Holding

Section 357(2) CrPC stays the recovery of compensation ordered under Section 357(3) pending an appeal, and no condition precedent may be imposed for admitting an appeal; the compensation must be reasonable and the court may direct a modest deposit without making it a condition for appeal.

Summary

The appellants, Dilip S. Dahanukar and Goodvalue Marketing Co. Ltd., were convicted under Section 138 read with Section 141 of the Negotiable Instruments Act and were ordered to pay a fine of Rs.25,000 and a compensation of Rs.15,00,000 under Section 357(3) of the CrPC. The trial court also directed the appellants to deposit Rs.5 lakh each as a condition for admitting their appeal. The Supreme Court held that the right to appeal under Article 21 and Section 374 CrPC is a vested fundamental right that cannot be conditioned, and that Section 357(2) – which stays the recovery of a fine pending appeal – equally applies to compensation ordered under Section 357(3). The Court further ruled that compensation must be reasonable, the court must consider the accused's capacity to pay, and any condition precedent to admission of appeal is ultra‑vires. Consequently, the appellate court’s direction to deposit money as a condition was set aside, but a reasonable deposit of Rs.1 lakh was ordered. The appeals were allowed.

Issues considered

The applicability of Section 357(2) CrPC to compensation ordered under Section 357(3) pending an appeal.
Whether a condition precedent (deposit of money) can be imposed for the admission of an appeal, given the constitutional right to appeal under Article 21 and Section 374 CrPC.
The scope and limits of the court’s power to award compensation under Section 357(3), including the requirement that the amount be reasonable and not arbitrary.
Whether a private party can insist that compensation be paid out of a fine and whether magistrates can award compensation in addition to a fine.
The interpretation of the legal fiction in Section 431 CrPC and its relation to the stay provision of Section 357(2).

Legislation cited

Code of Criminal Procedure, 1973s. 357, s. 357(2), s. 357(3), s. 374, s. 387, s. 389, s. 421, s. 424, s. 431
Negotiable Instruments Act, 1881s. 138, s. 141

Subjects

Section 357 CrPCcompensationfineright of appealArticle 21Negotiable Instruments Actpurposive constructionlegal fictionreasonable compensationstay of executioncriminal procedure

Judgment

A DILIP S. DAHANUKAR
v.
KOTAK MAHINDRA CO.LTD. AND ANR.

APRIL I 0, 2007

B [S.B. SINHA AND DALVEER BHANDARI, JJ.]

r
Code of Criminal Procedure, 1973 :

Sections 357 and 424-Jmprisonment for default in payment of fine-
c Held-It remains stayed pending elapsing ofperiod for presenting appeal or
decision therein-Section 424 is subject to Section 357(2).

Section 357(3)-Compensation not forming part of sentence of fine-
Recovery of-Held-Pending elapsing of period for presenting appeal or
decision therein, its recovery remains stayed-It is unacceptable that although
D '! compensation payable out of quantum offine would remain stayed under
Section 357(2) of Code, if a compensation is directed to be paid under sub- )
...
Section (3) thereof. same would not attract said provision-It was more so
as compensation was recoverable as a 'fine~ but legal fiction raised in
relation to recovery offine only, it is in that sense 'fine' stood on a higher
E footing than compensation-If, therefore, under Section 357(2) realization of
fine' is to be stayed automatically, there is no reason as to why legislative
intent cannot apply to compensation directed to be paid in terms of sub-
Section (3).

Section 357(3)-Compensation not forming part of sentence of fine-
F Quantum of-Held-It compensates in one way or another, hence amount /

thereof must be reasonable and not arbitrary-It should not be more than -..:.
sufficient to compensate complainant-Ordinarily, it should be less than
amount which can be granted by a Civil Court upon appreciation ofevidence
brought before it for losses which might have reasonably been suffered by
plaintiff-Though there is no upper limit to it, its subject to other provisions
G
of Code which mandates that amount offine imposed on an accused cannot
be mor:e than five thousand-Jn view of fact that Parliament did not think
it fit to put a ceiling limit in regard to amount of compensation leviable upon A_

an accused, discretionary jurisdiction thereto must be exercised judiciously.

H 1122
DILIPS. DAHANUKAR.v. KOTAK MAHINDRA CO. LTD. 1123
Section 357(3)-Compensation not forming part of sentence of fine- A
Order for payment of-Held-Before issuing a direction to pay compensation,
capacity of accused to pay it must be judged; a summary enquiry in this
behalf is necessary and some reasons, which may not be very elaborate, also
have to be assigned-Furthermore, as Section 357(3) neither imposes any
limitation o~ power to grant compensation nor enumerates factors for which B
it is to be paid, power to grant it should be exercised only in appropriate
cases, and such jurisdiction cannot be exercised at whims and caprice of a
judge.

