over 10 cheques each for Rs.12,500/- repayable every month. Another cheque for the entire amount of RS.1,25,000/- was also handed over as security. Ext.P4 is such cheque allegedly handed over as security.

5. The accused took the stand that the liability has already been discharged in part. According to her, four installments of Rs.12,500/- each had been paid by cheque-by honouring the cheques already issued. In respect of three other cheques, amount could not be collected from the bank as the cheques were dishonoured. In respect of those three cheques payments were made by cash. Thus, according to the accused, seven installments had been paid and only 3 installments remained to be paid only an amount of Rs.37,500/- remained to paid and an amount of Rs.87,500/- was already paid and discharged. The accused contended that Ext.P4 cheque was issued only as a security and not for the due discharge of any legally enforceable debt/liability.

6. The learned Magistrate on an anxious consideration of all the relevant inputs came to the conclusion that the complainant has not succeeded in proving all the ingredients of the offence punishable under Section 138 of the N.I.Act. It was held that the accused had issued Ext.P4 cheque only as security. At any rate, it was held that the complainant has not succeeded in proving beyond doubt that Ext.P4 cheque was issued for the due discharge of any legally enforceable debt/liability. According the learned Magistrate proceeded to pass the impugned judgment.

7. The learned counsel for the appellant contends that the learned Magistrate erred grossly in coming to such a conclusion. Such a plea had not even been urged in the reply to the notice of demand. When called upon to explain Exts.D1 to 3 and the oral evidence of Dw2, the learned counsel for the complainant contends that only three installments have been paid and the cheque in question (Ext.P3) was issued by the accused by accused towards the outstanding liability after giving due credit to the amounts already paid. It is in these circumstances contended that the accused had accepted that there was an outstanding liability of Rs.1 Lakh wh