1. Cheque dishonour — Conviction under Section 138, NI Act — Order for compensation with default sentence — Recovery of compensation sought after default sentence served. (Para 3 , 4 )
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2017 Supreme(SC) 447
SUPREME COURT OF INDIA
R.F. NARIMAN, NAVIN SINHA, JJ.
Kumaran – Appellant
Versus
State of Kerala & Anr. – Respondents
Criminal Appeal Nos. 896-897 of 2017 (@Special Leave Petition (Criminal) Nos.1231-1232 of 2013)
Decided On : 05-05-2017
Important Points
IMPORTANT POINT
Compensation awarded is payable even after undergoing default sentence.
Compensation awarded is payable even after undergoing default sentence.
Subject
Criminal Law - Compensation
Act Referred
Headnote
Code of Criminal Procedure, 1973 – Section 357(3) r/w section 421 and 431; and sections 64 and 70, Indian Penal Code, 1860 – Legal fiction created by section 431 extends for the purpose of recovery of compensation until such recovery is completed – Leading to process u/s 421 and Ss. 64 and 70, IPC – Compensation u/s 357(3) CrPC can be directed with default stipulation without recording any special reasons – Compensation recoverable by process u/s 421(1) even after undergoing default sentence. (Para 27, 29)
(2009) 6 SCC 652; (2012) 8 SCC 721 – Relied upon
AIR 1935 Bom 160: ILR LIX Bom 350; 1983 Cri LJ 8; AIR 1969 All 116; 2006 (3)KLT 679; AIR 1914 Lahore 539; AIR 1941 Bom 158; AIR 1953 Travancore-Cochin 233; AIR 1964 Mys. 64; (2003) 8 SCC 431; 1951 (2) All ER 587; (2004) 3 SCC 1 – Referred
Facts of the case:
The complainant approached the Magistrate under Section 138 of the Negotiable Instruments Act in a transaction where the accused had borrowed a sum of Rs.2.75 lakh from the complainant. When the complainant demanded the amount, the accused issued a cheque for the said amount which was returned as dishonoured due to insufficiency of funds. Ultimately, the accused was found guilty of the offence under Section 138 and was convicted. He was sentenced to simple imprisonment for 4 months. The accused was further directed to pay a compensation of Rs.2,75,000/-to the complainant u/s 357(3) of Cr.P.C. and in default of payment of compensation, to undergo simple imprisonment for 1 month.
The Appellate Court confirmed the conviction, but reduced the sentence to imprisonment till rising of the Court. The order to pay compensation with the default clause was sustained. The accused underwent imprisonment till the rising of the Court and also underwent the default sentence for non-payment of compensation.
The second respondent filed CMP before the learned Judicial Magistrate for realising compensation by issuing a distress warrant against the accused. This CMP was allowed and a distress warrant for the realisation of compensation was issued.
The High Court held that despite the fact that the default sentence was undergone, yet, under the provisions of the Code of Criminal Procedure, compensation was recoverable, and upheld the orders of the learned Judicial Magistrate.
Finding of the Court:
Compensation awarded is payable even after undergoing default sentence.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether recovery of compensation under Section 421 CrPC after undergoing a default sentence requires the court to record special reasons in writing. (Para 5 , 6 )
3. Analysis of Section 421 and 431 CrPC and Section 70 IPC regarding the application of legal fictions to treat compensation as a fine for recovery. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 28 )
4. Compensation under Section 357(3) CrPC is recoverable under Section 421(1) even after default sentence is served, via the deeming fiction of Section 431 CrPC. (Para 27 , 29 )
5. Appeals dismissed — High Court judgment upholding the recoverability of compensation after the default sentence is served is affirmed. (Para 30 )
6. Is compensation under Section 357(3) CrPC recoverable after the default sentence is served?
Yes. By applying the deeming fiction in Section 431 CrPC, compensation is recoverable as a fine. Under the proviso to Section 421(1) CrPC, if compensation is ordered under Section 357, it remains recoverable even if the default sentence has been undergone. (Para 27 , 29 )
7. Does the recovery of compensation after a default sentence require the court to record special reasons in writing?
No. The proviso to Section 421(1) CrPC uses a disjunctive or, meaning that if an order for compensation under Section 357 has been made, the requirement to record special reasons for issuing a warrant after the default sentence is served does not apply. (Para 27 )
8. How does Section 431 CrPC affect the recovery of money other than a fine?
Section 431 creates a deeming fiction where any money payable under the Code other than a fine, for which the recovery method is not expressly provided, is recoverable as if it were a fine, extending the application of Section 421 CrPC and Section 70 IPC. (Para 11 , 25 , 27 , 29 )
9. What is the limitation period for levying a fine or compensation treated as a fine?
According to Section 70 of the Indian Penal Code, a fine or any part thereof remaining unpaid may be levied at any time within six years after the passing of the sentence. (Para 13 , 20 , 21 , 29 )
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 Instruments Act in a transaction where the accused had borrowed a sum of Rs.2.75 lakh from the complainant. When the complainant demanded the amount, the accused issued a cheque for the said amount which was returned as dishonoured due to insufficiency of funds. The requisite demand notice was sent by the complainant to the accused followed by the complaint. Ultimately, the accused was found guilty of the offence under Section 138, and was convicted, stating:
“Considering the fact that this is an offence 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 Rs.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 accused challenged the aforesaid judgment before the Court of Sessions, and the Appellate Court, by an order dated 27th April, 2006, confirmed the conviction, but reduced the sentence to imprisonment till rising of the Court. The order to pay compensation with the default clause was, however, sustained. The accused underwent imprisonment till the rising of the Court and also underwent the default sentence for non-payment of compensation. The second respondent filed CMP No.2018 of 2008 before the 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 8th March, 2011. The High Court, by the impugned judgment dated 29th August, 2012, held that despite the fact that the default sentence was undergone, yet, under the provisions of the Code of Criminal Procedure, compensation was recoverable, and upheld the orders of the learned Judicial Magistrate.
5. Shri Siddharth Dave, learned counsel appearing on behalf of the Appellant, has argued before us that an accused who is directed to pay fine, or undergo sentence of which fine forms a part, and from which compensation is to be paid, then a court would proceed against the accused in the manner provided under Section 421 even though he may have undergone the default sentence 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 Section 421 can be initiated. As in the present case, at the time of issuance of warrant, the Magistrate did not record special reasons in writing for proceeding against the accused person, the Division Bench judgment ought to be set aside.
6. Shri C.K. Sasi, learned counsel for the Respondent, has repelled the above submissions. According to the learned counsel, by operation of the deeming fiction contained in Section 431 Cr.P.C. compensation can be realized even if the accused had undergone the default sentence. The exception provided in the pr
