Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

Criminal Appeal Nos. 896-897 of 2017

(@Special Leave Petition (Criminal) Nos.1231-1232 of 2013)

Kumaran …Appellant

Versus

State of Kerala & Anr. …Respondents

J U D G M E N T

R.F. NARIMAN, J.

1.Leave granted.

2.The present appeals raise an interesting question as to whether

when compensation is ordered as payable for an offence committed

under Section 138 of the Negotiable Instruments Act, and in default

thereof, a jail sentence is prescribed and undergone, is compensation

still recoverable.

1

Page 2 3.In the present case, the facts are that the complainant

approached the Magistrate under Section 138 of the Negotiable

Instruments Act in a transaction where the accused had borrowed a

sum of Rs.2.75 lakh from the complainant. When the complainant

demanded the amount, the accused issued a cheque for the said

amount which was returned as dishonoured due to insufficiency of

funds. The requisite demand notice was sent by the complainant to

the accused followed by the complaint. Ultimately, the accused was

found guilty of the offence under Section 138, and was convicted,

stating:

“Considering the fact that this is an offence u/s 138 of the

Negotiable Instruments Act I do not consider this to be a

fit case to be proceeded under the Probation of Offenders

Act. I am of the view that simple imprisonment for 4

months for the offence u/s 138 of the Negotiable

Instruments Act would meet the ends of justice. The

accused is further directed to pay a compensation of

Rs.2,75,000/- to the complainant u/s 357(3) of Cr.P.C. In

default of payment of compensation, he shall undergo

simple imprisonment for 1 month.”

4.The accused challenged the aforesaid judgment before the

Court of Sessions, and the Appellate Court, by an order dated 27

th

April, 2006, confirmed the conviction, but reduced the sentence to

2

Page 3 imprisonment till rising of the Court. The order to pay compensation

with the default clause was, however, sustained. The accused

underwent imprisonment till the rising of the Court and also

underwent the default sentence for non-payment of compensation.

The second respondent filed CMP No.2018 of 2008 before the

learned Judicial Magistrate under Section 421 of the Criminal

Procedure Code for realising compensation by issuing a distress

warrant against the accused. This CMP was allowed on 19

th

July,

2008, and a distress warrant for the realisation of compensation was

issued. A recalling petition filed by the accused was dismissed on

29

th

March, 2011. The High Court, by the impugned judgment dated

8

th

August, 2012, held that despite the fact that the default sentence

was undergone, yet, under the provisions of the Code of Criminal

Procedure, compensation was recoverable, and upheld the orders of

the learned Judicial Magistrate.

5.Shri Siddharth Dave, learned counsel appearing on behalf of

the Appellant, has argued before us that an accused who is directed

to pay fine, or undergo sentence of which fine forms a part, and from

which compensation is to be paid, then a court would proceed against

3

Page 4 the accused in the manner provided under Section 421 even though

he may have undergone the default sentence awarded to him.

However, if the sentence is of fine or sentence of which fine forms a

part and there is no order of payment of compensation from the fine

imposed, the court would have to record special reasons in writing

before proceeding against the accused under Section 421. Likewise,

compensation under Section 357(3) would be covered by the proviso

if the accused has undergone the default sentence awarded and

special reasons in writing would have to be recorded before action

under Section 421 can be initiated. As in the present case, at the time

of issuance of warrant, the Magistrate did not record special reasons

in writing for proceeding against the accused person, the Division

Bench judgment ought to be set aside.

6.Shri C.K. Sasi, learned counsel for the Respondent, has

repelled the above submissions. According to the learned counsel,

by operation of the deeming fiction contained in Section 431 Cr.P.C.

compensation can be realized even if the accused had undergone the

default sentence. The exception provided in the proviso to Section

421 is to achieve the object of payment of compensation to the victim

4

Page 5 of the offence. According to learned counsel, the purpose of Section

421 being victim compensation, the provision must be liberally

construed to meet the ends of justice. This being so, the Division

Bench judgment cannot be faulted on any score.

