Dishonour of cheque-When finding of civil court is relevant in criminal proceeding?

Thus a perusal of the above provisions contained in Sections 41 to 43 will give a clear perspective as to how judgments, orders or decrees passed by a competent court would become relevant in another case. If the decree or judgment in question is inter partes and if the existence of the said judgment is not disputed by either of the two parties, the said judgment or decree becomes all the more relevant. It need not be stressed that the decree or judgment assumes greater relevance and significance if the decree or judgment sought to be relied on is in respect of the same subject matter.As mentioned earlier, the short question that falls for consideration is whether the fate of the criminal prosecution should hang on the decree and judgment passed by the civil court based on the very same cheque. It is trite that if the criminal case and the civil proceeding are for the same cause, judgment of the civil court would be relevant, if conditions stipulated in sections 40 to 43 are satisfied. It has been so held by a three Judge Bench of the apex court in Prem Sankar v. I.G of Police (2002 (3) KLT 389 (SC). However the court further cautioned that the judgment, order or decree passed in a previous civil proceeding, if relevant, as provided under Ss.40  

and 42 or other provisions of the Evidence Act, then in each case, court has to decide to what extent it is binding or conclusive with regard to the matter(s) decided therein. In other words, the Court laid down that the issue will depend upon facts of each case.The above being the settled position about the right of the holder of a cheque to proceed against the drawer simultaneously before the civil court and criminal court, the other question as to what would be the impact of the finding of the civil court in criminal proceedings or whether the cheque was a valid negotiable instrument supported by consideration or whether or not there existed a legally enforceable debt or liability etc. has to be answered in the backdrop of the above settled legal position. In my view, for the reasons stated above, question posed for consideration has to be answered in the affirmative.

Kerala High Court

Mohandas vs P..Abdul Azeez on 30 June, 2011

IN THE HIGH COURT OF KERALA AT ERNAKULAM
Citation; 2014 ALLMR(cri)JOURNAL 43

Revision petitioner who has been concurrently found guilty under Section 138 of the Negotiable Instruments Act impugns the order of conviction and sentence passed against him in this revision petition. But apart from the question of correctness, legality or propriety of the orders under challenge, yet another interesting question has cropped up for consideration in this case.

2. The question: Is the criminal court bound by the decree and judgment passed by a competent civil court holding that the cheque which was the subject matter of the criminal prosecution was not supported by consideration as alleged by the complainant-plaintiff and that the accused/defendant had not borrowed any money from the defendant at all?

3. In other words, the question is : Can a criminal court ignore the judgment and decree inter partes and decide the question of culpability of the accused solely on the basis of the evidence adduced by the parties in the criminal proceeding? Crl.RP.886/2001.

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4. Before we deal with the above legal question, the essential facts which led to the prosecution case may be briefly noticed.

5. Respondent/complainant alleged that the accused had borrowed a sum of Rs.45,000/- from him and issued Ext.P1 cheque dated January 31, 1994 in discharge of the said debt. But when the cheque was presented for encashment it was dishonoured due to insufficiency of funds in the account of the accused. Though a statutory demand notice was issued, the liability was not discharged.

6. The complainant got himself examined before the trial court as Pw.1 and Exts.P1 to P6 were marked on his side. The accused and his two witnesses were examined as Dws.1 to 3. The learned Magistrate after considering the oral and documentary evidence available on record found that the accused had issued Ext.P1 cheque in discharge of an existing debt or liability and that it had been dishonoured due to insufficiency of funds in his account. Accordingly the accused was found guilty and convicted and sentenced under Section 138 of the Negotiable Instruments Act to undergo simple imprisonment for six months and to pay a fine of Rs.3,000/- with a default sentence of three months. It was directed that a sum of Crl.RP.886/2001.

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Rs.1,000/- shall be paid to the complainant, if the fine amount was realised from the accused.

7. In appeal, the Sessions Court confirmed the order of conviction passed by the trial court. However the sentence of imprisonment was modified and reduced to simple imprisonment for one month. The accused was further directed to pay a fine of Rs.50,000/- out of which Rs.45,000/- was directed to be paid to the complainant as compensation. In default of payment of the fine amount, the accused was directed to suffer simple imprisonment for two months.

