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CASE NO.:

Appeal (crl.) 521 of 2007

PETITIONER:

Dilip S. Dahanukar

RESPONDENT:

Kotak Mahindra Co. Ltd. & Anr

DATE OF JUDGMENT: 10/04/2007

BENCH:

S.B. Sinha & Dalveer Bhandari

JUDGMENT:

J U D G M E N T

With

Criminal Appeal No. 521 of 2007

(Arising out of S.L.P. (Crl.) No. 3355 of 2006)

Criminal Appeal No. 522 of 2007

(Arising out of S.L.P.(Crl.) No. 3490 of 2006)

S.B. Sinha, J.

Leave granted.

Interpretation of Section 357 of the Code of Criminal Procedure, 1973

('the Code', for short) vis-`-vis the provisions of the Negotiable Instruments

Act ('the Act', for short), as regards power to impose sentence of fine is

involved in these appeals which arise out of a judgment and order dated

6.6.2006 passed by the High Court of Bombay in Criminal Writ Petition No.

1167 of 2006.

Accused No.1-M/s. Goodvalue Marketing Co. Ltd., a company

registered and incorporated under the Companies Act, 1956 and Accused

No.2-Appellant herein were convicted for commission of an offence

involving Section 138 of the Act by a judgment of conviction and sentence

dated 23.2.2006 holding :

"The accused No.1 company M/s. Goodvalue

Marketing Co. Ltd. stands convicted for the offence

punishable under Section 138 r.w. 141 of Negotiable

Instruments Act.

The accused No.1 company, is sentenced to pay a

fine of Rs.25,000/- (Rupees Twenty Five Thousand

only). In default of payment of fine, the accused No.2

Mr. Dilip Dahanukar, the Chairman of accused No.1 and

representative at the trial, shall suffer S.I. for 1 month.

The accused No.2 Mr. Dilip S. Dahanukar, stands

convicted for the offence punishable under Section 138

r.w. 141 of Negotiable Instruments Act, 1881.

The accused No.2 is sentenced to suffer S.I. for 1

month.

The accused No.2 is also directed to pay

compensation to the complainant, quantified (sic) at

Rs.15,00,000/- (Rupees Fifteen lakhs only), under

Section 357(3) of Cr.P.C. The accused No.2 is entitled to

pay the amount of compensation in two equal monthly

instalments of Rs.7,50,000/- each. The first instalment of

Rs.7,50,000/- shall be paid on or before 23-03-2006 and

the second instalment of Rs.7,50,000/- shall be paid on or

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before 24-04-2006 in default of payment of the amount

of compensation the accused No.2 shall suffer further S.I.

for 2 month."

An appeal was preferred thereagainst. The Appellate Court by an

order dated 27.4.2006 while admitting the appeal, directed them to deposit a

sum of Rs. 5 lakhs each within four weeks from the said date. A writ

petition was filed by the appellants questioning the legality of the said order

which by reason of the impugned judgment has been dismissed.

Submissions of Mr. Subash Jha, learned Counsel appearing on behalf

of the appellant are :

i) That having regard to the provisions of Section 357(2) of the

Code, the impugned judgment is wholly unsustainable inasmuch as in terms

thereof the amount of fine imposed would automatically be suspended.

ii) Right to prefer an appeal being a constitutional right in terms of

Article 21 of the Constitution of India, no condition could have been

imposed in respect therefor or for suspension of sentence.

Mr. Uday Umesh Lalit, learned Senior Counsel appearing on behalf of

the respondents, on the other hand, would submit that a distinction must be

made between imposition of fine and application thereof, as contemplated

under Clauses (a) to (d) of Sub-Section (1) of Section 357 and an amount of

compensation directed to be paid under Section (3) thereof.

We have noticed hereinbefore the sentence imposed upon the accused.

It was submitted that a conjoint reading of Section 357 read with Sections

421 and 424 of the Code would clearly go to show that it is permissible for a

Court to direct recovery of fine forthwith and if it is to be held that recovery

of fine is automatically stayed, Section 421 and 424 of the Code would

become nugatory.

The Act is a special statute. Section 138(1) thereof provides for

imposition of sentence upto two years or a fine which may extend to twice

the amount of the cheque or with both.

Before embarking upon the rival contentions raised by the parties, we

may notice the relevant provisions of the Code :

"357. Order to pay compensation.\026 (1) When a

Court imposes a sentence of fine or a sentence (including

a sentence of death) of which fine forms a part, the Court

may, when passing judgment order the whole or any part

of the fine recovered to be applied-

* * * *

(b) in the payment to any person of

compensation for any loss or injury caused

by the offence, when compensation is,

in the opinion of the Court, recoverable by

such person in a Civil Court;

* * * *

(2) If the fine is imposed in a case which is subject

to appeal, no such payment shall be made before the

period allowed for presenting the appeal has elapsed, or

if an appeal be presented, before the decision of the

appeal.

(3) When a Court imposes a sentence, of which

fine does not form a part, the Court may, when passing

judgment order the accused person to pay, by way of

compensation such amount as may be specified in the

order to the person who has suffered any loss or injury by

reason of the act for which the accused person has been

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so sentenced.

* * * *

(5) At the time of awarding compensation in any

subsequent civil suit relating to the same matter, the

Court shall take into account any sum paid or recovered

as compensation under this section."

"421. Warrant for levy of fine.\026 (1) When an

offender has been sentenced to pay a fine the Court

passing the sentence may take action for the recovery of

the fine in either or both of the following ways, that is to

say, it may-

(a) issue a warrant for the levy of the amount by

attachment and sale of any movable property

belonging to the offender;

(b) issue a warrant to the collector of the

district, authorizing him to realize the

amount as arrears of land revenue from

the movable or immovable property, or

both of the defaulter:

Provided that, if the sentence directs that in default

of payment of the fine, the offender shall be imprisoned,

and if such offender has undergone the whole of such

imprisonment in default, no Court shall issue such

warrant unless, for special reasons to be recorded in

writing, it considers it necessary so to do, or unless it has

made an order for the payment of expenses or

compensation out of the fine under Section 357."

