Are Civil Courts' Decrees Binding On Criminal Courts? Supreme Court Explains

Recently, the Supreme Court observed that though the outcome of the proceedings initiated under civil law would not have any binding effect on the outcome of the proceedings initiated under criminal law, however, the outcome of the civil proceedings would be binding on the criminal proceedings only to the extent of holding the sentences or damages arising out of criminal proceedings as unsustainable in law.

The Bench comprising Justices Sanjay Karol and Aravind Kumar said that when the substance of the dispute is the same in civil and criminal proceedings, then the outcome of the civil proceedings shall be binding on the outcome of the criminal proceedings to make sentences/damages awarded in criminal proceedings unsustainable under the law.

The Court's judgment came in a case with the following facts :

Mr. X gives a cheque amounting to Rs. 2 Lakhs to Mr. Y in the form of security for the payment of an outstanding debt. However, the cheque was dishonored with 'funds insufficient' when encashed. On the other hand, Mr. X initiated a civil proceeding restraining Mr. Y from encashing the cheque citing that the cheque was given to Mr. Y for security purposes and not for encashment. The trial court decreed the suit in favor of Mr. X restraining Mr. Y from encashing the cheque holding that it was given only for security purposes.

The Court held that since the subject of the dispute in civil and criminal proceedings was the 'cheque', and once the civil court restrains the encashment of the cheque then the outcome/decision of the civil court would be binding on the criminal proceedings initiated under Negotiable Instruments Act, 1882 for dishonoring of the cheque. Therefore, the punishment imposed by the criminal court for cheque dishonor would be unsustainable in law, as the criminal court would be bound by the outcome of the civil proceedings.

Judicial Precedents

In M/s. Karam Chand Ganga Prasad & Anr. vs. Union of India & Ors, it was held that the decisions of the civil courts are binding on the criminal courts and the converse is not true. However, the position adopted in the Karam Chand case was overruled in the case of Satish Chander Ahuja vs. Sneha Ahuja, opining that there is no embargo for a civil court to consider the evidence led in the criminal proceedings.

Further, in the case of K.G. Premshanker vs. Inspector of Police & Anr, it was held that 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.

Endorsing the view taken in K.G. Premshanker, the 5 Judge Bench in Iqbal Singh Marwah vs. Meenakshi Marwah observed that the findings recorded in one proceeding may be treated as final or binding in the other, as both cases have to be decided based on the evidence adduced therein.

“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 court added in Iqbal Singh Marwah.

Based on the observation passed in K.G. Premshanker and Iqbal Singh Marwah, it can be ascertained that the sentence and damages awarded in the criminal proceedings would be excluded from the conflict of decisions in civil and criminal jurisdictions of the Courts.

As regards the facts of the case at hand, the Court observed :

“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 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.”

Counsel For Petitioner(s) Mr. K.parameshwar, AOR Ms. Arti Gupta, Adv. Ms. Kanti, Adv. Mr. Chinmay Kalgaonkar, Adv. Ms. Raji Gururaj, Adv.