REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.       4751           OF 2008 [Arising out of  SLP (Civil) No. 8520 of 2007]

D. Purushotama Reddy & Anr. …Appellants

Versus

K. Sateesh …Respondent

J U D G M E N T  

S.B. SINHA, J :

1. Leave granted.

2. Whether in a suit for recovery of money on a cheque issued by the

defendant but dishonoured, the amount received by the plaintiff-creditor

in  a  criminal  proceeding  should  be  adjusted,  is  the  core  question

involved herein.

3. Plaintiff  – Respondent  filed a suit  against  the appellants,  which

was marked as O.S.  No.  1844 of  2004,  for  recovery of  a sum of Rs.

3,09,000/-  with  interest.   In  the  plaint,  it  was  averred  that  Shri  K.

Balasubramanyam  (father  of  the  respondent)  and  Defendant  No.  1

(Appellant No. 1 herein) were good friends.  Defendant Nos. 1 and 2 had

been carrying on business.  They approached the plaintiff through Shri K.

Balasubramanyam for  financial  assistance  and  obtained  a  loan  of  Rs.

2,00,000/-  (Rs.  1,00,000/-  on  15.03.2001  and  Rs.  1,00,000/-  on

25.03.2001).  Two promissory notes were also executed therefor.   

4. Defendants – Appellants purported to be in discharge of the said

debt issued two cheques bearing Nos. 3960 dated 15.03.2003 and 3959

dated 31.05.2003 drawn on Bank of India, which on presentation, were

returned dishonoured.  Indisputably, a complaint under Section 200 of

the Code of Criminal Procedure, 1973 read with Sections 138 and 142 of

the Negotiable Instruments Act,  1881 (for short “the Act”),  marked as

C.C. No. 19337 of 2003, was filed.   

A judgment of conviction and sentence against the appellant was

passed therein by an order dated 15.12.2005 sentencing him to pay a sum

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of Rs. 2,10,000 by way of fine and in default thereof to undergo simple

imprisonment for a period of three months.  It was also directed that out

of the said amount of fine, a sum of Rs. 2,00,000/- would be paid to the

complainant by way of compensation in terms of Section 357 of the Code

of Criminal Procedure (for short “the Code”) and the remaining amount

was to  be payable  to  the State.   In  the said  criminal  proceedings,  the

appellants deposited a sum of Rs. 31,500/- on 7.02.2006, Rs. 68,500/- on

21.07.2006 and Rs. 1,10,000/- on 13.12.2006.

5. O.S.  No.  1844  of  2004  was  decreed  by  the  Trial  Court  by  a

judgment and order dated 23.01.2006, ordering:

“This  suit  is  hereby decreed for a sum of Rs. 3,09,000/-  (Rupees  three  lakhs  nine  thousand only) with court costs and current interest at 6% p.a. on the principal amount of Rs. 2,00,000/- from  the  date  of  suit  till  realization.   The defendants  are  jointly  and  severally  liable  to pay the decrial amount.”

6. In  the  civil  proceedings  also,  the  appellants  admittedly  have

deposited a sum of Rs. 1,90,000/-.  An appeal was preferred thereagainst

before the High Court of Karnataka at Bangalore marked as R.F.A. No.

1171  of  2006,  which  by  reason  of  the  impugned  judgment  has  been

dismissed.

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7. The principal contention raised herein is that the Trial Court and

consequently the High Court committed a serious error in decreeing the

suit in its entirety, i.e., for a sum of Rs. 3,09,000/- with interest without

taking into consideration the fact that an amount of Rs. 2,10,000/- had

already been deposited by the appellants in the said criminal proceedings.

8. Contention of the respondent, however, is that as the said question

was  not  and  could  not  have  been  raised  before  the  Trial  Court,  the

impugned judgment is sustainable.  It was furthermore urged that in view

of the well-settled principle of law that pendency of a criminal matter

would  not  be  an  impediment  in  proceeding  with  a  civil  suit,  the

impugned judgment should not be interfered with.

