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Mathew v. Sony Cyriac
Structured Summary of the Provided Legal Opinion
Factual and Procedural Background
The plaintiffs alleged that the defendants had issued cheques which were dishonoured on presentment. The plaintiffs initiated prosecutions under Section 138 of the Negotiable Instruments Act and thereafter filed civil suits for recovery of the amounts due under the dishonoured cheques. On entering appearance in the civil suits, the respective defendants filed applications under Section 151 of the Code of Civil Procedure seeking a stay of the civil suits pending the outcome of the criminal prosecutions. The defendants contended that proceeding with the civil suits would compel them to disclose their defences and prejudice their rights in the criminal prosecutions, invoking Article 20(3) of the Constitution of India. The trial court refused to stay the civil suits and dismissed the defendants' applications. The defendants challenged those orders by filing the present civil revision petitions.
Legal Issues Presented
- Whether civil suits founded on dishonoured cheques can or should be stayed pending parallel criminal prosecutions under Section 138 of the Negotiable Instruments Act.
- Whether compelling the defendants to file written statements in the civil suits would violate their constitutional right under Article 20(3) (the privilege against self-incrimination).
- Whether the exercise of discretion by the lower civil court in refusing to stay the suits was so unreasonable or perverse as to warrant interference under Section 115 of the Code of Civil Procedure.
Arguments of the Parties
Defendants' Arguments
- Proceeding with the civil suits would compel them to disclose their defences and thereby prejudice their ability to defend the criminal prosecutions; this would violate Article 20(3) of the Constitution of India.
- Reliance on M.S. Sherif v. State of Madras (AIR 1954 SC 397) for the proposition that, in appropriate cases, a civil court can stay civil proceedings until a related criminal case is disposed of and that criminal trials should have precedence.
- Reliance on Apeejay Private Ltd. v. Raghava Chari Narasingham (1989 Crl. L.J. 2358) (Calcutta High Court) to assert that accused persons have a constitutional right to silence and that identity of subject matter between criminal and civil proceedings requires stopping the civil proceedings until criminal disposal.
Plaintiffs' Arguments
- The mere institution of criminal proceedings under Section 138 is not a ground to stay civil suits founded on dishonoured cheques; plaintiffs remain free to pursue civil recovery remedies.
- The facts of the Supreme Court authority relied upon by defendants (M.S. Sherif) are distinguishable, and hence that authority does not justify a stay here.
- For the purposes of a civil decree founded on a dishonoured cheque, the court need only consider the issuance of the cheque and any pleas by defendants regarding absence of consideration or discharge; this does not amount to compelling self-incrimination under Article 20(3).
- Authorities such as Vasu Vydier v. State of Kerala (1974 KLT 24), V.C. Madhavan Nambiar & Others v. Bharathan & Others (1995 (1) KLJ 465), and Ranganayakalu v. Gopala (AIR 1953 Mad. 439) were brought to attention concerning similar situations in which stays were sought, but the plaintiffs submitted that these do not support staying the civil suits in the present circumstances.
- It is essentially a matter of judicial discretion whether to stay a civil suit pending criminal proceedings, and the trial court has exercised that discretion in refusing a stay.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| M.S. Sherif v. State of Madras, AIR 1954 SC 397 | Authority that in appropriate cases a civil court can stay civil proceedings until related criminal cases are disposed of; observation that criminal trials should have precedence. | The court acknowledged the principle but found the facts distinguishable and observed that staying a suit is a matter of discretion; it held that the lower court reasonably exercised its discretion in not staying the suits. |
| Apeejay Private Ltd. v. Raghava Chari Narasingham, 1989 Crl. L.J. 2358 (Calcutta HC) | Observed that accused persons have the constitutional right to silence and may not be compelled to be witnesses against themselves; used to argue that civil proceedings must be stopped where there is identity of subject matter. | The court observed that the observations in Apeejay are somewhat wide and may not cover cases arising under Section 138 of the Negotiable Instruments Act; it did not accept Apeejay as justifying a stay in these S.138 cases. |
| Anto v. Union of India, 1991 (2) KLT 341 | Explication of elements constituting an offence under Section 138: issuance in discharge of legally enforceable debt, timely presentation and dishonour for specified reasons, written demand and failure to pay within stipulated time, and mens rea. | The court relied on this exposition to stress that an offence under S.138 requires specific elements to be established and that these elements make the criminal charge distinct in character from a mere drawing of a cheque. |
| Padmanabha Panicker v. Tomy, 1991 (2) KLT SN 1 | Stated that enforcement of liability through a civil court does not disentitle the aggrieved person from prosecuting the offender under S.138; both civil and criminal remedies can coexist. | The court relied on this statement to hold that civil proceedings do not bar criminal prosecution and that successful civil recovery at best may be a circumstance for the criminal court in sentencing; this undercut the defendants' abuse-of-process argument. |