8. The above order passed by the Sessions Court is under challenge in this revision petition.

9. Learned counsel for the petitioner has assailed the concurrent orders passed by the courts below on all conceivable grounds. However the learned counsel has placed heavy reliance on the judgment and decree passed by a civil court in a suit relating to the very same cheque which is the subject matter of the prosecution. It is pointed out by the learned counsel that in a suit instituted by the complainant for recovery of the amount covered under Ext.P1 cheque, the civil court has held that the complainant/plaintiff had not been able to prove that the defendant had borrowed the sum indicated in Ext.P1 cheque or Crl.RP.886/2001.

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that Ext.P1 cheque had been issued by the accused/defendant in discharge of any debt as alleged by the plaintiff. In other words, the civil court categorically held that Ext.P1 cheque was not supported by consideration. True copy of the judgment passed by the subordinate Judge's Court, Attingal in OS.No.223/1995 has been produced by the petitioner as Annexure I. It is contended by the learned counsel that the above decree and judgment having become final, the order of conviction and sentence passed against the petitioner cannot be sustained any longer.

10. But learned counsel for the respondent/complainant while conceding the existence of the judgment referred to above contends that this Court need not look beyond the materials available in the criminal proceeding. The courts below have assessed the oral and documentary evidence adduced by the parties in accordance with the provisions contained in Chapter XVII of the Negotiable Instruments Act as amended by the Banking, Public Financial Institutions and Negotiable Instruments (Amendment) Act 1988. The trial court as well as the appellate court were rightly guided and governed by the provisions contained in Chapter XVII. The evidence adduced by the parties was assessed by the courts below applying the statutory presumption available to the holder of a cheque under Crl.RP.886/2001.

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Section 139 of the Act. Similarly, the defence available to the drawer of a cheque under Section 140 of the Act was also apparently kept in view by the courts below. It is thus contended by the learned counsel for the complainant that this Court in exercise of its revisional jurisdiction, need only consider the "correctness, legality or propriety" of the order passed by the inferior criminal court.

11. The jurisdiction of a civil court to try all suits of a civil nature except those in which cognizance either expressly or impliedly is barred, is beyond any pale of controversy. The expression "suit of civil nature" generally denotes private rights and obligations of a citizen and obviously not the larger political or religious issues. If in a suit the principal question relates to caste or religion, it is not a suit of civil nature. But if the question relates to determination of the right to property or the right to an office, and if the adjudication incidentally involves determination relating to the question of caste or religious rites or ceremonies, the suit does not cease to be a civil suit.

12. It is the settled law that if there is any doubt about ouster of jurisdiction, the courts will lean to an interpretation which will maintain the jurisdiction. Institution of a suit can be held to be barred only when it is done so by an enactment for the Crl.RP.886/2001.

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time being in force or when it is impliedly barred by the general principles of law. Principles regarding exclusion of jurisdiction of civil courts were elaborately dealt with and enumerated by their Lordships of the Supreme court in Dhulabhai v. State of Madhya Pradesh (AIR 1969 SC 78).

13. Reference has been made to the above judgment only to reiterate the settled position of law that a civil court will have jurisdiction to decide any issue of a civil nature. The judgment to be rendered by the civil court may be in personam or rem depending on the nature of the issue decided. If an issue between two parties is decided in a civil suit, the parties to the said lis will be bound by the said decision.

14. Sections 40 to 43 of the Evidence Act deal with relevancy of previous judgments of Courts in subsequent proceedings. Section 40 postulates that the existence of any judgment, order or decree which by law prevents any Court from taking cognisance of a suit or holding a trial is a relevant fact when the question is whether such Court ought to take cognisance of such suit or to hold such trial. Section 41 deals with relevancy of certain judgments in probate, matrimonial or insolvency jurisdiction. It is stipulated in this section that a final judgment, order or decree of a competent Court, passed in Crl.RP.886/2001.