Section 357(3)-Compensation not forming part of sentence of fine-
Conditions for suspension of sentence-Held-They should also be C
reasonable-A part of compensation may be directed to be deposited, but
that must be a reasonable amount-Order may not be passed which cannot
be complied resulting in a person being sent to prison-Court, in such cases,
must endeavour to strike a balance-Section 421 of Code may be taken
recourse to-Ordinarily, a person should not suffer imprisonment only because
conditions imposed for suspending sentence are harsh-Also, an accused D
shall not be taken in custody during trial.

Section 357-Compensation-Award of-Held-Magistrates cannot
award it in addition to fine-1--Power to award it under Section 357(3) .is not
an ancillary power, but an additional power-Also, when fine is imposed,
private party has no right to insist that compensation may be awarded to him E
out of it.

Section 357(3)-Negotiable Instrument Act, 1881-Sections 138 and
141-Company along with its Chairman convicted for offence punishable
under Section 138 r.w. 141 ofAct of 1881-Company sentenced to pay afine F
of twenty five thousand rupees and in default thereof, Chairman was to suffer
simple imprisonment for one month-Also, Chairman sentenced to simple
imprisonment for one month and directed to pay a compensation offtjieen
lakhs rupees under Section 357(3) to complainant-On admission of appeal
against it, direction given for deposition of amount of five lakhs rupees
each-Correctness of-Direction of Trial Judge was unreasonable- For all G
intent and purpose, both Sub-sections (1) and (3) of Section 357 were
invoked-Liability of Chairman was a vicarious one in terms of Section 141
ofAct of 1881- Direction/or payment of compensation offifteen lakhs rupees
by Chairman of Company found to be wrong when fine of only of twenty five
thousand rupees was imposed on Company-On facts, Chairman directed to H
1124 SUPREME COURT REPORTS [2007) 4 S.C.R. ..:.
y-<·-
A deposit one /akh rupees which complainant was entitled to withdr<IW.
"'
Section 3 74-Appeal from conviction-Scope of-Held-It is a statutory
right affecting liberty of a person-Keeping in view expansive definition of ..,
Article 21 of Constitution of India, 1950, it is also a Fundamental Right-
It can, thus, neither be interfered/impaired, nor subjected to any condition-
B Also, right of Court to suspend sentence cannot be taken away and such a
provision would be ultra vires. <
.,.
Interpretation of statutes-Penal statute-Held-Where different
meanings are possible, it must be construed liberally in favour of an accused-
Also, while Court shall give due weight to need of victim, it cannot ignore
c right of an accused, and in case of conflict, construction which favours
accused shall prevail. .
.....
Interpretation of statute-Legal fiction-Held-It must be construed
having regard to purport of statute.
D Appellant, along with Company of which he was Chairman, were
,.i
convicted for commission ofan offence punishable under Section 138 r.w. 141
of Negotiable Instruments Act The company was sentelk:ed to pay a fine of
twenty five thousand rupees, and in default of payment thereof, appellant was
to suffer simple imprisonment for one month. Appellant was sentenced to
E suffer simple imprisonment for one month and also directed to pay
compensation to the complainant, quantified at fifteen lakhs rupees under
Section 357(3) ofCr.P.C. An appeal was preferred there against The Appellate
Court while admitting the appeal, directed them to deposit five lakhs rupees
each. 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.
F Hence the present appeal.
r

Appellant contended that (i) right to prefer an appeal being a
constitutional right in terms of Article 21 of the Constit.ution oflndia, 1950
no condition could have been imposed in respect therefor or for suspension
of sentence; (ii) in terms of Section 357(2) of the Code, the amount of fine
G
imposed would automatically be suspended.

Respondents contended that (i) a distinction must be made between r
imposition of fine and application thereof, as contemplated under Section '""'
357(1)(a) to (d) of the Code, and an amount of compensation directed to be
paid under Sub-section (3) thereof; (ii) on a conjoint reading of Section 357
H
DILIPS.DAHANUKARv.KOTAKMAHINDRACO.LTD. 1125
-~ '-,( read with Sections 421 and 424 of the Code, it is permissible to direct recovery A
of fine forthwith.