"431. Money ordered to be paid recoverable as

a fine.\026 Any money (other than a fine) payable by virtue

of any order made under this Code, and the method of

recovery of which is not otherwise expressly provided

for, shall be recoverable as if it were a fine:"

"439. Special powers of High Court or Court of

Session regarding bail.\026 (1) A High Court or Court of

Session may direct-

(a) that any person accused of an offence and in

custody be released on bail, and if the offence

is of the nature specified in sub-section (3) of

Section 437, may impose any condition which

it considers necessary for the purposes

mentioned in that sub-section;

(b) that any condition imposed by a Magistrate

when releasing any person on bail be set aside

or modified:

Provided that the High Court or the Court of

Session shall, before granting bail to a person who is

accused of an offence which is triable exclusively by the

Court of Session or which, though not so triable, is

punishable with imprisonment for life, give notice of the

application for bail to the Public Prosecutor unless it is,

for reasons to be recorded in writing, of opinion that it is

not practicable to give such notice.

(2) A High Court or Court of Session may direct

that any person who has been released on bail under this

Chapter be arrested and commit him to custody."

It is, therefore, apparent that if a Court imposes a sentence of fine or a

sentence or where it forms a part thereof, the Court is entitled to direct that

whole or any part of the fine recovered, to be applied to in respect of the

factors enumerated in clauses (a), (b), (c) or (d). Section 421 of the Code

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deals with the mode and manner in which the fine levied is to be recovered.

Section 424 deals with the steps required to be taken by the Court where the

amount of fine has not been paid forthwith. Section 357 deals with two

types of cases, namely, (i) where only a sentence has been imposed; and (ii)

where fine also forms part of the sentence. When a fine is imposed

simplicitor Section 421 read with Section 424 would be applicable but where

fine forms part of the sentence, it would not have any application.

A statute must be read harmoniously. An amount of compensation

directed to be paid may not form part of a fine. It may be awarded

separately. It may be recoverable as if it is a fine in terms of Section 431 of

the Code but by reason thereof it would not become automatically

recoverable forthwith. The legal position, however, must be considered

keeping in view the purport and object of the Act.

An appeal is indisputably a statutory right and an offender who has

been convicted is entitled to avail the right of appeal which is provided for

under Section 374 of the Code. Right of Appeal from a judgment of

conviction affecting the liberty of a person keeping in view the expansive

definition of Article 21 is also a Fundamental Right. Right of Appeal, thus,

can neither be interfered with or impaired, nor it can be subjected to any

condition.

We may take notice of some of the decisions operating in the field in

this behalf.

In Garikapati Veeraya vs. N. Subbiah Choudhry & Ors. [AIR

1957 SCR 540], this Court opined :

"(i) That the legal pursuit of a remedy, suit, appeal and

second appeal are really but steps in a series of

proceedings all connected by an intrinsic unity and are to

be regarded as one legal proceeding.

(ii) The right of appeal is not a mere matter of procedure

but is a substantive right.

(iii) The institution of the suit carries with it the

implication that all rights of appeal then in force are

preserved to the parties thereto till the rest of the career

of the suit.

(iv) The right of appeal is a vested right and such a right

to enter the superior court accrues to the litigant and

exists as on and from the date the lis commences and

although it may be actually exercised when the adverse

judgment is pronounced such right is to be governed by

the law prevailing at the date of the institution of the suit

or proceeding and not by the law that prevails at the date

of its decision or at the date of the filing of the appeal.

(v) This vested right of appeal can be taken away only by

a subsequent enactment, if it so provides expressly or by

necessary intendment and not otherwise."

This Court, in Babu Rajirao Shinde vs. The State of Maharashtra

[(1971) 3 SCC 337], observed that a convicted person must be held to be at

least entitled to one appeal as a substantial right.

Yet again in Siddanna Apparao Patil vs. The State of Maharashtra

[(1970) 1 SCC 547], this Court held :

"The right to prefer an appeal from sentence of Court of

Sessions is conferred by Section 410 of the Criminal

Procedure Code. The right to appeal is one both on a

matter of fact and a matter of law. It is only in cases

where there is a trial by jury that the right to appeal is

under Section 418 confined only to a matter of law."

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In State of Gujarat vs. Salimbhai Abdulgaffar Shaikh and Others

[(2003) 8 SCC 50], it was held:

"10. Sub-section (4) of Section 34 of POTA

provides for an appeal to the High Court against an

order of the Special Court granting or refusing

bail. Though the word "appeal" is used both in the

Code of Criminal Procedure and the Code of Civil

Procedure and in many other statutes but it has not

been defined anywhere. Over a period of time, it

has acquired a definite connotation and meaning

which is as under:

"A proceeding undertaken to have a decision

reconsidered by bringing it to a higher authority,

especially the submission of a lower court's

decision to a higher court for review and possible

reversal.

An appeal, strictly so-called, is one in which the

question is, whether the order of the court from

which the appeal is brought was right on the

material which the court had before it.

An appeal is removal of the cause from an inferior

to one of superior jurisdiction for the purposes of

obtaining a review or retrial.

An appeal, generally speaking, is a rehearing by a

superior court on both law and fact."

11. Broadly speaking, therefore, an appeal is a

proceeding taken to rectify an erroneous decision

of a court by submitting the question to a higher

court, and in view of the express language used in

sub-section (1) of Section 34 of POTA the appeal

would lie both on facts and on law. Therefore even

an order granting bail can be examined on merits

by the High Court without any kind of fetters on its

powers and it can come to an independent

conclusion whether the accused deserves to be

released on bail on the merits of the case. The

considerations which are generally relevant in the

matter of cancellation of bail under sub-section (2)

of Section 439 of the Code will not come in the

way of the High Court in setting aside an order of

the Special Court granting bail. It is, therefore,

evident that the provisions of POTA are in clear

contradistinction with that of the Code of Criminal

Procedure where no appeal is provided against an

order granting bail. The appeal can lie only against

an order of the Special Court and unless there is an

order of the Special Court refusing bail, the

accused will have no right to file an appeal before

the High Court praying for grant of bail to them.

