In a significant ruling, the Supreme Court overturned a criminal conviction for check dishonor under Section 138 of the Negotiable Instruments Act.
The decision was based on a prior civil suit between the same parties, where it was established that the check in question was provided as security rather than for payment.
The Court clarified that while judgments in civil cases do not bind criminal courts entirely, they do have a limited impact on certain aspects such as sentencing and damages.
Citing the precedent set in the case of K.G. Premshanker vs. Inspector of Police & Anr, the Court emphasized that sentences and damages would be exceptions to the general non-binding nature of civil judgments on criminal proceedings.
In this specific case, the Court highlighted that the civil court had already determined the nature of the check as security in its judgment.
Consequently, the criminal court would be bound by this finding, particularly in terms of sentencing and damages.
The judgment, authored by Justice Sanjay Karol, underscored that the law does not anticipate complete binding between civil and criminal proceedings.
Each case must be decided based on the evidence presented within its respective jurisdiction.
The case at hand involved a scenario where criminal proceedings were initiated against the accused for check dishonor, while the accused had simultaneously initiated civil proceedings to prevent encashment of the check.
Despite the appellant being convicted and sentenced to imprisonment and a fine by lower courts, the Supreme Court intervened, noting the conflict between the civil and criminal judgments. While the civil court restrained encashment, the criminal court imposed penalties for dishonor.
Relying on the Constitution Bench judgment of Iqbal Singh Marwah vs. Meenakshi Marwah, the Court reiterated that findings in one proceeding are not automatically binding in another. It emphasized that the law does not make decisions of one court binding on the other, except for specific instances such as sentencing or damages.
Given the restraint imposed by the civil court regarding encashment of the check, the Supreme Court deemed the criminal proceedings unsustainable. Consequently, it quashed the conviction and set aside the criminal proceedings.
