* Author
[2024] 4 S.C.R. 29 : 2024 INSC 260
Prem Raj
v.
Poonamma Menon & Anr.
(Criminal Appeal No. 1858 of 2024)
02 April 2024
[Sanjay Karol* and Aravind Kumar, JJ.]
Issue for Consideration
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.
Headnotes
Negotiable Instruments Act, 1881 – s.138 – Appellant borrowed
Rs.2,00,000/- from the complainant – On receipt of demand,
appellant issued a cheque for the said amount – It was
dishonoured due to insufficient funds and ‘payments stopped
by drawer’ – The complainant issued a notice of demand –
No action on the part of the appellant was taken – Pursuant
thereto, a criminal proceeding was initiated against appellant
– Equally, though, the appellant had filed a civil suit with
prayers to declare the said cheque as a security; direction for
return of cheque and prohibitory injunction restraining any
steps to encash the said cheque – The suit was decreed in
favour of appellant – However, the Court seized of the s.138
N.I. Act complaint, convicted the appellant herein to undergo
simple imprisonment for one year as well as pay compensation
of Rs.2 lakhs in default whereof, he was to undergo further
simple imprisonment for six months – First Appellate upheld
the conviction – The High Court, in revision, observed no
perversity in the concurrent findings of the Trial Court and
First Appellate Court – Propriety:
Held: The position as per K.G. Premshanker vs. Inspector of
Police & Anr 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
30 [2024] 4 S.C.R.
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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 – In that view of the
matter, 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. [Paras 11 and 12]
Case Law Cited
Iqbal Singh Marwah v. Meenakshi Marwah [2005] 2
SCR 708 : (2005) 4 SCC 370 – followed.
K.G. Premshanker v. Inspector of Police & Anr. [2002]
Supp. 2 SCR 350 : (2002) 8 SCC 87 – relied on.
Karam Chand Ganga Prasad & Anr. v. Union of India &
Ors. (1970) 3 SCC 694; M.S. Sheriff v. State of Madras
[1954] 1 SCR 1144 : AIR 1954 SC 397; Vishnu Dutt
Sharma v. Daya Sapra (Smt.) [2009] 7 SCR 977 : (2009)
13 SCC 729; Satish Chander Ahuja v. Sneha Ahuja
[2020] 12 SCR 189 : (2021) 1 SCC 414 – referred to.
List of Acts
Negotiable Instruments Act, 1881.
List of Keywords
Dishonour of cheque; Criminal Proceedings; Civil suit; Conflict of
decisions in civil and criminal jurisdictions.
Case Arising From
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 1858
of 2024
From the Judgment and Order dated 23.01.2018 of the High Court
of Kerala at Ernakulam in CRLRP No. 1111 of 2011
Appearances for Parties
K. Parameshwar, Ms. Arti Gupta, Ms. Kanti, Chinmay Kalgaonkar,
Ms. Raji Gururaj, Advs. for the Appellant.
Pranjal Kishore, Atul Shankar Vinod, Dilip Pillai, Ajay Jain, Ms. Madiya
Mushtaq Nadroo, M. P. Vinod, Alim Anvar, Nishe Rajen Shonker,
Mrs. Anu K Joy, Advs. for the Respondents.
[2024] 4 S.C.R. 31
Prem Raj v. Poonamma Menon & Anr.
Judgment / Order of the Supreme Court
Judgment
Sanjay Karol, J.
Leave granted.
2. Appellant herein challenges judgment and order dated 23rd January,
2018 passed in Crl.R.P. No.1111 of 20111
, whereby the High Court of
Kerala allowed, only in part, his Revision Petition against the judgment
and order of the learned Additional Sessions Judge, Thrissur,2
dated
11th January, 2011, in Criminal Appeal No.673 of 2007, which, in turn,
upheld his conviction, as handed down by the learned Judicial First
Class Magistrate3
vide order dated 14th August, 2007 in CC No.51 of
2003, under Section 138 of the Negotiable Instruments Act, 1881.4
3. The sole issue that we are required to consider is, 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.
4. The facts necessary to put into perspective the issue in the present
appeal are:-
4.1 The Appellant borrowed Rs.2,00,000/- from the Complainant,
K.P.B Menon “Sreyes,” with the promise that he would repay
it on demand.
