2024 (4) TMI 218 - SC - Indian Laws

Criminal proceedings for dishonored cheque cannot continue when civil court declares cheque issued for security purposes only

PREM RAJ Versus POONAMMA MENON & ANR.

The SC held that criminal proceedings under dishonor of cheque cannot be sustained when a civil court has already declared the cheque was issued only for ... Dishonor of Cheque - Ascertaining nature of transaction - whether a criminal proceeding can be initiated and an accused held guilty when there is already a civil court decree concerning the same transaction - criminal jurisdiction would be bound by the civil Court or not - HELD THAT:- This Court in Satish Chander Ahuja vs. Sneha Ahuja [2020 (10) TMI 1379 - SUPREME COURT] considered a numerous precedents, including Premshanker [2002 (9) TMI 849 - SUPREME COURT] and Vishnu Dutt Sharma [2009 (5) TMI 862 - SUPREME COURT], to opine that there is no embargo for a civil court to consider the evidence led in the criminal proceedings. The position as per Premshanker is that sentence and damages would be excluded from the conflict of decisions in civil and criminal jurisdictions of the Courts. Therefore, in the present case, 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. The criminal proceedings resulting from the cheque being returned unrealised due to the closure of the account would be unsustainable in law and, therefore, are to be quashed and set aside. Resultantly, the damages as imposed by the Courts below must be returned to the appellant herein forthwith - Appeal allowed. Issues involved:The judgment involves the consideration of whether a criminal proceeding can be initiated and the accused held guilty in connection with a transaction for which a decree by a civil court already exists.Issue 1 - Civil Decree vs. Criminal Conviction:The appellant challenged a judgment under Section 138 of the Negotiable Instruments Act, 1881. The appellant had borrowed money and issued a cheque which was dishonored. There was a civil suit related to the same transaction where a decree was passed in favor of the appellant. The Trial Court convicted the appellant, and the First Appellate Court confirmed the conviction based on the cheque being issued against a legally enforceable debt. The High Court found no perversity in the lower courts' findings and dismissed the revision.Issue 2 - Conflict of Civil and Criminal Proceedings:The appellant had initiated both civil and criminal proceedings regarding the same transaction. The Courts below noted that the civil court's order cannot fetter the hands of the criminal court. The appellant relied on legal authorities emphasizing that decisions of civil courts are binding on criminal courts. However, conflicting decisions of civil and criminal courts are not relevant except for sentence or damages. The Constitution Bench clarified that criminal matters should be given precedence over civil matters for swift and sure justice. In this case, since the civil court had declared the cheque as security, the criminal proceedings were deemed unsustainable in law, and the conviction was quashed.Conclusion:The Supreme Court allowed the appeal, quashing the judgment and order that upheld the appellant's conviction. The criminal proceedings were deemed unsustainable due to the civil court's declaration regarding the nature of the cheque. The damages imposed were to be returned to the appellant, and all pending applications were disposed of accordingly.