Judgment :- 1. The plaintiff in the suit, the Irinjalakuda Bank Ltd., discounted a cheque issued by the second defendant who was the executive officer of the first defendant Panchayat. Subsequently on presenting the cheque to the Treasury at Mukundapuram, on which the cheque was drawn, payment was not made, as, in the meanwhile, the Panchayat Inspector appears to have advised the treasury not to make such payment. A notice was issued by the bank: to the defendant Panchayat and the amount due under the cheque having not been paid, the suit was instituted. The second plaintiff is the peon of the bank in whose name first defendant is alleged to have endorsed the cheque for the purpose of collection only. The plaintiffs got a decree against both defendants 1 and 2 in the trial court. The appellate court vacated the decree so far as it concerned the first defendant holding that the first defendant would not be liable for the plaint claim for various reasons. It was held by the appellate court that what has been issued by the second defendant is not a cheque within the meaning of Negotiable Instruments Act, that the second defendant was not competent to issue such a cheque and that the notice of dishonour is only that of the first plaintiff and not of the second plaintiff and, therefore also, the suit as 'against the first defendant would not lie. It is this that has been challenged in revision by the plaintiff bank. 2. A cheque is defined in S.6 of the Negotiable Instruments Act 26 of 1881 as follows: "A'cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand." Bill of exchange' is defined in S.5 of the Act and it runs as follows: "A 'bill of exchange' is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument." In order that a bill of exchange should come within the definition of 'cheque' it must be drawn on a specified banker and must not be expressed to be payable otherwise than on demand. 'Banker' is defined in S.3 of the Act as follows: "'Banker' includes any person acting as a banker and any Post Office Savings Bank." This is only an inclusive definition and there is no other definition of the term 'banker' in the Act. 3. Ex. P1, the cheque which has been discounted by the plaintiff Bank, was issued by the second defendant as Executive Officer of the first defendant. It was drawn on the treasury at Mukundapuram and was in favour of self or order. This was for sum of Rs. 608/-. It is seen signed by the second defendant as Executive Officer of the Panchayat. Ex. P1 itself mentions it as a cheque and gives the cheque number. Therefore, on the face of it Ex. P1 purports to to be a cheque drawn on the treasury at Mukundhapuram. The lower court has held that a Government treasury cannot be a Bank and therefore Ex. P1 cannot be said to be a bill of exchange drawn on a specified banker. If it is not a bill of exchange drawn on a specified banker, then it would not come within the definition of 'cheque'. In support of the case that a Government treasury is not a bank the decision in Rengaswami Pillai v. Sankaralingam Ayyar (ILR.XLIII Madras 816) is relied on by the court below. I have now to examine this question. 4. The definition of a 'bill of exchange' contained in Sections of the Negotiable Instruments Act shows that if the instrument is in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument, it satisfies of the definition a bill of exchange. There can be no dispute, and it appears to have been assumed as also by the court below, that apart from the question whether Ex. P1 would be a cheque or not, it is certainly a bill of exchange. It is so because it contains an unconditional order signed by the maker, the second defendant, on behalf of the first defendant, directing the treasury at Mukundapuram to pay a sum certain to self or order. The only question which is in controversy is whether the treasury at Mukundapuram is a banker. It is so because it contains an unconditional order signed by the maker, the second defendant, on behalf of the first defendant, directing the treasury at Mukundapuram to pay a sum certain to self or order. The only question which is in controversy is whether the treasury at Mukundapuram is a banker. If it is a banker, then since so far as Ex. P1 specifies the particular treasury, then it is a specified banker, and Ex. P1 being not expressed to be payable otherwise than on demand, it would be a cheque. Therefore, the question for determination is whether a Government treasury which accepts cheques from local bodies who have accounts in the treasury would be a 'banker' within the meaning of the term in the Negotiable Instruments Act. The case decided by the Madras High Court in Rangaswami Pillai v. Sankaralingam Ayyar (ILR. XLIII Madras 816) was one where the question that arose was whether a treasury is a banker. After referring to the decisions in Foley v. Hill ( (1848) 2 H.L. Cas. 28, 43) and Halifax Union v. Wheelwright ((1875) L.R. 10 Exch., 183) the Division Bench of the Madras High Court expressed its view that a banker being one who honours a cheque in the ordinary course of business, there must be an element of business or commerciality in the transaction. It would appear from the view expressed by the Madras High Court that the concept of business must be one involving a profit element. It is in that view that the court held that the treasury was not a bank within the meaning of that term in the Negotiable Instruments Act. This has been followed by the Andhra Pradesh High Court in the decision report in S. M, A. Somasundaram Mudaliar v. District Collector Chittoor (AIR. 1967 A.P. 126). There is no independent discussion of this question in that decision. It simply follows the decision of the Madras High Court. It is the correctness of these decisions that is being examined by me here to see whether I should follow these decisions in this case. 5. I do not think that the view that business of banking must necessarily be one which is run for