Partly allowing the appeals, the Court

HELD 1.1. 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 B
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. {Para 12) (1134-G]
c
Mardia Chemicals Ltd and Ors. v. Union of India and Ors., [2004) 4
sec 311, followed
Garikapati Veeraya v. N. Subbiah Choudhry & Ors., AIR [1957J SCR
540, Babu Rajirao Shinde v. The State of Maharashtra, [1971) 3 SCC 337,
Siddanna Apparao Patil v. The State of Maharashtra, (1970) 1 SCC 547, D
State ofGujarat v. Sa/imbhai Abdulgaffar Shaikh and Ors., [2003) 8 SCC SO,
Madhav Hayawadanrao Hoskot v. State of Maharashtra, (1978) 3 SCC 552,
Transmission Corporation ofA.P. v. Ch. Prabhakar & Ors., (2004) S SCC 551,
Madhav Hayawadanrao Hoskot v. State of Maharashtra, (1978) 3 SCC 544
and Jolly George Varghese and Anr. v. The Bank of Cochin, [1980) 2 SCC E
360, relied on

1.2. Although the right of appeal being a vested right cannot be taken
away, it must also be noticed that right of the Court cannot be taken away to
suspend the sentence and such a provision would be ultra vires. (Para 24)
[1139-DJ F
Dadu alias Tulsidas v. State of Maharashtra, (2000) 8 SCC 437, relied
on

2.1. There exists a distinction between fine and compensation, although,
in a way it seeks to achieve the same purpose. An amount of compensation G
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, there is
no reason as to why the legislative intent cannot be held to apply in relation H
1126 SUPREME COURT REPORTS [2007] 4 S.C.R.

A to amount of compensation directed to be paid in terms of sub-Section (3).
[Para 30 and 31) [1139-H; 1140-A-BJ

Rachhpal Singh v. State of Punjab, (2002) 6 SCC 462, State of Punjab
v. Gurmej Singh, [2002) 6 SCC 663, relied on --.

B 2.2. It is unacceptable that although a compensation payable out of 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. (Para 41) [1144-B)

P. Suresh Kumar v. R. Shankar, (2007) 4 SCALE 143, referred to
>- -
"\
c
2.3. 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, does not contemplate any other interpretation. Even assuming that
respondents are correct in their submission, still then sub-Section (3) would
be squarely attracted. [Para 43) (1144-D)
D
2.4. 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
E 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 respondents ·-.
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.
F [Para 45) (1144-H; 1145-A)
r

Stanny Felix Pinto v. Jangid Builders Pvt. Ltd. & Anr., (2001) 2 SCC
416, held inapplicable

2.5. When a direction is issued for payment of compensation, having
G 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 where under
compensation has been directed to be paid, which would necessarily mean that
A_
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·
H
DILIPS.DAHANUKARv.KOTAKMAIDNDRACO.LTD. 1127
reasonable amount [Para 53] [1147-F-GJ A
3. 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 (Para 58] (1148-C]

K. Bhaskaran v. Sankaran Vaidhyan Ba/an & Anr., [1999] 7 SCC 510, B
Suganthi Suresh Kumar v. Jagdeeshan, [2002] 2 SCC 420 and National
Insurance Co. Ltd v. Laxmi Narain Dhut, (2007) 4 SCALE 36, relied on.

K.L. Gupta v. Bombay Municipal Corpn. (1968] 1 SCR 274, Maruti
Udyog Ltd. v. Ram Lal, (2005) 2 SCC 638, Reserve Bank of India v. Peerless
General Finance & Investment Co. Ltd., (1987) 1 SCC'424, Punjab Land C
Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court,
(1990] 3 SCC 682, Bairam Kumawat v. Union of India, (2003] 7 SCC 628,
Pratap Singh v. State of Jharkhand, (2005] 3 SCC 682, referred to.

V. Prasada Rao v. The State ofA.P. & Anr., 2002 Crl. Law Journal 395,
approved. ·
D
R (Haw) v. Secretary ofState for the Home Department & Anr., (2006)
3 All ER p. 428-438, referred to

4.1. 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. E
(Para 53) (1147-D)

4.2. 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 imp<r..ed, thus, must be reasonable and not arbitrary. F
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 G
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. (Para 37] [1143-A-C]

Hari Singh v. Sukhbir Singh & Ors., [1988) 4 SCC 551 and Sarwan H
1128 SUPREME COURT REPORTS [2007] 4 S.C.R.

