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2017 (5) TMI 372 - SUPREME COURT OF INDIA

2017 (5) TMI 372 - SUPREME COURT OF INDIA - TMI - Order to pay compensation - Money ordered to be paid recoverable as fine - N.I. Act - 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? - Held 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 C .....

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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, compensation would be recoverable in the manner provided under Section 421(1). This would, however, be without the necessity for recording any special reasons. T .....

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on 357(1) and, by applying the fiction contained in Section 431, to compensation payable under Section 357(3). - 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. However, once the purpose of the legal fiction is ascertained, full effect must be given, and it should be carried to its logical conclusion. - The object of the legal fiction created by Section 431 is to extend for th .....

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r the Respondent : Mr. C. K. Sasi, AOR JUDGMENT 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. 3. In the present case, the facts are that the complainant approached the Magistrate under Section 138 of the Negotiable Instrum .....

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ffence 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 ₹ 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 .....

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e 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 19th July, 2008, and a distress warrant for the realisation of compensation was issued. A recalling petition filed by the accused was dismissed on 29th March, 2011. The High Court, by the impugned judgment dated 8th August, 2012, held that despite the fact that the default sentence was undergone, yet, under the provis .....

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tence 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 Secti .....

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ault sentence. The exception provided in the proviso to Section 421 is to achieve the object of payment of compensation to the victim 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. Secti .....

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coverable 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 ; (d) when any person is convicted of any offence which includes theft, criminal misappropriation, criminal br .....

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e 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 .....

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lows : 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 .....

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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 any decree for a like amount could be executed shall, for the purposes .....

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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 w .....

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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-s .....

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de 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 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 provisio .....

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ice 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 which such imprisonment can go. Section 68 is important and reads as follows : 68. Imprisonment .....

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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 spe .....

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e 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 .....

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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 .....

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hat 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 al .....

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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 the learned Se .....

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nt, 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 immovabl .....

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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 ficti .....

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coverable. 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 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 .....

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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. 21. In State v. Krishna Pillai, AIR 1953 Travancore-Cochin 233, the law was stated thus: The jurisdiction of the trial .....

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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, Pen .....

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at 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 mann .....

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t 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 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 .....

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1(1). The proviso to the said sub-section was altered because the 41st 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 .....

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f 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 .....

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fter 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 .....

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, 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. 26. This stateme .....

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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) prov .....

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ntence 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 .....

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