Criminal Court Bound By Civil Court's Declaration That Cheque Was Only For Purpose Of Security: SC Quashes Concurrent Conviction In Cheque Bounce Case
The Supreme Court quashed concurrent conviction in a cheque bounce case after noticing that a Civil Court had declared the subject cheque to be only for the purposes of security.
Justice Sanjay Karol and Justice Aravind Kumar observed, "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.. 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."
AOR K.Parameshwar represented the appellant, while Advocate Pranjal Kishore appeared for the respondent.
The appellant contested his conviction under Section 138 of the NI Act, 1881, arising from the dishonour of a cheque due to insufficient funds.
The Trial Court convicted the appellant to undergo simple imprisonment for one year as well as pay compensation of Rs.2 lakhs in default. It was also clarified that a Court exercising jurisdiction on the criminal side is not subordinate to the Civil Court. Similarly, the Kerala High Court in revision observed no perversity with the order of the Trial Court.
Now the Supreme Court had to determine whether criminal proceedings could be initiated in connection with a transaction in respect of which a decree by a competent Court of civil jurisdiction already stands passed.
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.”
Consequently, the Court quashed the criminal proceedings resulting from the cheque being returned unrealised due to the closure of the account. “Resultantly, the damages as imposed by the Courts below must be returned to the appellant,” the Court held.
Accordingly, the Supreme Court set aside the conviction and allowed the appeal.
Cause Title: Prem Raj v. Poonamma Menon & Anr. (Neutral Citation: 2024 INSC 260)
Appearance:
Appellant: AOR K.Parameshwar; Advocates Arti Gupta, Kanti, Chinmay Kalgaonkar and Raji Gururaj
Respondents: AOR Nishe Rajen Shonker; Advocates Pranjal Kishore, Atul Shankar Vinod, Dilip Pillai, Ajay Jain, Madiya Mushtaq Nadroo, M. P. Vinod, Alim Anvar and Anu K Joy