profit is consistent with the present day concept of banking. It is the correctness of these decisions that is being examined by me here to see whether I should follow these decisions in this case. 5. I do not think that the view that business of banking must necessarily be one which is run for profit is consistent with the present day concept of banking. The English cases which were relied on by the Madras High Court also do not appear to support the view that the running of the banking business must be for profit or that profit motive is one of the elements necessary to constitute the business one of banking. That apart, those decisions referred to in the Madras decision were rendered in the last century. Banking, as it is understood today, need not necessarily be a business run with a profit motive. This question has been the subject-matter of consideration in recent times both by the courts and by the legislatures and attempts appear to have been made to define the concept of Banking precisely. The legislatures in the United States of America formulated the following definition of the term 'banking' as is seen from the extract from "Indian Finance and Banking, by Findlay Shirras, 2nd impression" in "Banking Law and Practice in India, by M. L. Tannan". "By "banking" we mean the business of dealing is credits and by a "bank" we include every person, firm or company having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid or remitted on draft, cheque or order, or money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange or promissory notes are received for discount for sale." The criticism to this definition is noticed by the author in his book. The main criticism appears to be that it is more like a description and is wanting in precision and exactitude. 6. Dr. Herbert L. Hart in his book "'The Law of Banking and Stock Exchange Transactions, Vol. 1" attempts to define a bank. The main criticism appears to be that it is more like a description and is wanting in precision and exactitude. 6. Dr. Herbert L. Hart in his book "'The Law of Banking and Stock Exchange Transactions, Vol. 1" attempts to define a bank. According to him, a banker or a bank is a person or company carrying on the business of receiving moneys and collecting drafts for customers subject to the obligation of honouring cheques drawn upon them from time to time by the customers to the extent of the amounts available in their current accounts. A number of English cases are relied on for getting at this definition. It may be seen from this definition that profit motive is not necessarily the requisite of a banking business. As a matter of fact, banking, as understood today, is an evolutionary concept. It cannot be said that bodies which carry on business not with a profit motive, but with the incidents with which a business of banking is associated, are not banks. In the latest edition (12th Edition) of Bhashyam and Adiga on the Negotiable Instruments Act the decision of the Andhra Pradesh High Court is seen noticed at page 53. It would appear that the learned authors do not agree with the view taken by the Andhra Pradesh High Court. The comment made therein may be noticed. It can hardly be asserted today that the element of profit is a necessary attribute of banking. What makes a person a banker is not what he does with the money of which he obtains the use by lending it at interest or by investing it, but by the terms upon which he obtains deposits of money from the banking customers." This view appears to be justified, and concurs with the view that I propose to take in this case. 7. Certain provisions of the Kerala Panchayats (Accounts) Rules, 1965 framed under the Kerala Panchayats Act and certain provisions of the Kerala Treasury Code may also be noticed in this connections R.32 of the Kerala Panchayats (Accounts) Rules, 1965 provides for remittance into the treasury or Post Office of all sums received in cash, money orders or cheques on the account of Panchayat Fund. Such remittance is to be made through chalans prepared in duplicate in the form laid down in the Kerala Treasury Code or such other forms as may be laid down by the Government from time to time. R.33 which deals with Pass Books may be extracted here. "33. Pass Book. (1) The remittance of Panchayat money in the Treasury shall be promptly noted in the pass book by the Treasury Officer. The pass book is not a Panchayat account book but is simply a copy of the account kept in the treasury of the money paid in and taken out by Panchayat and must, therefore, always be written up only by the Treasury Officials, by whom the original account is kept. No entries or marks shall, under any circumstances. be made in the pass book by any one connected with the working in the Panchayat office. The pass book shall be sent to the Treasury along with the remittance for the Treasury officials to make necessary debit or credit entries in the pass book. (2) At the close of each month the receipt and payments shall be totalled and the memorandum of balance written in the pass book. The balance amount shall be written in words and signed by the Treasury officer. (3) The total of the balance in the Treasury and the total of the outstanding cheques should be reconciled with the corresponding balance shown in the Cash Book. The Executive Authority shall not sign in the cash book until such reconciliation has been effected. The Executive Authority shall call the attention of the Treasury Officer in case any discrepancy is noticed in the pass book." Rule 42 also may be noticed. That relates to the cheques to be issued by the Executive Authority for withdrawal of amounts from the treasury. R.43 deals with the prohibition on drawing of money from treasury by the Executive Authority under certain circumstances. A reading of these rules will indicate that the normal mode of dealing with the funds of a Panchayat is by remittance into the treasury or the post office. The