Existence of an order of the Special Court is,

therefore, a sine qua non for approaching the High

Court."

In regard to the principles of natural justice, it was stated in Madhav

Hayawadanrao Hoskot vs. State of Maharashtra reported in (1978) 3

SCC 552 :

"11. One component of fair procedure is natural justice.

Generally speaking and subject to just exceptions, at least

a single right of appeal on facts, where criminal

conviction is fraught with long loss of liberty, is basic to

civilized jurisprudence. It is integral to fair procedure,

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natural justice and normative universality save in special

cases like the original tribunal being a high bench sitting

on a collegiate basis. In short, a first appeal from the

Sessions Court to the High Court, as provided in the

Criminal Procedure Code, manifests this value upheld in

Article 21."

The legal position was declared as under :

"Where the prisoner seeks to file an appeal or revision,

every facility for exercise of that right shall be made

available by the Jail Administration;

These benign prescriptions operate by force of

Article 21 (strengthened by Article 19(1)(d) read with

sub-article (5) from the lowest to the highest court where

deprivation of life and personal liberty is in substantial

peril."

A Constitution Bench of this Court in Mardia Chemicals Ltd. and

Others vs. Union of India and Others [(2004) 4 SCC 311], where the

constitutionality of provisions of the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002 were

quested qua Section 17(4) thereof, held :

"In view of the discussion already held in this

behalf, we find that the requirement of deposit of 75% of

the amount claimed before entertaining an appeal

(petition) under Section 17 of the Act is an oppressive,

onerous and arbitrary condition against all the canons of

reasonableness. Such a condition is invalid and it is

liable to be struck down."

In Transmission Corporation of A.P. vs. Ch. Prabhakar & Ors.

[(2004) 5 SCC 551], this Court held :

"The appeal is the right of entering a superior court and

invoking its aid and interposition to redress an error of

the court below. Though procedure does surround an

appeal the central idea is a right. The right of appeal has

been recognized by judicial decisions as a right which

vests in a suitor at the time of institution of original

proceedings."

In Madhav Hayawadanrao Hoskot vs. State of Maharashtra

[(1978) 3 SCC 544], this Court held :

"\005The fact remains that prisoners are situationally at the

mercy of the prison `brass' but their right to appeal,

which is part of the constitutional process to resist illegal

deprivation of liberty, is in peril if district jail officials

ipse dixit that copies have been served is to pass muster

without a title of prisoner's acknowledgement. What is

more, there is no statutory provision for free legal

services to a prisoner, absent which a right of appeal for

the legal illiterates is nugatory and, therefore, a negation

of that fair legal procedure which is implicit in Article 21

of the Constitution as made explicit by this Court in

Maneka Gandhi."

It was further held:-

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"Freedom is what freedom does and here we go straight

to Article 21 of the Constitution, where the guarantee of

personal liberty is phrased with superb amplitude."

Although it has been contended that direction to impose a fine of Rs.5

lacs had been issued as a condition precedent for admitting the appeal; from

the order of the Appellate Court, the same does not appear to be correct. In

its order dated 23.4.2006, the learned Appellate Court directed:-

"Appeal admitted.

Substantive sentence @ compensation payable in default

is suspended till the disposal of the appeal, on payment of

Rs.5 lacs within four weeks.

Call R & P.

Appellant be released on same bail.

Appellant to furnish fresh bail bond."

We may also notice that appellant sought time for depositing the

amount of compensation and also asked for the indulgence of the Court for

reduction of the said amount as also for extension of time.

In the Memorandum of Appeal, it was prayed:-

"(d) That the order of depositing of the compensation

imposed by the trial court be suitably modified, to enable

the appellant No. 2 time and come up with reduced

amount of funds to comply with the same."

Although the right of appeal being a vested right cannot be taken

away, we must also notice that right of the Court cannot be taken away to

suspend the sentence and such a provision would be ultra vires. It was so

held in Dadu alias Tulsidas vs. State of Maharashtra [(2000) 8 SCC 437].

The distinction between sub-Sections (1) and (3) of Section 357 is

apparent. Sub-Section (1) provides for application of an amount of fine

while imposing a sentence of which fine forms a part; whereas sub-Section

(3) calls for a situation where a Court imposes a sentence of which fine does

not form a part of the sentence.

Compensation is awarded towards sufferance of any loss or injury by

reason of an act for which an accused person is sentenced. Although it

provides for a criminal liability, the amount which has been awarded as

compensation is considered to be recourse of the victim in the same manner

which may be granted in a civil suit. So far as Appellant No. 2 is concerned,

no fine has been imposed on him. He was directed to pay compensation.

The question is as to whether the matter would come within the

purview of sub-Section (3) and if so, whether sub-Section (2) of Section 357

would automatically be attracted.

The purposes for application of fine imposed has been set out in

clauses (a) to (d) of sub-Sections (1) of Section 357. Clause (b) of sub-

Section (1) of Section 357 provides for payment of compensation out of the

amount of fine. The purpose enumerated in clause (b) of sub-Section (1) of

Section 357 is the same as sub-Section (3) thereof, the difference being that

whereas in a case under sub-Section (1) fine imposed forms a part of the

sentence, under sub-Section (3) compensation can be directed to be paid

whence fine does not form a part of the sentence.

The fine can be imposed only in terms of the provisions of the Act.

Fine which can be imposed under the Act, however, shall be double of the

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amount of the cheque which stood dishonoured. When, however, fine is not

imposed, compensation can be directed to be paid for loss or injury caused

to the complainant by reason of commission of the offence. Clause (b) of

sub-Section (1) of Section 357 only provides for application of amount of

fine which may be in respect of the entire amount or in respect of a part

thereof. Sub-Section (3) of Section 357 seeks to achieve the same purpose.