4.2 On receipt of such demand, he issued a cheque dated 30th
June, 2002 for the said amount from the South Indian Bank,
encashment thereof was to be through Canara Bank, Irinjalakuda
Branch, to which the cheque was sent through the post with a
covering letter dated 24th September, 2002.
4.3 It was dishonoured due to insufficient funds and ‘payments
stopped by drawer’. The Complainant came to know of such
dishonour and issued a notice of demand dated 22nd December,
1 ‘Impugned Judgment’
2 ‘Lower Appellate Court’
3 ‘Trial Court’
4 ‘N.I. Act’
32 [2024] 4 S.C.R.
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2002. Accounting for no action on the part of the appellant, the
complaint, the subject matter of the instant proceedings, came
to be filed.
5. Equally, though, the appellant (accused) had filed Original Suit
No.1338 of 2002. The five parties impleaded as defendants were,
(i) K.P. Bhaskara Menon; (ii) K.P. Vipinendra Kumar5
; (iii) Praveen
Menon; (iv) The Manager South Indian Bank Limited Kathikudam,
Via Koratty, Trichur; and (v) N.T. Raghunandanan. The prayers
made therein were to, (a) declare cheque No.386543 of the South
Indian Bank Limited, Kathikudam, as a security cheque; (b) issue
mandatory injunction directing the 1st defendant to return the said
cheque; and (c) issue a permanent prohibitory injunction restraining
defendants 1 to 4 named hereinabove from taking any steps to
encash the said cheque.
5.1 The Additional District Munsif, Irinjalakuda, decreed the Suit on
11th April, 2003 in favour of the plaintiff (accused). The Suit in
respect of defendant No.4, namely the Manager, South Indian
Bank, was dismissed and the Suit was wholly decreed against
the remaining defendants.
5.2 Defendant No.1 filed an appeal before the Additional Subordinate
Judge, Irinjalakuda in C.M.A.No.6/2006. In its judgment dated
30th January, 2007, the Court observed that “The lower court
correctly analysed the facts and arrived at the right conclusion.
I find no reason to interfere the order of the lower court. Hence
I dismissed this appeal.”
6. Therefore, it appears from the record that the very same cheque
was in issue before the Civil Court and also the Court seized of the
Section 138 N.I. Act complaint.
The conclusions drawn by the Courts below, subject matter of the
instant lis, are as under:
6.1 The Trial Court convicted the appellant herein to undergo simple
imprisonment for one year as well as pay compensation of
Rs.2 lakhs in default whereof, he was to undergo further simple
imprisonment for six months. The determination of the issues,
i.e., whether the decree passed by the Munsif Court would be
5 2nd defendant
[2024] 4 S.C.R. 33
Prem Raj v. Poonamma Menon & Anr.
binding on it, is of note. It was observed that a Court exercising
jurisdiction on the criminal side is not subordinate to the Civil
Court. Further, it was held “That order was an ex-parte order
as far as criminal complaint is concerned the order of injunction
issued cannot be granted and the hands of the criminal court
cannot be fettered by the civil court”.
6.2 The First Appellate Court framed primarily one point for
consideration – whether the cheque was issued against a legally
enforceable debt, thereby attracting the offence under Section
138 of the N.I. Act. This point was held against the appellant
and therefore, the conviction handed down by the Court below,
accordingly confirmed.
7. The High Court, in revision, observed that no perversity could be
indicated in the concurrent findings of the Trial Court and First
Appellate Court. The same was dismissed.
8. We find the manner in which this matter has travelled up to this Court
to be quite concerning. We fail to understand as to how a civil as
well as criminal course could be adopted by the parties involved,
in respect of the very same issue and transaction, in these peculiar
facts and circumstances.
9. In advancing his submissions, Mr. K. Parameshwar, learned counsel
appearing for the appellant, placed reliance on certain authorities of
this Court. In M/s. Karam Chand Ganga Prasad & Anr. vs. Union
of India & Ors.
6
, this 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.”