Panchayat has to open an account with the treasury or post office concerned. All funds are to be deposited in such account and all withdrawals may be made by cheques from this account. R.248 of the Treasury Code is one relating to the local fund cheques. The Panchayat has to open an account with the treasury or post office concerned. All funds are to be deposited in such account and all withdrawals may be made by cheques from this account. R.248 of the Treasury Code is one relating to the local fund cheques. Note 1 to that rule is specially important. That note runs as follows: "The account of a local fund at the treasury is purely a banking account, and the nature of the disbursement need not be specified on any local fund cheque." It would appear from these rules that the Panchayat keeps a banking account with the treasury and operates on the banking account. This business run by the treasury so far as Panchayat is concerned is one of banking and therefore the treasury is a banker within the meaning of that term in S.6 of the Negotiable Instruments Act, 1881. 8. As I have noticed earlier there is no independent discussion of this question in the decision of the Andhra Pradesh High Court reported in S. M. A. Somasundaram Mudaliar v. District Collector Chittoor (AIR. 1967 A.P. 126). It merely follows the earlier Madras decision reported in Rengaswami Pillai v. Sankaralingam Ayyar (ILR. XLIII Madras 816). There again the decision is based solely on the two English cases referred to by me earlier. The definition by Hart has also been referred to. Merely because the word 'business' has been used in the decisions referred to by it and in the definition by Hart, the Madras High Court seems to have inferred that banking must be commercial in character and that would necessarily require a profit element. I am not able to agree. The business of banking may be run for profit or may not be run for profit, but in the exercise of a statutory duty for the sake of administrative convenience. I do not think that the two decisions on which the Madras High Court has relied upon for its view compels me to take the same view more so when various provisions which I have adverted to indicate that the treasury is really functioning as banker in regard to local bodies like the Panchayat. Therefore, I hold that Ext. P1 is a cheque and plaintiff is a holder of that cheque. 9. It was contended before the court below that even if Ex. Therefore, I hold that Ext. P1 is a cheque and plaintiff is a holder of that cheque. 9. It was contended before the court below that even if Ex. P1 is not cheque there would be no difference because would then be a bill of exchange and the result would be the same. But this seems to have been met by the contention that there is no plea that Ex. P1 is a bill of exchange. I need not go into this now since 1 have already held that Ex. P1 is in fact a cheque within the meaning of the term in S.6 of the Negotiable Instruments Act, 1881. 10. I may also notice that in the decision of the Andhra Pradesh High Court in S. M. A. Somasundaram Mudaliar v. District Collector Chittoor (AIR. 1967 A.P. 126) it was contended that the instrument which was the subject-matter of the controversy in that case was not negotiable and this contention is seen to have found acceptance. It is brought to my notice by the learned counsel for the revision petitioner that on the face of it this contention is unsustainable because the.very decision of the Madras High Court on which reliance is placed has considered a similar instrument as a bill of exchange, and therefore there was no warrant for the Andhra Pradesh High Court to hold otherwise with regard to the instrument before it. There is no discussion on that question, but the court assumes that there is no doubt that the bill concerned was not negotiable. It is possible that the particular document with which the Andhra Pradesh High Court was concerned in that case was not a bill of exchange as the term is defined in the Negotiable Instruments Act. I do not want to go into the question further here because in the present case what I am concerned with is a cheque. 11. The next question is as to the competency of the second defendant to draw the cheque. If by the rules which I have referred to earlier the executive officer is authorised to draw cheques and that too on self and if those cheques are cheques coming within the meaning of the Negotiable Instruments Act, automatically they become negotiable 'in character. S.15 of the Negotiable Instruments Act enables indorsement of such an instrument for the purpose of negotiation. S.15 of the Negotiable Instruments Act enables indorsement of such an instrument for the purpose of negotiation. R.42 (7) of the Kerala Panchayats (Accounts) Rules, 1965 authorises the Executive Officer to draw cheques for certain purposes, and in the present case he has drawn such a cheque under Ext. P1. The cheque being negotiable it is liable to be indorsed and that has been done in favour of the plaintiff bank. Whether the cheque has been drawn for purposes which come within R.42 (7) of the Kerala Panchayats (Accounts) Rules is not a matter for the plaintiff to ascertain when he discounts the cheque nor is it a matter on which depends, the negotiability of the cheque. Therefore, I find no reason to agree with the, court below in its conclusion that second defendant was not competent to indorse Ex. P1 in favour of the plaintiff bank. 12. The last contention raised before me is that there is no notice of dishonour by the second plaintiff as required by S.93 of the Negotiable Instruments Act. No doubt, such notice is required to be issued by the holder to the party who remains liable thereon. It is not disputed that the notice had been issued by the first plaintiff bank to the defendant. What is contended is that the cheque was indorsed in favour of the second plaintiff by the first plaintiff. The second plaintiff is the peon and there