This appeal is filed by the complainant in C.C. No.167/2001 on the file of the Judicial Magistrate of the First Class-I, Punalur. The above said calander case was on the basis of a complaint filed by the appellant alleging that Ext.P1 cheque issued by the 2nd respondent for an amount of Rs.2,25,000/- in discharge of liability cast on him was dishonoured with the endorsement “funds insufficient”. After completing the statutory formalities, the appellant filed the complaint under section 138 of the Negotiable Instruments Act, 1981, hereinafter referred to as the ‘Act’. Before the trial court, prosecution examined PWs.1 and 2 Exts.P1 to P6 were marked. On the side of the defence DWs.1 and 2 were examined and Exts.D1 to D4 were marked. After closing the evidence, the 2nd respondent was questioned under section 313 Cr.P.C. He denied the entire incriminating circumstances. The trial court found that the appellant had failed to establish the charge under section 138 of the Act against the 2nd respondent and acquitted the 2nd respondent under section 255(1) Cr.P.C.

2. Learned counsel appearing for the appellant submits that the trial court misunderstood the scope of enquiry in a prosecution under section 138 of the Act. The learned counsel also submits that on the basis of the decisions of this Court as well as the Apex Court, the findings entered by the trial court are wrong. Learned counsel appearing for the 2nd respondent submits that the judgment under appeal requires no interference by this Court, as the trial court has considered the entire evidence in extenso.

3. Before considering the respective arguments of the learned counsel on both sides, it is advantageous to see the relevant provisions with regard to the liability creates in a cheque under the Act. “Cheque” is defined under section 6 of the Act, which reads as follows:-

“A ‘cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.”

“Negotiable Instrument” is defined under section 13 of the Act, which reads as follows:-

“13. “Negotiable instrument”. – (1) A “negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer.

Explanation (i) -–A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable.

Explanation (ii)—A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last endorsement is an endorsement in blank.

Explanation (iii)—Where a promissory note, bill of exchange or cheque, either originally or by endorsement, is expressed to be payable to the order of a specified person, and not to him or his order it is nevertheless payable to him or his order at his option.

(2) A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees.”

A reading of the above would clearly indicate that cheque also comes under the definition of “negotiable instrument”. Section 43 of the act deals with legal effect of a Negotiable instrument made, etc. Without consideration. Section 43 of the Act reads as follows:-

“A negotiable instrument made, drawn, accepted, indorsed, or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without endorsement to a holder for consideration, such holder, and every subsequent holder deriving title from him, may recover the amount due on such instrument from the transferor for consideration or any prior party thereto.”

(2) A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable