2017 (5) TMI 372 - SC - Indian Laws

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 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, 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). 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 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.

Summary

Issues Involved:
1. Whether compensation is still recoverable after the accused has undergone a jail sentence for defaulting on compensation payment under Section 138 of the Negotiable Instruments Act.
2. Interpretation and application of Sections 357, 421, and 431 of the Criminal Procedure Code (Cr.P.C.).
3. Relevance and application of Section 70 of the Indian Penal Code (IPC).

Issue-wise Detailed Analysis:

1. Recovery of Compensation Post Default Imprisonment:
The primary issue was whether compensation ordered under Section 138 of the Negotiable Instruments Act remains recoverable after the accused has undergone the default jail sentence. The Court examined the statutory provisions and past judgments to determine that compensation remains recoverable even if the default sentence has been served. This conclusion was based on the interpretation of Sections 357, 421, and 431 of the Cr.P.C., and Section 70 of the IPC. The Court held that the legal fiction created by Section 431 Cr.P.C. allows for the recovery of compensation as if it were a fine, extending the recovery process until it is completed.

2. Interpretation and Application of Relevant Cr.P.C. Sections:
The Court analyzed Section 357 Cr.P.C., which allows courts to order compensation to victims. Sub-section (3) of this section, introduced in the 1973 Code, permits compensation even when a sentence of fine is not imposed. Section 421 Cr.P.C. provides the procedure for recovering fines, including issuing warrants for attachment and sale of property. The proviso to Section 421(1) states that if a default sentence has been served, a warrant for recovery can only be issued for special reasons or if compensation is ordered under Section 357. The Court clarified that the proviso’s reference to compensation includes both Sections 357(1) and 357(3) due to the legal fiction in Section 431 Cr.P.C., which treats compensation as recoverable in the same manner as a fine.

3. Relevance and Application of Section 70 IPC:
Section 70 IPC states that fines can be levied within six years of the sentence and are not discharged by the offender’s death, implying that fines and compensation remain recoverable even after default imprisonment. The Court referenced past judgments to affirm that imprisonment for default does not discharge the obligation to pay fines or compensation. This section supports the view that compensation under Section 357(3) Cr.P.C. remains recoverable despite the accused undergoing default imprisonment.

Conclusion:
The Court upheld the Kerala High Court's decision, confirming that compensation ordered under Section 138 of the Negotiable Instruments Act is recoverable even after the default sentence has been served. The legal fiction under Section 431 Cr.P.C. ensures that compensation is treated as a fine for recovery purposes, extending to Sections 421 and 70 IPC. The judgment emphasizes that the purpose of victim compensation must be liberally construed to meet the ends of justice. The appeals were dismissed accordingly.