9. A suit for recovery of money due from a borrower indisputably is

maintainable at the instance of the creditor.  It is furthermore beyond any

doubt or dispute that for the same cause of action a complaint petition

under terms of Section 138 of the Act would also be maintainable.   

10. The  question,  however,  is  as  to  whether  the  courts  in  one

proceeding  can  issue  directions  to  deposit  amount  in  favour  of  the

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plaintiff without taking into consideration the amount deposited by the

defendant in the other.

11. We  have  noticed  hereinbefore  that  whereas  the  judgment  of

conviction and sentence was passed on 15.12.2005, the suit was decreed

by the civil court on 23.01.2006.  Deposit of a sum of Rs. 2,00,000/- by

the appellants  in favour of the respondent  herein,  was directed by the

Criminal Court.  Such an order should have been taken into consideration

by the Trial Court.   

An appeal  from a decree,  furthermore,  is  a continuation of  suit.

The limitation of power on a civil court should also be borne in mind by

the appellate court.  Was any duty cast upon the civil court to consider

the amount  of  compensation deposited in  terms of  Section 357 of  the

Code is the question.  In terms of sub-section (1) of Section 357 of the

Code,  a criminal  court  is  empowered to direct  that  out  of  the amount

recovered from an accused by way of fine, compensation of a specified

amount may be directed to be paid for any loss or injury caused by the

offence, when compensation is, in the opinion of the Court, recoverable

by a person in a Civil Court.  It is, therefore, evident that the amount of

compensation could have been directed to be paid by the criminal court

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as the same was recoverable by the respondent as against the appellants

in a civil court also.  Such an order can also be passed by the Appellate

Court or by the High Court or by the Court of Sessions when exercising

its power of revision.   

12. Sub-section (5) of Section 357 of the Code, which is relevant for

our purpose, reads as under:

“357. Order to pay compensation –  *** *** *** (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.”

13. Evidently, a duty has been cast upon the civil courts to take into

account the sum paid or recovered as compensation in terms of Section

357 of the Code.  It is futile to urge that on the date on which the civil

court passed the decree the appellants were not convicted.  As noticed

hereinbefore, the appeal is a continuation of the suit and in that view of

the  matter  as  the  appellants  had  in  total  deposited  a  sum  of  Rs.

4,00,000/-,  i.e.,  Rs.  2,10,000/-  in  the  criminal  proceeding  and  Rs.

1,90,000/- in the civil proceedings, out of which a sum of Rs. 3,09,000/-

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has been withdrawn by the respondent, the High Court was obligated to

take the same into consideration.  In other words, having regard to the

provisions of Sub-section (5) of Section 357 of the Code, a duty was cast

upon  the  High  Court  to  take  into  account  the  fact  that  a  sum of  Rs.

2,00,000/-  had  already been  paid  by the  appellants  to  the  respondent.

Concededly, both the proceedings were maintainable.  Law recognizes

the same.  The Parliament must have the situation of this nature in mind

while enacting Clause (b) of Sub-section (1) of Section 357 of the Code

and Sub-section (5) thereof.   

14. In  Dilip S. Dahanukar v.  Kotak Mahindra Co. Ltd. and Another

[(2007) 6 SCC 528], while considering a question as to what should be

the reasonable amount in the matter of grant of compensation vis-à-vis

the power of the appellate court to issue an interim direction in relation

thereto, this Court held:

“38. 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 the accused to pay the same must be judged. A fortiori,  an  enquiry  in  this  behalf  even  in  a summary  way,  may  be  necessary.  Some

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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.

39. If a fine is to be imposed under the Act, the  amount  of  which  in  the  opinion  of 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 realisation 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.

40. Prosecution  under  the  Act  may  be contemplated  as  a  measure  of  deterrence,  but the same is never meant to be a persecution.

41. 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.”

[See also Manish Jalan v. State of Karnataka JT 2008 (7) SC 643]

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This Court therein adopted the doctrine of purposive construction.