We must, however, observe that there exists a distinction between fine

and compensation, although, in a way it seeks to achieve the same purpose.

An amount of compensation can be directed to be recovered as a 'fine' but

the legal fiction raised in relation to recovery of fine only, it is in that sense

`fine' stands on a higher footing than compensation awarded by the Court.

If, therefore, under sub-Section (2) of Section 357, realization of fine,

at least in respect of the factor(s) enumerated in clause (1) of sub-Section to

be stayed automatically, we see no reason as to why the legislative intent

cannot be held to apply in relation to amount of compensation directed to be

paid in terms of sub-Section (3).

In Rachhpal Singh vs. State of Punjab [(2002) 6 SCC 462], this

Court held:-

"...A perusal of the operative part of the judgment of the

High Court clearly shows that so far as the punishment

under Section 302 is concerned, it has disagreed with the

Sessions Court and altered the sentence to one of life

imprisonment from death. It has nowhere stated that it is

also awarding a fine or that it was confirming the fine

awarded by the Sessions Court for the offence under

Section 302 IPC. In the absence of any such specific

recording in our opinion, it should be deemed that the

High Court has awarded only a sentence of life

imprisonment for an offence under Section 302 IPC. In

such cases where the court does not award a fine along

with a substantive sentence, Section 357(3) comes into

play and it is open to the court to award compensation to

the victim or his family. In our opinion, it is in the

exercise of this power under Section 357(3) that the High

Court has awarded the compensation in question,

therefore, it was well within the jurisdiction of the High

Court..."

Yet again in State of Punjab vs. Gurmej Singh [(2002) 6 SCC 663],

we may notice a similar conclusion was arrived at although in a somewhat

different fact situation :

"11. In the present case, sentence of fine has also been

imposed, as indicated in the earlier part of this judgment.

Out of the fine, a sum of Rs.1000 each had been ordered

to be given to the three injured persons, namely, Dalip

Singh, Amarjit Kaur and Gurmeet Kaur. The balance

amount is to go to the legal heirs of Jagjit Singh. We had

heard the learned counsel for both parties on this aspect.

Learned counsel for the appellant submitted that Gurmeet

Kaur lost both her parents as well as her brother in the

incident and now she is alone and would have become of

marriageable age or may have to start some work of her

own. She would need some money. In case she cannot

be compensated, the amount of fine may be enhanced to

some extent. Learned counsel for the respondent has,

however, submitted that out of seven acres of land

belonging to his father, the same has been divided into

three equal shares and some of it is also under mortgage

and he has got two daughters and a son and his wife. He

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has also submitted that whenever the respondent was

released on parole he met Gurmeet Kaur and his wife

also keeps on going to meet her. Their relations are

normal and cordial. If that is so, nothing better can be

thought of in the prevailing circumstances. However, we

are not considering for awarding any compensation to

Gurmeet Kaur under Section 357(3) CrPC but the

amount of fine imposed, can in any case be reasonably

enhanced."

It is, therefore, seen that consideration for payment of compensation is

somewhat different from payment of fine. It is, to the said extent applied

differently. As would be noticed a little later, it is necessary to probe into

the capacity of the accused to pay the amount and the purpose for which it is

directed to be paid.

In Hari Singh vs. Sukhbir Singh & Ors. [(1988) 4 SCC 551], this

Court held:

"Sub-section (1) of Section 357 provides power to award

compensation to victims of the offence out of the

sentence of fine imposed on accused. In this case, we are

not concerned with sub-section (1). We are concerned

only with sub-section (3). It is an important provision

but courts have seldom invoked it. Perhaps due to

ignorance of the object of it. It empowers the court to

award compensation to victims while passing judgment

of conviction. In addition to conviction, the court may

order the accused to pay some amount by way of

compensation to victim who has suffered by the action of

accused. It may be noted that this power of courts to

award compensation is not ancillary to other sentences

but it is in addition thereto. This power was intended to

do something to reassure the victim that he or she is not

forgotten in the criminal justice system. It is a measure

of responding appropriately to crime as well of

reconciling the victim with the offender. It is, to some

extent, a constructive approach to crimes. It is indeed a

step forward in our criminal justice system. We,

therefore, recommend to all courts to exercise this power

liberally so as to meet the ends of justice in a better way.

It was further opined:-

"The payment by way of compensation must, however,

be reasonable. What is reasonable, may depend upon the

facts and circumstances of each case. The quantum of

compensation may be determined by taking into account

the nature of crime, the justness of claim by the victim

and the ability of accused to pay. If there are more than

one accused they may be asked to pay in equal terms

unless their capacity to pay varies considerably. The

payment may also vary depending upon the acts of each

accused. Reasonable period for payment of

compensation, if necessary by instalments, may also be

given. The court may enforce the order by imposing

sentence in default."

In Sarwan Singh & Ors. vs. State of Punjab [(1978) 4 SCC 111],

this Court held :

"...Though Section 545 enabled the court only to pay

compensation out of the fine that would be imposed

under the law, by Section 357 (3) when a Court imposes

a sentence, of which fine does not form a part, the Court

may direct the accused to pay compensation. In

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awarding compensation it is necessary for the court to

decide whether the case is a fit one in which

compensation has to be awarded. If it is found that

compensation should be paid, then the capacity of the

accused to pay a compensation has to be determined. In

directing compensation, the object is to collect the fine

and pay it to the person who has suffered the loss. The

purpose will not be served if the accused is not able to

pay the fine or compensation for, imposing a default

sentence for non-payment of fine would not achieve the

object. If the accused is in a position to pay the

compensation to the injured or his dependents to which

they are entitled to, there could be no reason for the court

not directing such compensation. When a person, who

caused injury due to negligence or is made vicariously

liable is bound to pay compensation it is only appropriate

to direct payment by the accused who is guilty of causing

an injury with the necessary mens rea to pay

compensation for the person who has suffered injury."

