The Hon’ble Supreme Court answered the question around what happens when a matter pertaining to cheque bounce was eventually dealt with by the Courts of Civil as well as Criminal jurisdictions.
The Division Bench of Justices Sanjay Karol and Aravind Kumar held that since the Civil Court had declared that the cheque was issued for security purpose, the proceedings for a cheque returned unrealised due to closure of the account could not sustain in law.
Brief Facts
The appellant borrowed Rs 2 lakhs from the complainant with the promise to pay back on demand. A cheque was accordingly issued on 30.06.2002 which was dishonored due to insufficient funds and ‘payments stopped by drawer’, and resulted in initiation of instant proceedings.
The appellant filed a suit impleading 5 defendants praying for declaration of the said cheque of South Indian Bank Limited as a security cheque, issuance of mandatory injunction to return the cheque and issuance of prohibitory injunction restraining the defendants from taking any steps to encash the said cheque. The said suit was decreed on 11.04.2003 in the appellant’s favour. However, the Trial Court convicted the appellant while observing that ‘a Court exercising jurisdiction on the criminal side is not subordinate to the Civil Court’.
The instant appeal challenges judgment and order passed by the Kerala High Court on 23.01.2018 which partly upheld his Revision Petition against the Additional Sessions Judge’s decision upholding the appellant’s conviction under Section 138 of the Negotiable Instruments Act, 1881.
The question to be considered by the Court in the instant matter was whether criminal proceedings could be initiated holding the accused guilty pertaining to a transaction for which a decree was already passed by a Court of competent jurisdiction.
Observations of the Court
The Court took note of the fact that the same cheque was the subject matter before the Civil Court and the Court dealing with the complaint under Section 138 of N.I. Act. It further stated that the First Appellate Court confirmed the appellant’s conviction after contemplating that the cheque was issued against a legally enforceable debt as required under Section 138 of NI Act. The High Court confirmed the said stance.
The court expressed concern over the manner in which the matter reached the Court, on how a civil as well as criminal course could be adopted by the parties pertaining to the very same issue and transaction.
The Court referred to K.G. Premshanker Vs. Inspector of Police And Anr, 2002 Latest Caselaw 387 SC wherein it was held that no straight-jacket formula could be laid, and that conflicting decisions of civil and criminal Courts were not a relevant consideration except for the limited purpose of sentence or damages. The Court further cited Iqbal Singh Marwah & ANR Vs. Meenakshi Marwah & Anr., 2005 Latest Caselaw 167 SC.
Relying on KG Premshanker (supra) wherein it was settled that sentence and damages would be excluded from the conflict of decisions in civil and criminal jurisdictions of the Courts, the Court stated that “considering that the Court in criminal jurisdiction has imposed both sentence and damages, the ratio of the above-referred decision dictates that the Court in criminal jurisdiction would be bound by the civil Court having declared the cheque, the subject matter of dispute, to be only for the purposes of security.”
Decision of the Court
The Court held that the criminal proceedings for a cheque returned unrealised due to closure of the account would not sustain in law. The Court quashed and set aside the impugned judgment and order of conviction and its confirmation by the High Court. It further ordered for the damages imposed by the Courts to be returned to the appellant.
Case Title: Prem Raj vs Poonamma Menon & Anr.
Case No.: Criminal Appeal arising out of Special Leave Petition (Criminal) No. 9778 of 2018
Coram: Hon’ble Mr. Justice Sanjay Karol and Hon’ble Mr. Justice Aravind Kumar
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