The Aryavarth Express
Agency(New Delhi): The Supreme Court recently allowed an appeal challenging the conviction of the appellant, Prem Raj, under Section 138 of the Negotiable Instruments Act, 1881, for issuing a cheque that was dishonored due to insufficient funds and ‘payment stopped by drawer.’ The Court held that the criminal proceedings were unsustainable in law, as a civil court had already declared the cheque in question to be a security cheque.
The appellant had borrowed Rs. 2,00,000 from the complainant, K.P.B Menon, and issued a cheque dated June 30, 2002, which was dishonored. Simultaneously, the appellant filed a civil suit seeking a declaration that the cheque was a security cheque and an injunction restraining the defendants from encashing it. The Additional District Munsif decreed the suit in favor of the appellant on April 11, 2003, and this decision was upheld by the Additional Subordinate Judge in an appeal.
Despite the civil court’s decree, the criminal proceedings under Section 138 of the Negotiable Instruments Act continued, and the appellant was convicted by the Judicial First Class Magistrate, which was upheld by the Additional Sessions Judge and the High Court of Kerala.
The Supreme Court, in its judgment, expressed concern over the parties adopting both civil and criminal courses for the same issue and transaction. The Court relied on several precedents, including M/s. Karam Chand Ganga Prasad & Anr. vs. Union of India & Ors. (1970), which held that decisions of civil courts are binding on criminal courts, but not vice versa.
The Court also referred to the Constitution Bench decision in Iqbal Singh Marwah vs. Meenakshi Marwah (2005), which clarified that while there is no statutory provision or legal principle making the findings in one proceeding binding on the other, the criminal matters should be given precedence, and the possibility of conflicting decisions is not a relevant consideration, except for limited purposes such as sentence or damages.
In light of these precedents, the Supreme Court held that the criminal court was bound by the civil court’s declaration that the cheque was only for security purposes. Consequently, the criminal proceedings resulting from the cheque being dishonored were quashed and set aside, and the Court directed that the damages imposed by the lower courts be returned to the appellant forthwith.
The Supreme Court’s judgment emphasizes the binding nature of civil court decisions on criminal courts in cases involving the same transaction and highlights the need for a harmonious interpretation of the law to avoid conflicting decisions.