The purpose of imposition of fine and/or grant of compensation to a

great extent must be considered having the relevant factors therefor in mind.

It may be compensating the person in one way or the other. The amount of

compensation sought to be imposed, thus, must be reasonable and not

arbitrary. Before issuing a direction to pay compensation, the capacity of

accused to pay the same must be judged. A fortiori, an enquiry in this behalf

even in a summary way may be necessary. Some reasons, which may not be

very elaborate, may also have to be assigned; the purpose being that whereas

the power to impose fine is limited and direction to pay compensation can be

made for one or the other factors enumerated out of the same; but sub-

Section (3) of Section 357 does not impose any such limitation and thus,

power thereunder should be exercised only in appropriate cases. Such a

jurisdiction cannot be exercised at the whims and caprice of a judge.

If a fine is to be imposed under the Act, the amount of which in the

opinion of the Parliament would be more than sufficient to compensate the

complainant; can it be said, that an unreasonable amount should be directed

to be paid by the Court while exercising its power under sub-Section (3) of

Section 357? The answer thereto must be rendered in the negative. Sub-

Section (5) of Section 357 also provides for some guidelines. Ordinarily, it

should be lesser than the amount which can be granted by a Civil Court upon

appreciation of the evidence brought before it for losses which might have

reasonably been suffered by the plaintiff. Jurisdiction of the Civil Court, in

this behalf, for realization of the amount in question must also be borne in

mind. A criminal case is not a substitution for a civil suit, far less execution

of a decree which may be passed.

Prosecution under the Act may be contemplated as a measure of

deterrence, but the same is never meant to be a persecution.

Even in a case where violation of fundamental right guaranteed under

Article 21 is alleged, the amount of compensation cannot be arbitrary or

unreasonable even under Public Law.

In Sube Singh vs. State of Haryana [2006 (3) SCC 178], it is stated :

"...The quantum of compensation will, however, depend

upon the facts and circumstances of each case. Award of

such compensation (by way of public law remedy) will

not come in the way of the aggrieved person claiming

additional compensation in a civil court, in the

enforcement of the private law remedy in tort, nor come

in the way of the criminal court ordering compensation

under Section 357 of the Code of Criminal Procedure."

It does not appeal to us that although a compensation payable out of

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the quantum of fine would remain stayed under sub-Section (2) of Section

357 of the Code, if a compensation is directed to be paid under sub-Section

(3) thereof, the same would not attract the said provision. [See P. Suresh

Kumar v. R. Shankar, 2007 (4) SCALE 143]

Magistrates cannot award compensation in addition to fine. When a

fine is imposed, however, the private party has no right to insist that

compensation may be awarded to him out of the amount of fine. The power

to award compensation under Section 357(3) is not an ancillary power. It is

an additional power. {See Balraj vs. State [1995 Crl. Law Journal 3217}.

Clause (b) of sub-Section (1) of Section 357 and sub-Section (1) of

Section 357 and sub-Section (3) of Section 357 seek to achieve the same

purpose. What is necessary is to find out the intention of the law maker and

the object sought to be achieved. Sub-Section (2) of Section 357 uses the

word `fine'. It does not say that what would be stayed i.e. application of

fine. Sub-Section 2 of Section 357, in our opinion, does not contemplate

any other interpretation. Even assuming that Mr. Lalit was correct in his

submission, still then sub-Section (3) would be squarely attracted.

The amount of compensation, in view of the legal fiction, may be

recovered under Section 421 of the Code. But the amount of compensation,

having regard to Sub-Section (2) of Section 357 of the Code cannot be

recovered forthwith unless the period of appeal expires.

Legal fiction, it is well- settled, must be construed having regard to

the purport of the statute. {See Sadashiv Dada Patil vs. Purushottam

Onkar Patil (D) By Lrs. [2006 (10) SCALE 21]; M.P. State Electricity

Board vs. Union of India & Ors. [2006 (9) SCALE 194]; Maruti Udyog

Ltd. vs. Ram Lal & Ors. [(2005) 2 SCC 638]; Bharat Petroleum Corpn.

Ltd. vs. P. Kesavan & Anr. [(2004) 9 SCC 772].}

Section 421 only provides for a mode of recovery of fine. Section 424

provides for an enabling clause so as to enable the Court to take recourse to

either of the situations provided for therein. The said provision, however,

would be subject to sub-Section (2) of Section 357 of the Code. Section 431

of the Code provides for a legal fiction in terms whereof any money other

than a fine shall be recoverable as if it were a fine. Even according to Mr.

Lalit, sub-Section (2) of Section 357 of the Code would be attracted in such

a situation. There does not appear to be any reason as to why the amount of

compensation should be held to be automatically payable, although the same

is only to be recovered as if a fine has been imposed.

We are, however, not oblivious of the fact that in Stanny Felix Pinto

vs. Jangid Builders Pvt. Ltd. & Anr. [(2001) 2 SCC 416], Thomas, J.

opined that while entertaining revision applications, a part of the fine should

be directed to be deposited but therein this Court had no occasion to consider

the provisions of Section 357 of the Code in details.

This Court in an appropriate case may have to consider as to whether

in economic offence like Negotiable Instruments Act, the Courts should at

all invoke sub-Section (3) of Section 357 of the Code, when the purpose can

be achieved by taking recourse to substantive provision of Section 138 of the

Act read with Section 357(1) thereof. We, however, do not intend to lay

down any law in this behalf, as at present advised, as we are not concerned

herein with such a situation.

Section 389 does not deal with exactly a similar situation. Section

389 of the Code is to be read with Section 387 thereof. Suspension of a

sentence and enlarging an appellant on bail, who is convicted and realization

of fine has been dealt with by the Parliament under different provisions of

the Code. The power of the Court, thus, to suspend a sentence in regard to

realization of compensation may be different from that of a direction in

realization of fine.

