The Supreme Court on Tuesday stated that the criminal court is bound by the decree of the civil court declaring the cheque to be for security only.
The bench of Justices Sanjay Karol and Aravind Kumar was dealing with the appeal challenging the judgement passed by the Kerala High Court where the Court allowed the Revision Petition in part against the judgment and order of the Additional Sessions Judge, which, in turn, upheld appellant’s conviction.
In this case, the appellant borrowed Rs.2, 00,000 from the complainant, with the promise to repay it on demand. When the demand was made, the appellant issued a cheque drawn from the Bank, which was dishonored due to insufficient funds. The complainant then issued a notice of demand, but upon no from the appellant, filed a complaint.
The appellant also filed a civil suit regarding the same cheque, seeking various reliefs including declaring the cheque as a security cheque and injunctions against encashment. The civil court decreed the suit in favour of the complainant.
The appellant’s appeal against the civil court’s decision was dismissed, affirming the lower court’s findings. Meanwhile, the trial court convicted the appellant under Section 138 of the Negotiable Instruments Act, sentencing him to imprisonment and compensation.
Both the trial court and the first appellate court upheld the conviction, which was affirmed by the High Court. The appellant’s conviction under Section 138 of the Negotiable Instruments Act was confirmed based on the dishonour of the cheque issued against a debt, despite the appellant’s parallel civil suit regarding the same cheque.
K. Parameshwar, counsel for the appellant, placed reliance on the case of M/s. Karam Chand Ganga Prasad & Anr. vs. Union of India & Ors. where Supreme Court observed that: “…….It is a well-established principle of law that the decisions of the civil courts are binding on the criminal courts. The converse is not true.”
The issue before the bench was:
Whether, a criminal proceeding can be initiated and the accused therein held guilty with natural consequences thereof to follow, in connection with a transaction, in respect of which a decree by a competent Court of civil jurisdiction, already stands passed?
The bench referred to the case of Iqbal Singh Marwah vs. Meenakshi Marwah where it was held that “………..Civil cases are decided on the basis preponderance of evidence, while in a criminal case, the entire burden lies on the prosecution, and proof beyond reasonable doubt has to be given. There is neither any statutory provision nor any legal principle that the findings recorded in one proceeding may be treated as final or binding in the other, as both the cases have to be decided on the basis of the evidence adduced therein………..”
Supreme Court looked into the case of K.G. Premshanker vs. Inspector of Police & Anr. where it was stated that sentence and damages would be excluded from the conflict of decisions in civil and criminal jurisdictions of the Courts.
The bench noted 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. Supreme Court opined that the criminal proceedings resulting from the cheque being returned unrealised due to the closure of the account would be unsustainable in law. In view of the above, the bench allowed the appeal.
Case Title: Prem Raj v. Poonamma Menon & Anr.
Bench: Justices Sanjay Karol and Aravind Kumar
Case No.: Arising out of Special Leave Petition (Crl.) No.9778/2018
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