7.Having heard learned counsel for the parties, it is important to

set out all the relevant statutory provisions. Section 357 Cr.P.C.

reads as under:

“357. Order to pay compensation. (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-

(a) in defraying the expenses properly incurred in the

prosecution;

(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;

(c) when any person is convicted of any offence for

having caused the death of another person or of having

abetted the commission of such an offence, in paying

compensation to the persons who are, under the Fatal

Accidents Act, 1855 (13 of1855), entitled to recover

damages from the person sentenced for the loss resulting

to them from such death ;

5

Page 6 (d) when any person is convicted of any offence which

includes theft, criminal misappropriation, criminal breach

of trust, or cheating, or of having dishonestly received or

retained, or of having voluntarily assisted in disposing of,

stolen property knowing or having reason to believe the

same to be stolen, in compensating any bona fide

purchaser of such property for the loss of the same if

such property is restored to the possession of the person

entitled thereto.

(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

so sentenced.

(4) An order under this section may also be made by an

Appellate Court or by the High Court or Court of Session

when exercising its powers of revision.

(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.”

It is important to note that sub-section (3) is a new provision

which did not exist in the old Criminal Procedure Code.

6

Page 7 8.The predecessor to Section 421 was Section 386 of the Code

of Criminal Procedure, 1898, which reads as follows :

“386. Warrant for levy of fine.(1) Whenever 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

authorising him to realise the amount by execution

according to civil process against 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 to do so.

(2) The Government may make rules regulating the

manner in which warrants under sub-section (1), clause

(a), are to be executed, and for the summary

determination of any claims made by any person other

than the offender in respect of any property attached in

execution of such warrant.

(3) Where the Courts issue a warrant to the Collector

under sub-section (1), Clause (b), such warrant shall be

deemed to be a decree, and the Collector to be the

decree-holder, within the meaning of the Code of Civil

Procedure, 1908, and the nearest Civil Court by which

7

Page 8 any decree for a like amount could be executed shall, for

the purposes of the said Code, be deemed to be the

Court which passed the Decree, and all the provisions of

that Code as to execution of decrees shall apply

accordingly:

Provided that no such warrant shall be executed by the

arrest or detention in prison of the offender.”

9.Section 421 of the present Code reads as follows :

“421. Warrant for levy of fine. (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,

authorising him to realise 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.

(2) The State Government may make rules regulating the

manner in which warrants under clause (a) of sub-section

8

Page 9 (1) are to be executed, and for the summary

determination of any claims made by any person other

than the offender in respect of any property attached in

execution of such warrant.

(3) Where the Court issues a warrant to the Collector

under clause (b) of sub-section (1), the Collector shall

realise the amount in accordance with the law relating to

recovery of arrears of land revenue, as if such warrant

were a certificate issued under such law :

Provided that no such warrant shall be executed by the

arrest or detention in prison of the offender.”

10.It may be noticed that the last part of the proviso to sub-section

(1), namely, “or unless it has made an order for the payment of

expenses or compensation out of the fine under Section 357” has

been added to the proviso for the first time. This was done pursuant

to the 41

st

Law Commission Report, which will be referred to a little

later.

11.The third important provision in the Code of Criminal Procedure

is Section 431, which reads as follows:

“431. Money ordered to be paid recoverable as fine.

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:

9

Page 10 Provided that section 421 shall, in its application to an

order under section 359, by virtue of this section, be

construed as if in the proviso to sub-section (1) of section

421, after the words and figures "under section 357", the

words and figures "or an order for payment of costs under

section 359" had been inserted.”

From this provision, it is clear that a deeming fiction is enacted,

viz., that any money other than a fine, (which would include

compensation payable under Section 357(3) Cr.P.C.) the method of

recovery of which is not expressly provided for, shall be recoverable

as if it was a fine. One of the bones of contention in these appeals is

the effect of the deeming fiction under Section 431.

12.Section 53 of the Indian Penal Code speaks of punishment to

which offenders are liable under the provisions of the Code. Suffice it

to say that fine is one of them, but compensation payable is not.

13.Also contained in Chapter III of the Penal Code which is

headed “OF PUNISHMENTS” are the provisions of Sections 64 to 70.