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If realization of an amount of compensation payable to a victim as

envisaged under Clause (d) of sub-Section (1) of Section 357 is to be stayed

under sub-Section (2) thereof, there is no reason why the amount of

compensation payable in terms of sub-Section (3) shall not receive the same

treatment.

Doctrine of Purposive Interpretation in a situation of this nature, in

our opinion, shall be applied.

In R (Haw) vs. Secretary of State for the Home Department &

Anr. [(2006) 3 All ER p.428 at p.438], Lord Smith stated:-

"42...a passage from Bennion Statutory Interpretation (4th

edn, 2002) 810 (section 304) entitled, `Nature of

purposive construction'. That begins with the following

words:

`A purposive construction of an enactment is

one which gives effect to the legislative

purpose by- (a) following the literal meaning

of the enactment where the meaning is in

accordance with the legislative purpose (in

this Code called a purposive-and-literal

construction), or (b) applying a strained

meaning where the literal meaning is not in

accordance with the legislative purpose (in

the Code called a purposive-and-strained

construction).'

xxx xxx

44. The passage from Bennion continues:

'...I am not reluctant to adopt a

purposive construction where to apply

the literal meaning of the legislative

language used would lead to results

which would clearly defeat the

purposes of the Act. But in doing so

the task on which a court of justice is

engaged remains one of construction,

even where this involves reading into

the Act words which are not expressly

included in it. [Kammins Ballroom

Co. Ltd. v. Zenith Investments

(Torquay) Ltd. (1970) 2 All ER 871,

[1971] AC 850, [1970] 3 WLR 287]

provides an instance of this; but in

that case the three conditions that

must be fulfilled in order to justify

this course were satisfied. First, it

was possible to determine from a

consideration of the provisions of the

Act read as a whole precisely what the

mischief was that it was the purpose

of the Act to remedy; secondly, it was

apparent that the draftsman and

Parliament had by inadvertence

overlooked, and so omitted to deal

with, an eventuality that required to

be dealt with if the purpose of the Act

was to be achieved; and thirdly, it was

possible to state with certainty what

were the additional words that would

have been inserted by the draftsman

and approved by Parliament had their

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attention been drawn to the omission

before the Bill passed into law.

Unless this third condition is fulfilled

any attempt by a court of justice to

repair the omission in the Act cannot

be justified as an exercise of its

jurisdiction to determine what is the

meaning of a written law which

Parliament has passed.'

45. The passage from Bennion continues:

'Lord Diplock's third point is, with

respect, erroneous. The argument that

in Jones v. Wrotham Park Settled

Estates Lord Diplock was mistaken in

saying that for a rectifying

construction to be effected it must be

possible to state with certainty what

the missing words are, has been

endorsed by the House of Lords.

Lord Nicholls of Birkenhead said that

the court must be sure of "the

substance of the provision Parliament

would have used" [See Inco Europe

Ltd. v. First Choice Distribution (a

firm) [2000] 2 All ER 109, [2000] 2

All ER 109, [2000] 1 WLR 586].'"

{See also K.L. Gupta vs. Bombay Municipal Corpn. [(1968) 1 SCR

274 : AIR 1968 SC 303]; Maruti Udyog Ltd. vs. Ram Lal [(2005) 2 SCC

638 : 2005 SCC (L&S) 308]; Reserve Bank of India vs. Peerless General

Finance & Investment Co. Ltd. [(1987) 1 SCC 424]; Punjab Land

Development and Reclamation Corpn. Ltd. vs. Presiding Officer,

Labour Court [(1990) 3 SCC 682]; Balram Kumawat vs. Union of India

[(2003) 7 SCC 628] and Pratap Singh vs. State of Jharkhand [(2005) 3

SCC 682].}

Unfortunately, the Legislature has not made any express provision in

this behalf. In absence of any express provision, the question must be

considered having regard to the overall object of a statute. We have noticed

hereinbefore that Article 21 of the Constitution of India read with Section

374 of Crl.P.C. confers a right of appeal. Such a right is an absolute one. In

a case where a judgment of conviction has been awarded, the Court can

release a person on bail having regard to the nature of offence but as also the

other relevant factors including its effect on society. A person upon arrest

may have to remain in jail as an under trial prisoner. So would a person

upon conviction. A person may also have to remain in jail, in the event he

defaults in payment of fine, if he is so directed. But when a direction is

issued for payment of compensation, having regard to Sub-Section (2) of

Section 357 of the Code, the application thereof should ordinarily be

directed to be stayed. It will, therefore, be for the Court to stay the operation

of that part of the judgment whereby and whereunder compensation has been

directed to be paid, which would necessarily mean that some conditions

therefor may also be imposed. A fortiori a part of the amount of

compensation may be directed to be deposited, but the same must be a

reasonable amount.

An order may not be passed which the appellant cannot comply with

resulting him being sent to prison. Appellate Court, in such cases, must

make an endeavour to strike a balance. Section 421 of the Code of the

Criminal Procedure may take recourse to, but therefor he cannot be

remanded to custody.

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The Parliament has dealt with the imposition of substantive sentence

and a sentence of fine vis-`-vis payment of compensation differently.

A penal statute, in the event, the different meanings are possible to be

given, must be construed liberally in favour of an accused.

While the Court shall give due weight to the need of the victim, it

cannot ignore the right of an accused. In a case of conflict, construction

which favours the accused shall prevail.

In a case of this nature, the Court must invoke the doctrine of

purposive construction. Sub-Section (2) of Section 357 was enacted for a

definite purpose. It must be given its full effect.

