The main legal point established in the judgment is the interpretation of the validity of a cheque, the definition of 'payee' and 'holder in due course' under the Negotiable Instruments Act, and the presumption of consideration for negotiable instruments.

K.A. Mohammed Shafi J.

The complainant in C.C. No. 40 of 1993 on the file of the Judicial First Class Magistrate's Court, Changanacherry, is the appellant.

2. He filed the complaint against the respondent alleging the offence punishable under S.138 of the Negotiable Instruments Act, hereinafter referred to as 'the Act', on the ground that the respondent-accused issued a cheque for Rs. 3,000/- to discharge his previous liability and on presentation of the cheque for collection, it was bounced and he did not pay the amount inspite of the registered notice sent to him through an. Advocate calling upon him to pay the amount.

3. The lower court, after trial, found the respondent not guilty of the offence punishable under S.138 of the Act, acquitted him and set him at liberty by judgment dated 27.1.1994. Hence, the complainant has come up in appeal before this Court.

4. The lower court rightly rejected the contention of the respondent that there was no proper notice as contemplated under proviso (b) to S.138 of the Act. That contention of the respondent was based on the fact that he was known as Joseph J. Kondody, whereas the registered notice was sent to Jose J. Kondody. Even though registered notice was sent to the address Jose J. Kondody, Ext. P5 acknowledgment of the respondent shows that he received the registered notice and signed the acknowledgement as Jose J. Kondody. It is further seen that the respondent has sent Ext. P7 reply to the registered notice Ext. P3 to the appellant. In the complaint the respondent is described as Joseph J. Kondody @ Jose J. Kondody. Therefore, it is clear that the respondent received the registered notice, sent Ext. P7 reply and appeared before the lower court on receiving notice issued by the Court understanding that the person referred to in the registered notice and the notice issued by the lower court is himself. Therefore, there is no merit in the contention that proviso (b) to S.138 of the Act is not complied with before instituting the above case.

5. Counsel for the respondent submitted that though Ext. P1 cheque was issued in favour of the appellant, it was sent for collection through Thankachan Antony and not by the appellant. Ext. P1 cheque contains no endorsement by the appellant or by Thankachan Antony. The appellant, when examined as PW2, has deposed that his cheque was presented through his friend Thankachan Antony for collection and on the intimation about the dishonour of the cheque for insufficient funds, he has instituted the above case after complying the necessary formalities. Ext. P1 is a bearer cheque. Under law, a bearer cheque can be presented for encashment without any endorsement by the party. Therefore, the contention that Ext. P1 cheque was presented not by the appellant but by his friend Thankachan Antony for encashment is of no consequence.

6. The respondent vehemently contended that the appellant is not the payee or holder in due course and therefore, he is not entitled to prosecute him for the offence punishable under S.138 of the Act. The lower court found that the appellant is neither the payee nor a holder in due course and Ext. P1 is not a valid cheque for the purpose S.138 of the Act and therefore, the respondent is not guilty of the said offence.

7. The fact that the respondent has issued Ext. P1 cheque to the appellant is admitted. The crucial contention raised by the respondent is that the appellant is neither a payee nor a holder in due course and that in Ext. P1 no name of the payee is mentioned and is stated pay to cash and the word bearer is struck off. Therefore, the respondent contended that the appellant is not a payee as defined under S.7 of the Act since under S.7, "payee" is defined as the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid. He also contended that the appellant is not the "holder in due course" as defined in S.9 of the Act. wherein "holder in due course" is defined as