Section 64 recognises that it shall be competent to the Court which

sentences an offender to state that, in default of payment of a fine,

the offender shall suffer imprisonment. Section 65 sets the limit to

10

Page 11 which such imprisonment can go. Section 68 is important and reads

as follows :

“68. Imprisonment to terminate on payment of fine.-

The imprisonment which is imposed in default of payment

of a fine shall terminate whenever that fine is either paid

or levied by process of law.”

Section 70, which is almost determinative of the point that has

been argued in these appeals, reads as follows:

“70. Fine leviable within six years, or during

imprisonment – Death not to discharge property from

liability.--The fine, or any part thereof which remains

unpaid, may be levied at any time within six years after

the passing of the sentence, and if, under the sentence,

the offender be liable to imprisonment for a longer period

than six years, then at any time previous to the expiration

of that period; and the death of the offender does not

discharge from the liability any property which would, after

his death, be legally liable for his debts.”

14.It is important at this juncture to deal with some of the

judgments of the High Courts.

15.An early judgment of the Bombay High Court dealt with what

were “special reasons” for the purpose of the proviso to Section

386(1) under the old Code. A Division Bench of the said High Court

in Digamber Kashinath Bhavarthi v. Emperor, AIR 1935 Bom 160:

11

Page 12 ILR LIX Bom 350, dealt with the proviso to Section 386(1) in the

following terms:

“On June 30, 1934, the applicant was Released from jail,

having served not only his substantive sentence, but also

the sentence imposed upon him in default of payment of

the fine, and he now asks that the warrant for the

recovery of the fine issued against him should be

withdrawn, and in support of his contention he relies on

the proviso to section 386(1). That proviso provides 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 a warrant under the section unless for

special reasons to be recorded in writing it considers it

necessary to do so. The proviso applies in terms only to

the issue of a fresh warrant and does not require the

withdrawal of a warrant already issued before expiration

of the sentence in default of payment. But, I think that, in

dealing with such existing warrants, the Court should

follow the policy which seems to have inspired the proviso

to section 386. That policy appears to be that in general

an offender ought not to be required both to pay the fine

and to serve the sentence in default. But the proviso

enables a warrant to be issued for recovery of the fine,

even if the whole sentence in default has been served, if

the Court considers that there are special reasons for

issuing the warrant. I apprehend that the special reasons

should be reasons accounting for the fact that the fine has

not been recovered before the sentence in default has

been served, and any reasons which are directed to that

point would be relevant. It may be that the authorities,

through no negligence on their part, did not know of the

existence of the property or the accused may have

inherited property after he served his sentence in default;

or there may not have been time to execute the warrant.

Matters of that sort would all be special reasons for

12

Page 13 issuing a warrant after the sentence in default had been

served; and I think, in the same way, they are reasons

justifying the Court in refusing to withdraw a warrant

already issued. In the present case, in my opinion, there

are special reasons, though not quite those which were

recorded by the Judge. I think that a special reason for

not withdrawing the warrant is that before the sentence in

default had been served the authorities had taken steps

to enforce this warrant by levying execution, upon the

immoveable property of the applicant, and the delay

which has taken place is not, in my opinion, shown to be

due to any default on the part of the authorities. The

learned Judge himself gave as his reasons for not

withdrawing the warrant that the offence was a serious

one, and the complainant had been allotted part of the

fine. In my view, reasons of that sort are not relevant

because they do not account for the fine not having been

recovered before the service of the sentence in default.

For these reasons, I think the application must be

refused.”

16.This judgment was followed in Brahameshwar Prasad Sinha

v. State of Bihar, 1983 Cri LJ 8 by a Division Bench of the Patna

High Court, in which the Patna High Court held as follows :

“In Digamber Kashinath Bhavarthi v. Emperor (AIR 1935

Bom 160) : (1935-36 Cri LJ 1034) the Bombay High Court

pointed out that special reasons mentioned in S. 386 of

the old Code should be reasons accounting for the fact

that the fine had not been recovered from the convict

before the sentence in default had been served out and

any reasons which are directed to that point would be

relevant applying that test, I am unable to say that the

reasons-given by the learned Sessions Judge is not

relevant. It must be pointed that, that the discretion is of

13

Page 14 the learned Sessions Judge and sitting in revision it may

not be interfered with lightly.”