It  was  opined  that  compensation  directed  to  be  paid  should  be  a

reasonable one.

15. In  New  India  Assurance  Co. v.  Nusli  Neville  Wadia  and  Anr.

[2007 (14) SCALE 556], it was held :

“50. Except  in the first  category of cases, as has been noticed by us hereinbefore, Sections 4 and 5 of the Act, in our opinion, may have to be construed differently  in  view of the  decisions rendered by this Court.  If the landlord being a State within the meaning of Article 12 of the Constitution  of  India  is  required  to  prove fairness  and  reasonableness  on  its  part  in initiating a proceeding, it is for it to show how its prayer meets the constitutional requirements of Article 14 of the Constitution of India.  For proper  interpretation  not  only  the  basic principles of natural justice have to be borne in mind,  but  also  principles  of  constitutionalism involved  therein.   With  a  view  to  read  the provisions of the Act in a proper and effective manner,  we  are  of  the  opinion  that  literal interpretation,  if  given,  may  give  rise  to  an anomaly or  absurdity which must  be avoided. So as to enable a superior court to interpret a statute in a reasonable manner, the court must place  itself  in  the  chair  of  a  reasonable legislator/  author.   So  done,  the  rules  of purposive  construction  have  to  be  resorted  to which would require the construction of the Act in such a manner so as to see that the object of the Act fulfilled; which in turn would lead the beneficiary under the statutory scheme to fulfill

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its  constitutional  obligations  as  held  by  the court  inter  alia  in  Ashoka  Marketing  Ltd (supra).   

51. Barak  in  his  exhaustive  work  on ‘Purposive  Construction’  explains  various meanings  attributed  to  the  term “purpose”.  It would be in the fitness of discussion to refer to Purposive Construction in Barak’s words:

“Hart  and  Sachs  also  appear  to  treat “purpose” as a subjective concept.  I say “appear”   because,  although  Hart  and Sachs  claim  that  the  interpreter  should imagine  himself  or  herself  in  the legislator’s  shoes,  they  introduce  two elements  of  objectivity:  First,  the interpreter  should  assume  that  the legislature  is  composed  of  reasonable people  seeking  to  achieve  reasonable goals  in  a  reasonable  manner;  and second, the interpreter should accept the non-rebuttable  presumption  that members  of  the  legislative  body sought to  fulfill   their  constitutional  duties  in good  faith.  This  formulation  allows  the interpreter  to  inquire  not  into  the subjective intent of the author, but rather the intent the author would have had, had he or she acted reasonably.”

16. Submission of the learned counsel for the respondent that the said

question was not raised before the learned Trial Judge or before the High

Court is of no moment.  Sub-section (5) of Section 357 of the Code casts

a duty upon the court.  It was for the Trial Court/High Court to take the

same  into  consideration.   Such  consideration  was  required  to  be

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bestowed despite the fact that the said provision was not brought to its

notice.   

17. Actus curiae neminem gravabit (no person shall be prejudiced by

an act  of  court)  is  a well-known maxim.  In  any event,  this  Court  in

exercise of its jurisdiction under Article 136 as also under Article 142 of

the Constitution of India can direct rectification of a mistake committed

by the courts below.   

18. We,  therefore,  are  of  the  opinion  that  the  impugned  judgment

should  be  modified  and  is  directed  to  be  modified  accordingly.   The

matter is remitted to the learned Trial Judge.  The learned Trial Judge is

directed to take into consideration the amount of compensation deposited

by  the  appellants  in  the  criminal  case  and  for  the  said  purpose,  the

learned Trial Judge should draw up a fresh decree while correcting the

decree in terms of the order of this Court.  The learned Trial Judge shall,

while preparing a fresh decree, take into consideration the various dates

on which the diverse amounts had been deposited by the appellants and

calculate the interest payable thereupon.

19. The appeal is allowed to the aforementioned extent.  In the facts

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

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………………………….J. [S.B. Sinha]

..…………………………J. [Cyriac Joseph]

New Delhi; August 01, 2008

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