| Vasu Vydier v. State of Kerala, 1974 KLT 24 | Cited as an authority in contexts where criminal cases were sought to be stayed. | The decision was noted by the court as a precedent brought to its attention by the plaintiffs; the court nonetheless maintained its view that the present facts did not warrant a stay. |
| V.C. Madhavan Nambiar & Others v. Bharathan & Others, 1995 (1) KLJ 465 | Cited as another decision involving similar situations where criminal cases were sought to be stayed. | The court considered the reference but did not treat it as persuading a different outcome; it confirmed the trial court's exercise of discretion not to stay the civil suits. |
| Ranganayakalu v. Gopala, AIR 1953 Mad. 439 | Referenced by the plaintiffs along with M.S. Sherif to show discretion in staying suits. | The court noted the reference in support of the proposition that stay is discretionary; it found no reason to interfere with the lower court's exercise of discretion. |
| Gibson v. Minet, (1791) 1 H.B. 1, 569 | Quoted for the commercial importance and negotiable nature of instruments (observations on the assignable quality and circulation of negotiable instruments). | The court cited the quotation to underscore the special commercial character of negotiable instruments and the legislative intent behind Section 138 to preserve that concept when deciding issues of compulsion to file written statements. |
| Padmanabha Pillai's case (as referred to by Padmanabhan, J.) | Observation that even if civil litigation goes against a defendant, that fact may have relevance primarily in the criminal court's sentencing discretion. | The court relied on this principle to support the view that adverse civil findings do not preclude criminal prosecution and therefore do not justify staying civil suits on the ground of self-incrimination. |
Court's Reasoning and Analysis
The court's analysis proceeded by focusing on the statutory structure and elements of the offence created by Section 138 of the Negotiable Instruments Act and related provisions (notably Section 140 and the proviso to S.138). The court examined whether compelling defendants to file written statements in the civil suits would violate Article 20(3).
Key analytical steps and legal principles the court applied:
- Elements of S.138: The court reiterated that an offence under Section 138 is not constituted merely by the drawing of a cheque; it requires (a) a legally enforceable debt/liability, (b) the cheque to have been presented in time and dishonoured for specified reasons, (c) a written demand within the statutory time, and (d) failure to pay within a stipulated period — together with the requisite mens rea. This exposition was supported by the court's citation of Anto v. Union of India.
- Effect of Section 140: The court noted Section 140 disallows certain defences in a prosecution under S.138 (specifically that the drawer had no reason to expect dishonour), thereby limiting the scope of what a drawer may claim in criminal proceedings and influencing the interplay between civil and criminal remedies.
- Civil vs. criminal remedies: Relying on Padmanabha Panicker v. Tomy, the court emphasized that civil enforcement of liability does not disentitle an aggrieved person from pursuing criminal prosecution under S.138; both remedies may exist simultaneously. A civil outcome may at most be a circumstance relevant to sentencing in the criminal trial.
- Article 20(3) analysis: The court reasoned that when a drawee receives the statutory notice contemplated by the proviso to S.138, the drawee must adopt a position — either pay or advance his contentions regarding the cheque and underlying liability. Therefore, requiring the defendant to file a written statement in the civil suit (which may confirm or deny issuance, and may plead lack of consideration or discharge) does not force the defendant into self-incrimination beyond what the statutory scheme already contemplates. The court concluded that the filing of written statements would not violate Article 20(3).
- Scope of Apeejay and similar authorities: The court observed that the observations in Apeejay Private Ltd.'s case may be wider than warranted and in any event may not cover the particular statutory context of S.138, given the statutory obligation on the drawee when notice is received.
- Discretion not to stay: The court reiterated that the decision to stay a civil suit pending criminal proceedings is one of discretion (as noted in M.S. Sherif). In this matter the lower court, after considering relevant aspects, exercised its discretion to refuse a stay. The revisional court found no perversity or unreasonableness in that exercise of discretion so as to justify interference under Section 115 of the Code of Civil Procedure.
Holding and Implications
Holding:
DISMISSED
The revisional court confirmed the orders of the trial court and dismissed the Civil Revision Petitions challenging the refusal to stay the civil suits. The court made no order as to costs.
Immediate consequences and implications:
- The civil suits founded on the dishonoured cheques are to proceed; the defendants are not entitled, on the facts of these petitions, to a stay of the civil proceedings pending the criminal prosecutions under Section 138.
- The defendants may be required to file written statements in the civil proceedings and doing so does not, in the court's view, violate Article 20(3) because the statutory scheme of S.138 already contemplates that the drawer must respond to notice and raise or deny defences.