17.A Single Judge of the Allahabad High Court in Parasnath v.

State AIR 1969 All 116 held as follows :

“There is no provision in the Indian Penal Code like Sec.

68 providing that, on the undergoing of the whole period

of imprisonment, the fine shall not be recoverable. The

procedure for recovery of such fines is provided for in

Sec. 386 of the Code of Criminal Procedure. Sub-sec. (1)

of Sec. 386, Cr. P.C. which is relevant, provides:

“386(1)—Whenever 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

authorising him to realise the amount by execution

according to civil process against 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 to

do so.”

14

Page 15 The absence of any specific provision to the effect that

the fine shall not be realisable if the whole of the period of

imprisonment for default has been undergone and the

language of the proviso to sub-sec. (1) of Sec. 386, Cr.

P.C. lead to the conclusion that the undergoing of

imprisonment awarded in default of payment of the fine

does not operate as a discharge or satisfaction of the fine

which may nevertheless be levied in the manner

prescribed by Sec. 386(1), Cr. P.C.”

18.A Single Judge of the Kerala High Court in Saji Kumar vs.

Soman Pillai, 2006 (3)KLT 679, set out Section 421 of the Code of

Criminal Procedure and held that the fiction contained in Section 431

Cr.P.C. must be extended logically until its object is accomplished. A

non-fine must be deemed to be a fine for the purpose of recovery,

and until recovery is complete, the fiction must continue. Having so

held, the learned Judge stated that the proviso to Section 421(1)

would apply not merely to Section 357(1), but also to Section 357(3)

and this being so, held that despite the fact that the default sentence

had been undergone, compensation under Section 357(3) is

recoverable. The impugned judgment before us of the same High

Court approved of the conclusion of the aforesaid judgment, but with

completely different reasoning. According to the Division Bench,

“compensation” is not a “sentence” and this being the case, would not

15

Page 16 be covered by the proviso to Section 421(1). This would make it clear

that since compensation is otherwise recoverable, despite the default

sentence having been undergone, ultimately, a warrant can be issued

under the first part of Section 421(1).

19.At this stage, it is important to refer to a few judgments of

various High Courts on the reach of Section 70 of the Penal Code. In

Kirpa Ram v. Emperor AIR 1914 Lahore 539, a Division Bench of

the Lahore High Court adverted to Section 70 of the Penal Code and

added that a fine can be collected even after the imprisonment

awarded in default has been undergone.

20.In Collector of Broach and Panchmahals v. Ochhavlal

Bhikalal, AIR 1941 Bom 158, a Division Bench of the Bombay High

Court held that Section 386 of the Cr.P.C. (i.e. the predecessor

Section to Section 421 of the present Code) relates only to

procedure, whereas the substantive law as to payment of fine is

contained in Section 70 of the Penal Code. This being the case, it

was held that the limitation period of six years from the date of the

sentence barred the darkhast that was presented in that case.

16

Page 17 21.In State v. Krishna Pillai, AIR 1953 Travancore-Cochin 233,

the law was stated thus:

“The jurisdiction of the trial court to impose a sentence of

imprisonment in default of payment of fine is merely

permissive. It is not imperative to award a term of

imprisonment in default of payment of a fine. Section 64,

Penal Code (S. 53, Travancore Code) only states that it

shall be competent to the court to impose a sentence of

imprisonment for non-payment of fine. Further,

imprisonment in default of payment of fine does not

liberate an accused person from his liability to pay the fine

imposed on him. Such imprisonment does not serve as a

discharge or satisfaction of the fine, but is imposed as a

punishment for nonpayment. The fine would remain alive

for collection for six years after the passing of the

sentence. Assuming the accused counter-petitioner has

no means now to pay the same, it can be recovered from

any property acquired by him within the period specified.

Even his death will not discharge from the liability any

property which would, after his death be legally liable for

his debts. (Section 70, Penal Code, corresponding to S.

59, Travancore Penal Code).”

