Cheque Bounce Complaint U/S 138 NI Act Maintainable Even If Civil Suit For Recovery Is Instituted: Karnataka High Court Reiterates

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Case Overview

The Karnataka High Court dismissed a petition challenging the maintainability of a criminal complaint under Section 138 of the Negotiable Instruments Act (NI Act). The petitioner, Lalji Kesha Vaid, argued that filing a civil suit for debt recovery precluded a criminal complaint for cheque bouncing. The court rejected this argument.

Court's Ruling

The court ruled that both a civil suit for debt recovery and a criminal complaint under Section 138 of the NI Act are maintainable, even though they stem from the same cause of action. This aligns with a previous Apex Court judgment in D. Purushottama Reddy v. K. Sateesh (2008) 8 SCC 505. The court emphasized that the civil suit addresses damages, while the criminal complaint addresses the dishonor of the cheque.

Key Arguments

Petitioner argued that the civil suit bars the criminal complaint.
Respondent countered that the civil suit is for damages, and the criminal action is for cheque dishonor.
The court cited precedent supporting the maintainability of both proceedings.

Outcome

The court rejected the petition, finding no grounds to interfere with the ongoing criminal proceedings. The decision clarifies that pursuing civil remedies does not preclude criminal action for cheque bouncing under Section 138 of the NI Act.

The Karnataka High Court has held that a complaint for offence punishable under Section 138 of the Negotiable Instruments Act would be maintainable, notwithstanding the civil suit filed for recovery of the money.

A single judge bench of Justice M Nagaprasanna held thus white dismissing a petition filed by one Lalji Kesha Vaid. It said “The 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.”

Vaid had challenged the order of the trial court issuing summons to him on a private complaint filed by Dayanand R under Section 138 of the Act. He argued that once having instituted a civil suit for the purpose of recovery of money of the very sum and the Court decreeing the suit even at a later point in time, would bar setting criminal law into motion for the offence punishable under Section 138 of the Act.

The complainant opposed the plea submitting that instituting a civil suit is for the purpose of damages and mere institution of civil suit would not bar criminal law being set into motion, for dishonour of a cheque that was presented for realisation on account of non-payment.

The bench relied on Apex court judgment in the case of D.PURUSHOTAMA REDDY v. K.SATEESH, (2008) 8 SCC 505 wherein the court had held that two proceedings are maintainable. The two would be a civil suit seeking recovery of amount and a proceeding for the offence punishable under Section 138 of the Act.

The court held “Since the entire petition is framed on the aforesaid ground and the ground is answered to be unsustainable, there is no warrant to interfere in the criminal proceedings set into motion by the respondent. In the result, finding no merit in the petition, the petition stands rejected.”

Appearance: Advocate V Sudhakar for Petitioner

Advocate Vijetha R Naik for Respondent

Citation No: 2024 LiveLaw (Kar) 450

Case Title: Lalji Kesha Vaid AND Dayanand R

Case No: CRIMINAL PETITION No.331 OF 2022.

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