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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.