22.In K. Vemmana Shenoy v. Collector of South Kanara, AIR

1964 Mys. 64, a Single Judge of that High Court adverted to the

amending Act of 1923, by which a substantial change was made to

Section 386 of the Cr.P.C., which made it clear that the offender

should not be made to pay fine as well as undergo imprisonment in

default of payment of the fine in the absence of special reasons to be

17

Page 18 recorded in writing. The learned Single Judge held that Section 70

IPC read with Section 386(1) proviso would necessarily lead to the

conclusion that in the absence of special reasons to be recorded in

writing, the fine cannot be recovered after the offender has

undergone imprisonment in default of payment.

23.A conspectus of the aforesaid judgments would show that

compensation under the old Cr.P.C. was always recoverable as a part

of fine, and that even after default imprisonment having been

undergone, a fine could still be collected in the manner provided by

Section 386. The requirement of special reasons was introduced by

the amending Act of 1923. The special reasons outlined in the

Bombay High Court judgment of 1935 as well as in the Mysore High

Court judgment of 1964 would show that it is enough that sufficient

reasons or some good reason be given in order that fine be realized

even after default imprisonment has been undergone. The Courts

held that despite the fact that the reach of Section 386(1) proviso was

only qua warrants that issued after default imprisonment was

undergone, yet, the principle of the proviso to Section 386(1) would

apply even to warrants issued before default imprisonment was

18

Page 19 undergone. The law, therefore, till the enactment of the 1973 Code, made

it clear that Section 386, and Section 70 IPC read together would lead to

the conclusion that fines were recoverable even after default imprisonment

was undergone, provided there were special reasons for recovery of

the same. With the Code of 1973 came an interesting change.

Sub-section (3) was added to Section 357, which was an entirely new

provision making it clear that the Court may, when passing judgment,

order the accused to pay by way of compensation such amount as

may be specified in the order to the person who has suffered loss or

injury by reason of the act for which the accused person has been

sentenced. This is provided that the Court imposes a sentence of

which fine does not form a part. Another important change was made

in Section 421(1). The proviso to the said sub-section was altered

because the 41

st

Law Commission Report, in recommending

amendments to the old Section 386 stated, after noticing the Bombay

High Court judgment in Digambar’s case (supra) as follows :

“28.10. Fine should be recoverable when

compensation has been ordered. – We notice that in

the above judgment the fact that the complainant has

been allotted part of the fine was not considered a

relevant special reason for purposes of the proviso as it

stands. A contumacious offender should not, in our

19

Page 20 opinion, be permitted to deprive the aggrieved party of the

small compensation awarded to it by the device of

undergoing the sentence of imprisonment in default of

payment of the fine. When an order under Section 545

has been passed for payment of expenses or

compensation out of fine, recovery of the fine should be

pursued, and in such cases, the fact that the sentence of

imprisonment in default has been fully undergone should

not be a bar to the issue of a warrant for levy of the fine.

We recommend that the proviso to section 386(1) should

make this clear.”

24.Following paragraph 28.10, the words “or unless it made an

order for the payment of expenses or compensation out of the fine

under Section 357” was added to the proviso which was contained in

old Section 386(1) and continued in Section 421(1).

25.At this juncture, it is important to note that in Vijayan v.

Sadanandan K. (2009) 6 SCC 652, this Court held :

“29. To appreciate the said legal position, the provisions

of Section 431 are set out hereinbelow:

“431. Money ordered to be paid recoverable as fine.

—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:

Provided that Section 421 shall, in its application

to an order under Section 359, by virtue of this

section, be construed as if in the proviso to

20

Page 21 sub-section (1) of Section 421, after the words and

figures ‘under Section 357’, the words and figures

‘or an order for payment of costs under Section 359’

had been inserted.”

Section 431 makes it clear that any money other than a

fine payable on account of an order passed under the

Code shall be recoverable as if it were a fine which takes

us to Section 64 IPC.

30. Section 64 IPC makes it clear that while imposing a

sentence of fine, the court would be competent to include

a default sentence to ensure payment of the same. For

the sake of reference, Section 64 IPC is set out

hereinbelow:

“64. Sentence of imprisonment for non-payment of

fine.—In every case of an offence punishable with

imprisonment as well as fine, in which the offender

is sentenced to a fine, whether with or without

imprisonment, and in every case of an offence

punishable with imprisonment or fine, or with fine

only, in which the offender is sentenced to a fine, it

shall be competent to the court which sentences

such offender to direct by the sentence that, in

default of payment of the fine, the offender shall

suffer imprisonment for a certain term, which

imprisonment shall be in excess of any other

imprisonment to which he may have been

sentenced or to which he may be liable under a

commutation of a sentence.”