Reliance has been placed on a judgment of a learned Single Judge of

the Andhra Pradesh High Court in V. Prasada Rao vs. The State of A.P. &

Anr. [2002 Crl. Law Journal 395]. The learned Judge opined that the

purpose of stay in sub-Section (2) of Section 357 would cover a case both

under sub-Section (1) as also under sub-Section (3) stating:-

"8. The fine amount imposed by the Court as a sentence

shall have to be recovered in the first instance so that the

whole of the said amount or part of it can be applied

towards expenses and towards compensation. The Code

clearly envisages recovery of fine amount. The

execution, suspension, remission and commutation of

sentences passed by a criminal Court is envisaged under

Chapter XXXII of the Code. It is in four parts. Part A

deals with the death sentences, Part B deals with

imprisonment, Part C with levy of fine and Part D deals

with general provisions regarding execution. Coming in

the realm of Part C. Section 421 envisages the procedure

of recovery of fine. There has been no specific provision

for recovery of compensation awarded by the criminal

Court. If the compensation awarded is from out of the

fine amount there is no difficulty. However, under the

general provisions of Part D, Section 431 covers the

field. It is a residuary provision, which caters to the

above piquant situation.

The learned Judge referred to Section 431 of the Code and observed :

"The object of granting compensation is one and the

same under these provisions. When the order of

compensation granted under sub-section (1) gets

automatically stayed in the event of filing an appeal there

is no reason as to why the stay shall not operate in

respect of the compensation granted under sub-section

(3) of Section 357 of the Code. Merely because sub-

section (2) is coming under sub-section (1) and speaks of

fine imposed by the Court in an appealable case the

benefit of the stay engrafted under the Section cannot be

restricted to sub-section (1) alone nor its application be

excluded to the provisions of sub-section (3) thereof. It

is manifest now even the compensation granted under

sub-section (3) of Section 357 shall have to be recovered

only as if it were a fine. Consequently, the stay engrafted

under sub-section (2) in my considered view equally

applies to the compensation granted under sub-section (3)

of Section 357 of the Code. It is not a case of suspending

the sentence of fine where it is open to the Court to

impose a condition either for deposit of a part of the fine

amount or for such condition as is appropriate in the

context. Section 357 which enables the Court to grant

compensation, inheres in itself a bar for such payment of

compensation under sub-section (2) which operates

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automatically. Imposing a condition in this regard has

not been clearly envisaged by that Section. Oblivious of

the legal position the learned Judge directed the

petitioner to furnish third party security."

In K. Bhaskaran vs. Sankaran Vaidhyan Balan & Anr. [(1999) 7

SCC 510], this Court held :

"However, the Magistrate in such cases can

alleviate the grievance of the complainant by making

resort to Section 357(3) of the Code. It is well to

remember that this Court has emphasised the need for

making liberal use of that provision (Hari Singh v.

Sukhbir Singh). No limit is mentioned in the sub-section

and therefore, a Magistrate can award any sum as

compensation. Of course while fixing the quantum of

such compensation the Magistrate has to consider what

would be the reasonable amount of compensation

payable to the complainant. Thus, even if the trial was

before a Court of a Magistrate of the First Class in

respect of a cheque which covers an amount exceeding

Rs 5000 the Court has power to award compensation to

be paid to the complainant."

{See also Suganthi Suresh Kumar vs. Jagdeeshan [(2002) 2 SCC

420].}

Recently, in National Insurance Co. Ltd. vs. Laxmi Narain Dhut

[2007 (4) SCALE 36], a Division Bench of this Court laid down the law in

the following terms:

"A statute is an edict of the Legislature and

in construing a statute, it is necessary to seek the

intention of its maker. A statute has to be

construed according to the intent of those who

make it and the duty of the court is to act upon the

true intention of the Legislature. If a statutory

provision is open to more than one interpretation

the Court has to choose that interpretation which

represents the true intention of the Legislature.

This task very often raises difficulties because of

various reasons, inasmuch as the words used may

not be scientific symbols having any precise or

definite meaning and the language may be an

imperfect medium to convey one's thought or that

the assembly of Legislatures consisting of persons

of various shades of opinion purport to convey a

meaning which may be obscure. It is impossible

even for the most imaginative Legislature to

foresee all situations exhaustively and

circumstances that may emerge after enacting a

statute where its application may be called for.

Nonetheless, the function of the Courts is only to

expound and not to legislate. Legislation in a

modern State is actuated with some policy to curb

some public evil or to effectuate some public

benefit. The legislation is primarily directed to the

problems before the Legislature based on

information derived from past and present

experience. It may also be designed by use of

general words to cover similar problems arising in

future. But, from the very nature of things, it is

impossible to anticipate fully the varied situations

arising in future in which the application of the

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legislation in hand may be called for, and, words

chosen to communicate such indefinite referents

are bound to be in many cases lacking in clarity

and precision and thus giving rise to controversial

questions of construction. The process of

construction combines both literal and purposive

approaches. In other words the legislative intention

i.e., the true or legal meaning of an enactment is

derived by considering the meaning of the words

used in the enactment in the light of any

discernible purpose or object which comprehends

the mischief and its remedy to which the

enactment is directed. (See District Mining Officer

and Ors. v. Tata Iron & Steel Co. and Anr.JT 2001

(6) SC 183).

It is also well settled that to arrive at the

intention of the legislation depending on the

objects for which the enactment is made, the Court

can resort to historical, contextual and purposive

interpretation leaving textual interpretation aside."

It was also opined:

"More often than not, literal interpretation of

a statute or a provision of a statute results in

absurdity. Therefore, while interpreting statutory

provisions, the Courts should keep in mind the

objectives or purpose for which statute has been

enacted. Justice Frankfurter of U.S. Supreme Court

in an article titled as Some Reflections on the

Reading of Statutes (47 Columbia Law Reports

527), observed that, "legislation has an aim, it

seeks to obviate some mischief, to supply an

adequacy, to effect a change of policy, to

formulate a plan of Government. That aim, that

policy is not drawn, like nitrogen, out of the air; it

is evidenced in the language of the statutes, as read

in the light of other external manifestations of

purpose"."