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exercise of the above jurisdiction will be relevant when the existence of any such legal character or the title of any such person or to any such thing is relevant. Section 42 refers to judgments, orders or decrees other than those mentioned in Section 41 and postulates that all other judgments would be relevant if only they relate to matters of a public nature. Section 43 postulates that all judgments other than those mentioned in Sections 40, 41 and 42 would be irrelevant unless the existence of such judgment, order or decree is a fact in issue or is relevant under some other provisions of the Act.

15. Thus a perusal of the above provisions contained in Sections 41 to 43 will give a clear perspective as to how judgments, orders or decrees passed by a competent court would become relevant in another case. If the decree or judgment in question is inter partes and if the existence of the said judgment is not disputed by either of the two parties, the said judgment or decree becomes all the more relevant. It need not be stressed that the decree or judgment assumes greater relevance and significance if the decree or judgment sought to be relied on is in respect of the same subject matter.

16. In the case on hand admittedly the suit was in relation to the very same cheque (Ext.P1) . It is beyond controversy that Crl.RP.886/2001.

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the trial court had passed the judgment in the case on April 26, 1995 holding the petitioner guilty of the offence. Nevertheless, the complainant chose to institute the suit before the civil court on August 4, 1995. Apparently at that time the appeal preferred by the petitioner was pending before the Sessions Court. The civil court dismissed the suit on December 5, 1997. The Sessions Court had disposed of the criminal appeal only on June 21, 2001. However it appears that the decree passed by the civil court was not brought to the notice of the Sessions Court. Anyhow the fact remains that the Sessions Court confirmed the order of conviction and sentence passed by the trial court.

17. As mentioned earlier, the short question that falls for consideration is whether the fate of the criminal prosecution should hang on the decree and judgment passed by the civil court based on the very same cheque. It is trite that if the criminal case and the civil proceeding are for the same cause, judgment of the civil court would be relevant, if conditions stipulated in sections 40 to 43 are satisfied. It has been so held by a three Judge Bench of the apex court in Prem Sankar v. I.G of Police (2002 (3) KLT 389 (SC). However the court further cautioned that "...the judgment, order or decree passed in a previous civil proceeding, if relevant, as provided under Ss.40 Crl.RP.886/2001.

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and 42 or other provisions of the Evidence Act, then in each case, court has to decide to what extent it is binding or conclusive with regard to the matter(s) decided therein". In other words, the Court laid down that the issue will depend upon facts of each case.

18. It is well settled that holder of a cheque is entitled to institute suit for recovery of the money covered under the said cheque, even if he has filed a complaint under Section 138 of the Negotiable Instruments Act against the drawer of the cheque (State of Rajasthan v. K.Sundaram Cement Inds. (SC) (1986 Com. Cases 433). Various High Courts have also repeatedly held that enforcement of the liability through a civil court will not disentitle the aggrieved person from prosecuting the offender for the offence punishable under Section 138 of the Act. Both remedies may be simultaneously available and a civil suit cannot deter the criminal cause of action.

19. It has also been held in several cases that successful termination of the civil litigation can not ipso facto mean that the criminal prosecution cannot be pursued. The only safeguard the drawer of the cheque (accused) may have is that realisation of the amount by the civil court will definitely have a bearing on the criminal court while considering the sentence to be imposed Crl.RP.886/2001.

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on him if he is found guilty. Even while executing the decree passed by the civil court the payment, if any, made by the accused before the criminal court will have to be given credit to. The above being the settled position about the right of the holder of a cheque to proceed against the drawer simultaneously before the civil court and criminal court, the other question as to what would be the impact of the finding of the civil court in criminal proceedings or whether the cheque was a valid negotiable instrument supported by consideration or whether or not there existed a legally enforceable debt or liability etc. has to be answered in the backdrop of the above settled legal position. In my view, for the reasons stated above, question posed for consideration has to be answered in the affirmative. I do so. Therefore, the order of conviction and sentence passed against the petitioner is set aside. Criminal Revision Petition is allowed.

A.K. Basheer

Judge.

an.

Crl.RP.886/2001.

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A.K.Basheer, J.

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Crl.R.P.No.886 of 2001

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ORDER

30th June, 2011

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