has been no indorsement back in favour of the first plaintiff. It is therefore contended that the second plaintiff is the holder and the notice of dishonour must be by the second defendant, the peon of the bank. The answer to this is two-fold. The second plaintiff is only an indorsee for collection and not an indorsee who acquires interest in the subject-matter of the cheque. A negotiable instrument is negotiable when such instrument is transferred to any person so as to constitute that person the holder thereof. This is the provision is S.14 of the Act. Mere indorsement will not make the person in whose favour it is indorsed a holder of the negotiable instrument. What is essential is the intention to pass the property in the instrument. This is the provision is S.14 of the Act. Mere indorsement will not make the person in whose favour it is indorsed a holder of the negotiable instrument. What is essential is the intention to pass the property in the instrument. The person who indorses must do so for the purpose of negotiation and then alone it would involve a transfer of the instrument with the intention to constitute the indorsee the holder of the instrument. 13. The second plaintiff in this case is certainly not an indorsee in whose favour it was intended by the bank that there should be a transfer of the property in the cheque. He is merely an indorsee for collection. In such a case the indorsee will not have property in the instrument transferred. Dealing with the question of the necessity for an indorsement back in the case of an indorsee for collection only, Bhasbyam and Adiga in The Negotiable Instruments Act, 12th edition, at page 112 state: " Indorsement back. An indorsement back is not necessary to revert title in a negotiable instrument. If a person who indorses a bill of exchange to another, whether for a consideration or for purposes of collection shall come to the possession thereof again, he shall be regarded unless the contrary appears in evidence, as a bona fide holder of the bill. When a prior endorser takes up a note on payment to his immediate indorsee and discharges his liability under the contract arising by indorsement there is no provision either in the Act or elsewhere prescribing the mode in which "taking up" of the note is to be established" In the present case the second plaintiff merely being an indorsee for collection, no indorsement back is necessary and therefore it is sufficient if the first plaintiff has issued notice as a holder of the instrument. 14. Even assuming that second plaintiff is a holder of Ext. P1 cheque it is not necessary that notice should have been issued by him. If a notice is issued by his endorser that would satisfy the requirement of S.93 of the Negotiable Instruments Act. The section does not require that notice of dishonour must be issued by the holder of the instrument. It is sufficient if it is issued by some party thereto who remains liable thereon and if Ext. If a notice is issued by his endorser that would satisfy the requirement of S.93 of the Negotiable Instruments Act. The section does not require that notice of dishonour must be issued by the holder of the instrument. It is sufficient if it is issued by some party thereto who remains liable thereon and if Ext. P1 is considered to have been indorsed in favour of the second plaintiff so as to transfer property in his favour, then first plaintiff would be liable to the second plaintiff and in that case a notice issued by the first plaintiff would be by one who remains liable on the instrument and that would be sufficient answer to the contention of the first defendant on the question of want of notice of dishonour by second plaintiff 15. It is also urged before me by learned counsel for the first defendant that even though first plaintiff may be holder he is not a holder in due course. A 'holder in due course' is defined in S.9 of the Negotiable Instruments Act as follows: "Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange of conque if payable to bearer, or the payee or indorsee thereof, if (payable to order) before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title." It is not disputed that the first plaintiff is a person who, for consideration, became the possessor of the cheque and is the indorsee thereof. It is not shown that he had sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. It was the first defendant acting through the second defendant that transferred Ex. P1 to the first plaintiff. The second defendant was, under the Kerala Panchayats (Accounts) Rules, competent to draw cheques and therefore was competent to execute Ex. P1. A cheque being a negotiable instrument the law permits indorsement of such instrument and, in as much as the plaintiff has come into possession thereof by such indorsement and payment, and no factors vitiating such transfer having been shown, I must hold that the first plaintiff bank is a holder in due course. 16. P1. A cheque being a negotiable instrument the law permits indorsement of such instrument and, in as much as the plaintiff has come into possession thereof by such indorsement and payment, and no factors vitiating such transfer having been shown, I must hold that the first plaintiff bank is a holder in due course. 16. It therefore follows that the first defendant the Panchayat is also liable to the plaintiff bank for the amount for which a decree has been granted against the second defendant alone now. I therefore allow this revision petition in modification of the decree of the court below and give a decree to the 1st plaintiff for recovery of the amount of Rs. 608/- with interest at 6% per annum from 30-7-1963 as against defendants 1 and 2 and interest on the decree amount at that rate till recovery. The civil revision petition is therefore allowed. The 1st plaintiff will get costs in the trial court from defendants 1 and 2 and the costs in the appellate court and here from the 1st defendant. Allowed.