31. The provisions of Sections 357(3) and 431 CrPC,

when read with Section 64 IPC, empower the court, while

making an order for payment of compensation, to also

include a default sentence in case of non-payment of the

same.”

21

Page 22 26.This statement of the law was reiterated in R. Mohan v. A.K.

Vijaya Kumar, (2012) 8 SCC 721 (see paras 26 to 29).

27.These two judgments make it clear that the deeming fiction of

Section 431 Cr.P.C. extends not only to Section 421, but also to

Section 64 of the Indian Penal Code. This being the case, Section 70

IPC, which is the last in the group of Sections dealing with sentence

of imprisonment for non-payment of fine must also be included as

applying directly to compensation under Section 357(3) as well. The

position in law now becomes clear. The deeming provision in Section

431 will apply to Section 421(1) as well, despite the fact that the last

part of the proviso to Section 421(1) makes a reference only to an

order for payment of expenses or compensation out of a fine, which

would necessarily refer only to Section 357(1) and not 357(3).

Despite this being so, so long as compensation has been directed to

be paid, albeit under Section 357(3), Section 431, Section 70 IPC and

Section 421(1) proviso would make it clear that by a legal fiction,

even though a default sentence has been suffered, yet,

22

Page 23 compensation would be recoverable in the manner provided under

Section 421(1). This would, however, be without the necessity for

recording any special reasons. This is because Section 421(1)

proviso contains the disjunctive “or” following the recommendation of

the Law Commission, that the proviso to old Section 386(1) should

not be a bar to the issue of a warrant for levy of fine, even when a

sentence of imprisonment for default has been fully undergone. The

last part inserted into the proviso to Section 421(1) as a result of this

recommendation of the Law Commission is a category by itself which

applies to compensation payable out of a fine under Section 357(1)

and, by applying the fiction contained in Section 431, to

compensation payable under Section 357(3).

28. As is well known, a legal fiction is not to be extended beyond

the purpose for which it is created or beyond the language of the

section by which it is created. For example, see Prakash H. Jain v.

Marie Fernandes, (2003) 8 SCC 431 at 438. However, once the

purpose of the legal fiction is ascertained, full effect must be given,

and it should be carried to its logical conclusion. This is clear from the

23

Page 24 celebrated passage in East End Dwelling Co. Ltd. v. Finsbury

Borough Council, 1951 (2) All ER 587 at 589:

“if you are bidden to treat an imaginary state of affairs as

real, you must surely, unless prohibited from doing so,

also imagine as real the consequences and incidents

which, if the putative state of affairs had in fact existed,

must inevitably have flowed from or accompanied it. One

of those in this case is emancipation from the 1939 level

of rents. The statute says that you must imagine a certain

state of affairs; it does not say that having done so, you

must cause or permit your imagination to boggle when it

comes to the inevitable corollaries of that state of affairs”.

29.The legal fiction enacted under Section 431 is not limited to “the

purpose of this Act” unlike Section 6A of the Central Sales Tax Act, as

was the case in Ashok Leyland Limited v. State of Tamil Nadu,

(2004) 3 SCC 1 at para 32,76. Thus it is clear that the object of the

legal fiction created by Section 431 is to extend for the purpose of

recovery of compensation until such recovery is completed - and this

would necessarily take us not only to Section 421 of the Cr.P.C. but

also to Section 70 of the Penal Code, a companion criminal statute,

as has been held above.

30.This being the case, we uphold the conclusion of the judgment

dated 8

th

August, 2012 of the Division Bench of the Kerala High Court

24

Page 25 but for the reasons given in this judgment. The appeals are

dismissed accordingly.

………………………………..J.

(R.F. NARIMAN)

….…………………………… J.

(NAVIN SINHA)

New Delhi;

May 5, 2017.

25