This is a petition to grant leave to file an appeal against the judgment in C.C.No.259/2004 on the file of the Court of the Judicial First Class Magistrate-I, Nedumangad. The above case was on a complaint filed by the petitioner alleging that the 2nd respondent committed an offence punishable under section 138 of the Negotiable Instruments Act, 1881, hereinafter referred to as ‘the Act’. It is stated in the complaint that the 2nd respondent issued Ext.P1 cheque in favour of the petitioner in discharge of an amount of Rs.60,000/- alleged to have been owed by him and on presentation of the same, it was dishonoured stating “Funds insufficient”. The petitioner caused a statutory notice to the 2nd respondent demanding the amount covered by the cheque. Though the 2nd respondent received the notice, the amount was not paid. Hence the complaint was filed. The trial court took cognizance of the offence and tried the case. Before the trial court P.Ws.1 to 4 were examined on the side of the prosecution and marked Exts.P1 to P9. On the side of the defence 2nd respondent himself was examined as DW1 and Exts. D1 to D5 were marked. After considering the evidence, the trial court acquitted the 2nd respondent holding that the petitioner failed to prove the service of statutory notice to the 2nd respondent and that the cheque was in discharge of legally enforceable debt. Aggrieved by the above, the petitioner has approached this Court.

2. Learned counsel for the petitioner submits that the finding of the trial court that the notice was issued not within the statutory time limit is not correct. The learned counsel also submits that the finding of the trial court that Ext.P1 cheque issued the 2nd respondent was not a legally enforceable debt or other liability is not correct.

3. Section 138 of the Act deals with dishonour of cheque for insufficiency, etc. of funds in the account, which reads as follows:-

“138. Dishonour of cheque for insufficiency, etc., of funds in the account—Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a terms which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless—

a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever, is earlier.

b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and

c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

Explanation – For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability” A reading of the above provision would indicate that the execution of the cheque is not sufficient to constitute an offence punishable under section 138 of the Act, unless it is proved that the debt or other liability is a legally enforceable one.

4. The Trial court considered the factual matrix, which was the basis for issuance of Ext.P1 cheque,