Civil and criminal cases can proceed simultaneously

By Vivek Vashi, Bharucha & Partners
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The Supreme Court in Vishnu Dutt Sharma v Daya Sapra considered the effect of a judgment passed in a criminal proceeding on a pending civil proceeding.

Vivek Vashi Bharucha & Partners
Vivek Vashi
Bharucha & Partners

Daya Sapra (Sapra) had borrowed Rs150,000 (US$3,100) from Vishnu Dutt Sharma (Sharma) on 10 August 1999. Upon demand by Sharma, Sapra issued a cheque for Rs150,000 on 20 October 1999. The cheque when presented for payment by Sharma to the Oriental Bank of Commerce, Delhi, was returned unpaid with the remark “insufficient funds”. This culminated in Sharma filing a criminal complaint against Sapra for allegedly committing offences under section 138 of the Negotiable Instruments Act, 1881 (for dishonour of a cheque) read with section 420 of the Indian Penal Code (i.e. for cheating). In October 2002, almost 29 months later, Sharma additionally instituted a civil suit for recovery of a sum of Rs204,000 in the court of a senior civil judge in Delhi.

Sapra’s defence in both proceedings was that she had not taken any money on loan from Sharma; the cheque was not issued in repayment of any loan since no loan had been taken from Sharma; and that the cheque was in fact forcibly taken from her husband by the police.

The criminal court in its September 2003 judgment was pleased to acquit Sapra on the basis of its finding that the cheque was not issued to Sharma for the purpose of repaying any loan.

Having succeeded in obtaining an acquittal in the criminal proceedings, Sapra filed an application under order 7 Rule 11(d) Code of Civil Procedure, 1908, for rejection of the plaint in Sharma’s civil suit. The application was based on the premise that since the criminal complaint had been dismissed, the plaint ought to be rejected. The application was dismissed by the civil judge on the basis that the finding of a criminal court in the proceeding under section 138 of the Negotiable Instruments Act would not operate as res-judicata in a civil suit for recovery of money, particularly as the nature of proceedings in both cases was different.

Aggrieved by the decision, Sapra filed a writ petition in Delhi High Court to quash the civil judge’s order. The court allowed the writ on two grounds; 1) that the principles of res-judicata were applicable; and 2) that Sharma’s suit was nothing but an abuse of the legal process.

Sharma filed a special leave petition to the Supreme Court and sought to impugn the decision of the civil judge. The question of law to be determined by the special leave petition was: What would be the effect of a judgment passed in the criminal proceedings in relation to the subject matter for which a civil proceeding has also been initiated?

The Supreme Court observed that the cause of action in the suit was the grant of a loan, whereas in the criminal complaint it was the dishonour of a cheque. It observed that “There cannot be any doubt or dispute that a creditor can maintain a civil and criminal proceeding at the same time. Both proceedings, thus, can run parallel. The fact required to be proved to obtain a decree in the civil suit and a judgment of conviction in the criminal proceedings may overlap, but the standard of proof in a criminal case vis-a-vis a civil suit, indisputably is different. Whereas in a criminal case the prosecution is bound to prove the commission of the offence on the part of the accused beyond any reasonable doubt; in a civil suit ‘preponderance of probability’ would serve the purpose for obtaining a decree.

In the course of its analysis of the question of law, the court considered the decision in the case of Krishna Janardhan Bhat v Dattaraya G Hegde, where it was observed while considering the applicability of section 118(a) read with section 139 of the Negotiable Instruments Act, that a mandatory presumption was required to be raised in terms of section 118(b) of the act, while section 139 of the act merely raised a presumption in favour of the holder of the cheque, i.e. that the cheque had been issued in discharge of a debt or liability.

The court also considered the applicability of section 40 of the Indian Evidence Act, 1872 (i.e. relevancy of previous judgments to bar a second suit or trial) and held that section 40 would only be applicable if the case was barred by the principle of res-judicata or by the provisions of other statutes. It however held that the provision did not lay down that a criminal court’s judgment would be admissible in a civil court.

Accordingly, the court held that it would be incorrect to contend that a judgment rendered in criminal proceedings would make the continuation of civil proceedings an abuse of the process of court. A criminal court’s judgment can therefore be relevant in a civil proceeding only for the purpose of identifying the accused and the operative order passed therein. The decision would not however be binding in a civil proceeding.

This ruling once again clarifies the law that civil and criminal proceedings can proceed simultaneously. The standard of proof required in the two proceedings is entirely different. Civil cases will be decided on the basis of preponderance of evidence, while in a criminal case the doctrine of ‘proof beyond reasonable doubt’ would be applied.

Vivek Vashi is the mainstay of the litigation department at Bharucha & Partners. Bharucha & Partners is a full-service firm with practice areas including litigation, international and domestic arbitration, intellectual property, real estate, M&A, corporate restructuring, joint ventures, private equity etc.

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