Complaint U/S 138 NI Act Is Maintainable Despite Existence Of Civil Suit Arising From The Same Cause Of Action: Karnataka HC

The Court was hearing a Criminal Petition calling into question proceedings pending before the Additional Chief Metropolitan Magistrate registered by the Respondent under Section 200 of the CrPC for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

The bench of Justice M Nagaprasanna observed, “complaint for offence punishable under Section 138 of the Act would be maintainable, notwithstanding recovery proceedings initiated by institution of a civil Suit, though both spring from the same cause of action.”

Advocate Amaresh A. Angadi appeared for the Petitioner and Advocate Vijetha R Naik appeared for the Respondent.

Brief Facts-

The Petitioner and Respondent were long-time colleagues at Hi-Tech Computer and later worked together when the Petitioner started Venus Office Needs. The Respondent lent money to the Petitioner during a purchase, who provided a blank signed cheque as repayment. Later, the Petitioner repaid the Rs. 5L in cash, but the blank cheque was not returned. A dispute occurred and the Respondent filed a Civil Suit and a private complaint under Section 200 of CrPC. The Magistrate issued a summons. Hence, the Petitioner challenged the proceedings in the present Petition.

The Court mentioned the Supreme Court decision in D. Purushotama Reddy v. K Sateesh and quoted, “A suit for recovery of money due from a borrower indisputably is maintainable at the instance of the creditor. It is furthermore beyond any doubt or dispute that for the same cause of action a complaint petition under terms of Section 138 of the Act would also be maintainable.”

The Court further mentioned the Supreme Court decision in Vishnu Dutt Sharma v. Daya Sapra (SMT) and quoted, “If judgment of a civil court is not binding on a criminal court, it is incomprehensible that a judgment of a criminal court will be binding on a civil court. We have noticed hereinbefore that Section 43 of the Evidence Act categorically states that judgments, orders or decrees, other than those mentioned in Sections 40, 41 and 42 are irrelevant, unless the existence of such judgment, order or decree, is a fact in issue, or is relevant in some other provisions of the Act, no other provisions of the Evidence Act or for that matter any other statute had been brought to our notice.”

The Court relied on the decision in CREF Finance Limited v. Sree Shanthi Homes Private Limited and quoted, “….There is no dispute so far as this position is concerned. The Apex Court in the aforesaid decision has held “simultaneous civil suit and complaint case under Section 138 of the N.I. Act for the same cause of action are maintainable”. Therefore, the respondents cannot take any advantage of filing the suit by the appellant for recovery of dues.”

Accordingly, the Court rejected the Criminal Petition.