We, generally, agree with the observations made by the learned Judge,

the same shall, however, be subject to any observations made hereinbefore.

The matter has to be considered from another angle. An accused for

commission of an offence under Section 138 of the Negotiable Instruments

Act would ordinarily be granted bail; in view of the fact that the offence is a

bailable one.

The right to appeal from a judgment of conviction vis-`-vis the

provisions of Section 357 of the Code of Criminal Procedure and other

provisions thereof, as mentioned hereinbefore, must be considered having

regard to the fundamental right of an accused enshrined under Article 21 of

the Constitution of India as also the international covenants operating in the

field.

It is of some significance to notice that in Jolly George Varghese

and Another vs. The Bank of Cochin [(1980) 2 SCC 360], this Court

opined:

"Equally meaningful is the import of Article 21 of

the Constitution in the context of imprisonment for

non-payment of debts. The high value of human

dignity and the worth of the human person

enshrined in Article 21, read with Arts. 14 and 19,

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obligates the State not to incarcerate except under

law which is fair, just and reasonable in its

procedural essence. Maneka Gandhi's case [1978]

1 S.C.R. 248 as developed further in Sunil Batra v.

Delhi Administration, Sita Ram and Ors. v. State

of U.P. and Sunil Batra v. Delhi Administration

lays down the proposition. It is too obvious to need

elaboration that to cast a person in prison because

of his poverty and consequent inability to meet his

contractual liability is appalling. To be poor, in this

land of daridra Narayana, is no crime and to

'recover' debts by the procedure of putting one in

prison is too flagrantly violative of Article 21

unless there is proof of the minimal fairness of his

wilful failure to pay in spite of his sufficient means

and absence of more terribly pressing claims on his

means such as medical bills to treat cancer or other

grave illness. Unreasonableness and unfairness in

such a procedure is inferable from Article 11 of the

Covenant. But this is precisely the interpretation

we have put on the Proviso to Section 51 C.P.C.

and the lethal blow of Article 21 cannot strike

down the provision, as now interpreted.

The words which hurt are "or has had since the

date of the decree, the means to pay the amount of

the decree". This implies, superficially read, that if

at any time after the passing of an old decree the

judgment-debtor had come by some resources and

had not discharged the decree, he could be

detained in prison even though at that later point of

time he was found to be penniless. This is not a

sound position apart from being inhuman going by

the standards of Article 11(of the Covenant) and

Article 21(of the Constitution). The simple default

to discharge is not enough. There must be some

element of bad faith beyond mere indifference to

pay, some deliberate or recusant disposition in the

past or, alternatively, current means to pay the

decree or a substantial part of it. The provision

emphasises the need to establish not mere

omission to pay but an attitude of refusal on

demand verging on dishonest disowning of the

obligation under the decree. Here considerations of

the debtor's other pressing needs and straitened

circumstances will play prominently. We would

have, by this construction, sauced law with justice,

harmonised Section 51 with the Covenant and the

Constitution."

It is also of some significance to note that whereas under Section

357(1) of the Code of Criminal Procedure a fine of Rs. 5000/- can be

imposed; fine in terms of Section 357 (2) thereof can be twice the amount of

cheque whereas there is no upper limit for award of a compensation. But the

same would be subject to other provisions of the Code of Criminal

Procedure which mandates that the amount of fine imposed on an accused

cannot be more than Rs. 5000/-. The very fact that the Parliament did not

think it fit to put a ceiling limit in regard to the amount of compensation

leviable upon an accused, the discretionary jurisdiction thereto must be

exercised judiciously. Ordinarily, an accused shall not be taken in custody

during trial. Thus, while exercising the appellate power, ordinarily, a person

should not suffer imprisonment only because the conditions imposed for

suspending the sentence are harsh.

We are of the opinion that having regard to the aforementioned factors

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the amount of compensation not only must be reasonable one, the conditions

for suspending the sentence should also be reasonable. It is only with that

intent in view, the doctrine of purposive construction should be applied.

We would, however, like to put a note of caution that the right of an

accused unnecessarily need not be enlarged but it is the court's duty to duly

protect his right.

We are prima facie of the opinion (without going into the merit of the

appeal) that the direction of the learned Trial Judge appears to be somewhat

unreasonable. Appellant herein has been sentenced to imprisonment. Only

fine has been imposed on the Company. Thus, for all intent and purpose, the

learned Trial Judge has invoked both Sub-sections (1) and (3) of Section 357

of the Code. The liability of the appellant herein was a vicarious one in

terms of Section 141 of the Negotiable Instruments Act. The question may

also have to be considered from the angle that the learned Trial Judge

thought it fit to impose a fine of Rs. 25,000/- only upon the Company. If

that be so, a question would arise as to whether an amount of compensation

for a sum of Rs. 15 lakhs should have been directed to be paid by the

Chairman of the Company. We feel that it is not.

We, therefore, are of the opinion :

i) In a case of this nature, Sub-Section (2) of Section 357 of the

Code of Criminal Procedure would be attracted even when

Appellant was directed to pay compensation;

ii) The Appellate Court, however, while suspending the sentence,

was entitled to put the appellant on terms. However, no such

term could be put as a condition precedent for entertaining the

appeal which is a constitutional and statutory right;

iii) The amount of compensation must be a reasonable sum;

iv) The Court, while fixing such amount, must have regard to all

relevant factors including the one referred to in Sub-Section (5)

of 357 of the Code of Criminal Procedure;

v) No unreasonable amount of compensation can be directed to be

paid.

In the facts and circumstances of the case, we, however, think it

reasonable to direct the appellant to deposit a sum of Rs. 1 lakh within a

period of four weeks, from date. The Respondent - Company, however,

would be entitled to withdraw the said amount. The deposit of such amount

by the appellant shall be without prejudice to the rights and contentions of

the parties in the appeal.

These appeals are allowed to the aforementioned extent. In the facts

and circumstances of this case, there shall be no order as to costs.