- The court emphasised that both civil and criminal remedies can coexist in S.138 cases; an adverse civil result at best bears on sentencing in the criminal trial and does not make the criminal prosecution an abuse of process.
- No new legal precedent was laid down by this opinion; the decision confirms the trial court's exercise of discretion and declines to interfere under S.115. The court expressly treated the matter as one of judicial discretion applied to the particular facts before it.
Note: This summary is strictly confined to the content and reasoning contained in the provided opinion and does not add information beyond the text supplied.
1. These revisions are by the defendants in two suits. According to the plaintiffs, the defendants had issued them cheques which were dishonoured on presentment. The plaintiffs had earlier initiated proceedings under S. 138 of the Negotiable Instruments Act on the basis that the defendants have committed offences within the meaning of that Act. Suits were subsequently filed for recovery of the amounts due under the cheques. On entering appearance in the suits, respective defendants filed applications under S. 151 of the Code of Civil Procedure praying that the suits be stayed pending the criminal cases filed against them. Their contention was that if they were compelled to disclose their defence in the suits, they will be prejudiced in defending the prosecutions against them and consequently the civil court ought to stay the suits.
2. They relied on Art. 20(3) of the Constitution of India. The plaintiffs resisted the prayers for stay. They contended that the fact that prosecutions have been launched against the defendants is no ground to stay the civil suits based on the dishonour of the cheques and that there would be no violation of any of the rights of the defendants either under general law or under Art. 20(3) of the Constitution.
3. The court below held that there was no substance in the contention of the defendants that if they are compelled to disclose their defences to the actions based on the cheques, they would be prejudiced in their defence of the criminal cases, The trial court therefore declined the prayer of the defendants to stay the suits pending the criminal cases and dismissed the applications filed by the defendants. The defendants challenge the orders of the court below in these revisions.
4. Learned counsel for the defendants submitted that if the suits were proceeded with and a decision rendered, the same would bind the criminal court and in such a situation the defendants ought not to be compelled to file their written statemnts in the suits. He referred to the decision of the Supreme Court in M.S Sherif v. State of Madras (AIR 1954 SC 397) in support of the proposition that in appropriate cases civil court can stay the suits pending before it until the criminal case launched is disposed of. He also relied on the observations of the Supreme Court that a criminal trial must have precedence over a civil action. Relying on the decision of the Calcutta High Court in Apeejay Private Ltd. v. Raghava Chari Narasingham (1989 Crl. L.J 2358) he contended that the defendants being accused in the criminal cases have the constitutional right to maintain silence and not to be compelled to be witnesses against themselves and since there is total identity of subject matter in the earlier criminal proceedings and the subsequent civil suits, further proceedings in the civil suits have to be stopped until the disposal of the criminal cases. Learned counsel for the plaintiffs on the other hand submitted that the facts of the case before the Supreme Court are clearly distinguishable and that if the offence alleged is one under S. 138 of the Negotiable Instruments Act, there is no justification for staying the civil suit since the plaintiffs would also be free to sue for recovery of the amounts due to them or dishonour of the cheques. He also contended that there is no merit in the contention that the defendants cannot be forced to disclose their defences since for making out an offence under S. 138 of the Negotiable Instruments Act, the existence of the conditions to attract that Section have to be clearly established and for getting a decree on the basis of the dishonoured cheques only the due issuance of the cheque and any plea by the defendants regarding absence of consideration or of discharge alone need be considered. He brought to the notice of this court the decision in Vasu Vydier v. State of Kerala (1974 KLT 24) and in V.C Madhavan Nambiar & Others v. Bharathan & Others, 1995 (1) KLJ 465 where in similar situations criminal cases were sought to be stayed. He also referred to the decision of the Madras High Court in Ranganayakalu v. Gopala (AIR 1953 Mad. 439) and the decision of the Supreme Court in M.S Sheriff's case to submit that essentially it is a matter of discretion and the court below has exercised its discretion in the case on hand properly and that in any event there is no justification for this court to interfere with the exercise of that discretion in these revisions under S. 115 of the Code of Civil Procedure.
5. A successful prosecution under S. 138 of the Negotiable Instruments Act depends upon establishing the elements specified by that Section. It not only includes the issuance of a cheque for the discharge of a pre-existing debt but it also insists on other conditions referred to in the Section. Section 140 of the Negotiable Instruments Act provides that it shall not be a defence in a prosecution for an offence under S. 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that Section. His Lordship Justice Padmanabhan in Anto v. Union of India (1991 (2) KLT 341) has stated below thus:
“What is made an offence is not the drawing of cheque alone. It must have been drawn in discharge, in whole or in part, of a legally enforceable debt or other liability. It must have been duly presented in time and dishonoured for the reasons specified. Then there must be a written demand for the amount within a specified time followed by failure to make payment within another specified time. It becomes an offence only on such failure which is an illegal omission made with requisite mens rea”.