In K.G. Premshanker vs. Inspector of Police & Anr7
., a Bench
of three learned Judges observed that, following the M.S. Sheriff
vs. State of Madras8
, no straight-jacket formula could be laid down
and conflicting decisions of civil and criminal Courts would not be
a relevant consideration except for the limited purpose of sentence
or damages.
6 (1970) 3 SCC 694
7 [2002] Supp. 2 SCR 350 : (2002) 8 SCC 87
8 [1954] 1 SCR 1144 : AIR 1954 SC 397
34 [2024] 4 S.C.R.
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10. We notice that this Court in Vishnu Dutt Sharma vs. Daya Sapra
(Smt.)9
, had observed as under:
“26. It is, however, significant to notice a decision of
this Court in Karam Chand Ganga Prasad v. Union of
India (1970) 3 SCC 694, wherein it was categorically
held that the decisions of the civil court will be binding
on the criminal courts but the converse is not true, was
overruled therein…”
This Court in Satish Chander Ahuja vs. Sneha Ahuja10 considered
a numerous precedents, including Premshanker (supra) and Vishnu
Dutt Sharma (supra), to opine that there is no embargo for a civil
court to consider the evidence led in the criminal proceedings.
The issue has been laid to rest by a Constitution Bench of this Court
in Iqbal Singh Marwah vs. Meenakshi Marwah11 :
“32. Coming to the last contention that an effort should
be made to avoid conflict of findings between the civil
and criminal courts, it is necessary to point out that the
standard of proof required in the two proceedings are
entirely different. Civil cases are decided on the basis of
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. While
examining a similar contention in an appeal against an
order directing filing of a complaint under Section 476
of the old Code, the following observations made by a
Constitution Bench in M.S. Sheriff v. State of Madras
[1954 SCR 1144 : AIR 1954 SC 397: 1954 Cri LJ 1019]
give a complete answer to the problem posed: (AIR p.
399, paras 15-16)
9 [2009] 7 SCR 977 : (2009) 13 SCC 729
10 [2020] 12 SCR 189 : (2021) 1 SCC 414
11 [2005] 2 SCR 708 : (2005) 4 SCC 370
[2024] 4 S.C.R. 35
Prem Raj v. Poonamma Menon & Anr.
“15. As between the civil and the criminal proceedings,
we are of the opinion that the criminal matters should
be given precedence. There is some difference of
opinion in the High Courts of India on this point. No
hard-and-fast rule can be laid down but we do not
consider that the possibility of conflicting decisions in
the civil and criminal courts is a relevant consideration.
The law envisages such an eventuality when it
expressly refrains from making the decision of one
court binding on the other, or even relevant, except
for certain limited purposes, such as sentence or
damages. The only relevant consideration here is
the likelihood of embarrassment.
16. Another factor which weighs with us is that a civil
suit often drags on for years and it is undesirable
that a criminal prosecution should wait till everybody
concerned has forgotten all about the crime. The
public interests demand that criminal justice should
be swift and sure; that the guilty should be punished
while the events are still fresh in the public mind and
that the innocent should be absolved as early as
is consistent with a fair and impartial trial. Another
reason is that it is undesirable to let things slide till
memories have grown too dim to trust.
This, however, is not a hard-and-fast rule. Special
considerations obtaining in any particular case might
make some other course more expedient and just. For
example, the civil case or the other criminal proceeding
may be so near its end as to make it inexpedient to stay
it in order to give precedence to a prosecution ordered
under Section 476. But in this case we are of the view that
the civil suits should be stayed till the criminal proceedings
have finished.”
(Emphasis Supplied)
11. The position as per Premshanker (supra) 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
36 [2024] 4 S.C.R.
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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.
12. In that view of the matter, 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.
13. The appeal is allowed in the aforesaid terms. Hence, the judgment
and order passed by Additional Sessions Judge, Thrissur, in Criminal
Appeal 673 of 2007, which upheld the conviction, as handed down
by the learned Judicial First Class Magistrate in CC No. 51 of 2003,
which came to affirmed by the High Court of Kerela in Crl.R.P.No.1111
of 2011 is quashed and set aside. Pending application(s), if any,
shall stand disposed of.
Headnotes prepared by: Ankit Gyan Result of the case:
Appeal allowed.
