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TMI Blog2010 (5) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... an offence under section 138 of the Negotiable Instruments Act (the 'Act' for short). The complainant's case is that the appellant, who was due in a sum of Rs. 5,00,000, issued a cheque dated 16-6-2003 in respect of that liability, and when the cheque was presented for encashment, the same was returned with an endorsement of "insufficiency of funds". 5. The complainant, through his Advocate, had issued notice to the appellant demanding the payment and that in spite of the service of notice, the appellant failed to pay the amount covered by the cheque and thus has committed an offence under section 138 of the Act and, accordingly, has approached the learned Magistrate for appropriate reliefs. 6. The learned Magistrate after taking cognizance of the offence and after recording the evidence of the parties and after analyzing the same, has found the accused guilty of the offence punishable under section 138 of the Act and sentenced to simple imprisonment for one year. In addition to that he had directed to pay a compensation of Rs. 5 lakhs to the complainant under section 357(3) of the Cr. PC, and in default, to undergo simple imprisonment for a further period of two months. 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Padmanabhan [2000] 2 KLT 349, wherein the Kerala High Court had given a similar finding. The accused also contends, that, there is a factual error in the judgment of the High Court to the effect that the accused had already deposited Rs. 2 lakhs towards paying the compensation amount pursuant to interim orders of the Sessions Court and the High Court respectively, instead the High Court has observed that only Rs. 1 lakh has been deposited. 10. The complainant being aggrieved by the sentence imposed on the accused has filed SLP (Crl.) No. 4099 of 2008. The contention of the complainant is that, the sentence imposed is very minimal and will defeat the very purpose of section 138 of N.I Act and if for any reason the default sentence is deleted then there is no chance of the accused paying the compensation . In this regard, the complainant relies on the observation of this court in the case of Suganthi Suresh Kumar v. Jagdeeshan [2002] 2 SCC 420. 11. Heard learned counsel for both sides. The learned counsel for the accused submits, that, the default sentence imposed by the learned Judge of the High Court is against the dicta of this Court in the case of Ettappadan Ahammed Kutty v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 all Appellate Court or by the High Court or Court of Session when exercising its powers of revision. (5) At the time of awarding compensation in any subsequent civil suit relating to the same matter, the court shall take into account any sum paid or recovered as compensation under this section." 15. Essentially the section empowers the courts, not to just impose a fine alone or fine along with the sentence of imprisonment, but also when the situation arises, direct the accused to pay compensation to the person who has suffered any loss or injury by reason of the act for which the accused person has been sentenced. 16. The above view we have taken is supported by the decisions of this Court, to which we presently refer. 17. In the case of Sarwan Singh v. State of Punjab AIR 1978 SC 1525, this court has noticed the object and genesis of the section : "10. The law which enables the Court to direct compensation to be paid to the dependents is found in section 357 of the Cr. PC (Act 2 of 1974). The corresponding provision in the 1898 Code was secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is sought to be given effect to by section 357 of the new Code (Act 2 of 1973). Section 357(3) provides that 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. The object of the section therefore, is to provide compensation payable to the persons who are entitled to recover damages from the person sentenced even though fine does not form part of the sentence. Though section 545 of 1898 Code 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 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 compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dahanukar v. Kotak Mahindra Co. Ltd. [2007] 6 SCC 528, this court differentiated between fine and compensation, and while doing so, has stated that 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. The court further observed :- "19. 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." Finally the court summed up :- "22. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the said decision this Court reminded all concerned that it is well to remember the emphasis laid on the need for making liberal use of section 357(3) of the Code. This was observed by reference to a decision of this Court in 1989 Crl. LJ 116 Hari Singh v. Sukhbir Singh. In the said decision this Court held as follows :- "The quantum of compensation may be determined by taking into account the nature of crime, the justness of the 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." [Emphasis supplied] '10. That apart, section 431 of the Code has only prescribed that any money (other than fine) payable by virtue of an order made under the Code shall be recoverable "as if it were a fine". Two modes of recovery of the fine have been indicated in section 421(1) of the Code. The proviso to the sub-section says that if the sentence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for payment of compensation, to also include a default sentence in case of non-payment of the same. The observations made by this Court in Hari Singh's case (supra) are as important today as they were when they were made and if, as submitted by Dr. Pillay, recourse can only be had to section 421, Cr. P.C. for enforcing the same, the very object of sub-section (3) of section 357 would be frustrated and the relief contemplated therein would be rendered somewhat illusory." 25. In Shantilal v. State of M.P. [2007] 11 SCC 243, it is stated, that, the sentence of imprisonment for default in payment of a fine or compensation is different from a normal sentence of imprisonment. The court also delved into the factors to be taken into consideration while passing an order under section 357(3) of the Cr. PC. This court stated :- "The term of imprisonment in default of payment of fine is not a sentence. It is a penalty which a person incurs on account of non-payment of fine. The sentence is something which an offender must undergo unless it is set aside or remitted in part or in whole either in appeal or in revision or in other appropriate judicial proceedings or "otherwise". A term of impris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se is served by keeping a person behind bars. Instead directing the accused to pay an amount of compensation to the victim or affected party can ensure delivery of total justice. Therefore, this grant of compensation is sometimes in lieu of sending a person behind bars or in addition to a very light sentence of imprisonment. Hence on default of payment of this compensation, there must be a just recourse. Not imposing a sentence of imprisonment would mean allowing the accused to get away without paying the compensation and imposing another fine would be impractical as it would mean imposing a fine upon another fine and, therefore, would not ensure proper enforcement of the order of compensation. While passing an order under section 357(3), it is imperative for the courts to look at the ability and the capacity of the accused to pay the same amount as has been laid down by the cases above, otherwise the very purpose of granting an order of compensation would stand defeated. 28. Section 421 of Cr. PC reads :- "421. Warrant for levy of fine. - (1) When an offender has been sentenced to pay the court passing the sentence make action for the recovery of the fine in either or-both of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intention of the Legislature is clearly to ensure that mode of recovery of a fine and compensation is on the same footing. In light of the aforesaid reasoning, the contention of the accused that there can be no sentence of imprisonment for default in payment of compensation under section 357(3) should fail. 30. A similar position is also prevalent in other countries. In the United Kingdom, section 82(3) of Magistrates' Courts Act, 1980 allows for a sentence of imprisonment for default in payment of a fine or any financial order. The section reads :- "Where on the occasion of the offender's conviction a Magistrates' Court does not issue a warrant of commitment for a default in paying any such sum as aforesaid or fix a term of imprisonment under the said section 77(2) which is to be served by him in the event of any such default, it shall not thereafter issue a warrant of commitment for any such default or for want of sufficient distress to satisfy such a sum unless :- (a)he is already serving a sentence of custody for life, or a term of imprisonment, detention in a young offender institution, or detention under section 9 of the Criminal Justice Act, 1982; or (b)the court has s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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