6. Considering the argument that once a civil suit has been instituted, the prosecution for an offence under S. 138 of the Negotiable Instruments Act becomes an abuse of process of court. His Lordship in Padmanabha Panicker v. Tomy (1991 (2) KLT SN 1 Case No. 1) stated thus:
“Enforcement of the liability through a civil court will not disentitle the aggrieved person from prosecuting the offender for the offence punishable under S. 138 of the Act. Both remedies may be simultaneously possible. A civil suit cannot debar the criminal prosecution. At the best, realisation of the amount may be taken as circumstance by the criminal court, in considering the sentencing discretion. Simply because of the successful termination of the civil litigation, criminal prosecution cannot become an abuse of the process of court justifying interference by this court, in exercise of the inherent powers”.
7. According to me there is no substance in the contention raised on behalf of the defendants that they cannot be compelled to file a written statement in the suits based allegedly on the dishonoured cheques. To make out an offence under S. 138 of the Negotibale Instruments Act a notice has to be issued on behalf of the drawee or such other person entitled to encash the instrument calling upon the drawer to pay the amount covered by the dishonoured cheque within the time stipulated in the Section. At that stage the drawer of the cheque is bound to adopt a specific stand either by paying off the pre-existing debt or putting forward his contention in respect of the cheque and in respect of the liability. In other words the drawee is bound to disclose his defence, if he has any, when he receives the notice contemplated by proviso (b) to S. 138 of the Negotiable Instruments Act. I therefore find no substance in the argument that by being compelled to file written statement in the suits, the defendants would be forced to disclose their defence and that would amount to violation of their fundamental rights under Article 20(3) of the Constitution of India. A negotiable instrument is the life blood of Commerce and S. 138 of the Negotiable Instruments Act was enacted to ensure the preservation of that concept. As observed by Eyre, C.B, in Gibson v. Minet (1791) 1 H.B 1, 569), “The wit of man cannot devise a thing better calculated for circulation. The value of the writing, the assignable quality of it, and the particular mode of assigning it, are created and determined in the original frame and constitution of the instrument itself; and the party to whom such a Bill of Exchange is intended, has only to read it, need look no further and has nothing to do with any private history that may belong to it”. It is in that context that S. 138 of the Negotiable Instruments Act insists only on the establishment of the conditions specified therein and S. 140 of the Negotiable Instruments Act precludes a defence to a prosecution under S. 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment. An accused in an offence under S. 138 of the Negotiable Instruments Act has necessarily either to deny the issuance of the instrument or to confirm it and if he is confirming the issuance of the instrument at best his defence can only be the absence of the other elements referred to in S. 138 of the Negotiable Instruments Act. The filing of written statement in the suit either confirming the issuance of the cheque or denying the issuance of the cheque and pleading the absence or failure of consideration cannot therefore affect the defence that may be open to him in a prosecution under S. 138 of the. Negotiable Instruments Act. As observed by Padmanabhan, J. in Padmanabha Pillai's case even if the civil litigation goes against the defendant, that can only have relevance in considering the sentencing discretion of the criminal court. In my view the observations in Apeejay Private Ltd,'s case are somewhat wide and in any view may not cover cases arising under S. 138 of the Negotiable Instruments Act in view of the fact that even when he receives notice under the proviso (b) to S. 138 of the Negotiable Instruments Act, the drawer is obliged either to honour the instrument or to put forward his defence. Of course, mere failure to reply to a notice issued to him under proviso (b) to S. 138 of the Negotiable Instruments Act cannot put the drawer in a better position than the one who takes up his definite stand in reply to the notice issued to him. In such a situation I am satisfied that there is no need to stay the suits based on the cheques merely because prosecutions have been initiated under S. 138 of the Negotiable Instruments Act against the defendants.
8. Moreover as has been bserved by the Supreme Court in M.S Sheriff's case, it is essentially a matter of discretion for the court to either stay the civil suit or to proceed with it in the circumstances of a given case. In the case on hand, the court below after referring to the aspects brought to its notice has exercised its discretion not to stay the suits. I am not in a position to say that the discretion vested in the court has been exercised by that court so unreasonably or perversely as to call for interference under S. 115 of the Code of Civil Procedure. In that view also I find no merit in the contention raised on behalf of the defendants.
9. I thus confirm the orders of the court below and dismiss these Civil Revision Petitions. I make no order as to costs.
10. Dismissed
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