Yes, both these proceedings are possible under law. One is to punish for the criminal offence of Section 138 of the Negotiable Instruments Act for dishonour of the cheque. And, the other is to recover the amount of debt due from the party. These are for different purposes.
In fact, in the case of D. Purushotama Reddy v. K. Sateesh, (2008) 8 SCC 505, the Supreme Court has held that:
“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.”
However, the Supreme Court further observed that:
“In terms of sub-section (1) of Section 357 of the Code, a criminal court is empowered to direct that out of the amount recovered from an accused by way of fine, compensation of a specified amount may be directed to be paid for any loss or injury caused by the offence, when compensation is, in the opinion of the court, recoverable by a person in a civil court. It is, therefore, evident that the amount of compensation could have been directed to be paid by the criminal court as the same was recoverable by the respondent as against the appellants in a civil court also. Such an order can also be passed by the appellate court or by the High Court or by the Court of Session when exercising its power of revision.”
“Evidently, a duty has been cast upon the civil courts to take into account the sum paid or recovered as compensation in terms of Section 357 of the Code.”
I may point out that, thus, while both the proceedings are possible (i.e., cheque bounce case under Section 138 as well as civil suit for recovery of money due), generally in practice only Section 138 case is filed by most people since this is a faster way of getting justice and also since if this case succeeds then generally the court will award fine / compensation equivalent to the amount of the cheque, which will obviate the need for filing of the civil suit for recovery of money.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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