A Singh & Ors. v. State ofPunjab, (1978) 4 SCC 111, relied on
4.3. 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. (Para 40) (1143..:F)
Sube Singh v. State of Haryana, (2006) 3SCC178, relied on
B
4.4. If a fme is to be imposed under the Ad, the amount which in the
opinion of the Parliament would be more than suffi~ient 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-
·C 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
D of a decree which may be passed. [Para 38) (1143-D-E)
4.5. It is also of some significance to note.that whereas under Section J

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
E would be subject to other provisions of the Code of Crimiltal 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. [Para 66)
F [1152-G-H; 1153-A)
.r-
4.6. The matter has to be considered fr9m another angle. An accused
for commission of an offence under Section 138 of the Negotiable Instruments
Act would ordinarily be granted bail in view·ofthe fact that the offence is a
bailable one. [Para 63) (1151-D-E]
G 4.7. Prosecution under the Negotiable Instruments Act may be
contemplated as a measure of deterrence, but the same is never meant to be
a persecution. [Para 39) [1143-F)
4.8. An order may notbe passed which the appellant cannot comply with • A._

resulting him being sent to prison. Appellate Court, in such cases, must make
H an endeavour to strike a balance. Section 421 of the Code of the Criminal
DILIPS.DAHANUKARv.KOTAKMAIDNDRACO.LTD. 1129
Procedure may take recourse to, but therefor he cannot be remanded to A
custody. [Para 54) [1147-G]

4.9. 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. [Para 66) [1153-A-B] B
4.10. Having regard to the aforementioned factors 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. [Para 67) [1153-B-C]

5. Magistrates cannot award compensation in addition to fine. When a c
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. [Para 42) [1144-C]

Ba/raj v. State, (1995) Crl. Law Journal 3217, referred to
D

6.1. Primafacie, without going into the merit of the appeal, the direction
of the Trial Judge appears to be somewhat unreasonable. Appellant has been
sentenced to imprisonment. Only fine has been imposed on the Company.
Thus, for all intent and purpose, the Trial Judge has invoked both Sub-sections
(1) and (3) of Section 357 of the Code. The liability of the appellant was a
E
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 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 F
-._ the Company. The answer is that it is not. [Para 69] [1153-D-E]
.
6.2. In the facts and circumstances of the case, it is 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 G
prejudice to the rights and contentions of the parties in the appeal.
[Para 71) [1154-B-C)

,... 7.1. A penal statute, in the event, the different meanings are possible to
~ be given, must be construed liberally in favour of an accused.
[Para 56] [1148-A-B] H
1130 SUPREME COURT REPORTS (2007) 4 S.C:R.

A 1.:J.. 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. [Para 57) [1148-B]

8. Legal fiction must be c()nstrued having regard tO the purport of the
statute. [Para 44) [1144-F]
B
Sadashiv Dada Patil v. Purushottam Onkar Patil (DJ By Lrs., (2006)
10 SCALE 21, MP. State Electricity Boardv. Union ofIndia & Ors., (2006)
9 SCALE 194, Maruti Udyog Ltd. v. Ram Lal & Ors., [2005] 2 SCC 638 and
Bharat Petroleum Corpn. Ltd. v. P. Kesavan & Anr., [2004) 9 SCC 772,
C referred to

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 521 of
2007.

From the Judgment and Order dated 06.06.2006 of the High Court of }-

Bombay in Criminal Writ Petition No. 1167 of2006.
D
WITH
,)
Criminal Appeal No. 522 of2007

Kamal Mohan Gupta for the Appellant.
E
Uday Lalit, Nandini Gore and V.N. Raghupathy for the Respondents. ·

The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.
F
2. Interpretation of Section 357 of the Co~ of Criminal Procedure, 1973
('the Code', for short) vis-a-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 ~ut of a judgment and order dated
6.6.2006 passed by the High Court of Bombay in Criminal Writ Petition No.
G 1167 of2006.
J

3. Accused No.1-M/s. Goodvalue Marketing Co. Ltd., a company :z
registered and incorporated under the Companies Act, 1956 and Accused · ·
No.2-Appellant herein were convicted for ~ommission of an offence involving ..... ...
Section 138 of the Act by a judgment of conviction and sentence dated
H
DILIPS. DAHANUKARv. KOTAKMAHINDRACO.LTD. [S.B.SINHA,J.] 1131

23.2.2006 holding: A
"The accused No. I company Mis. Goodvalue Marketing Co. Ltd.
stands convicted for the offence punishable under Section 138 r.w. 141
of Negotiable Instruments Act.

The accused No.I company, is sentenced to pay a fine ofRs.25,000/ B
- (Rupees Twenty Five Thousand only). In default of payment of fine,
the accused No.2 Mr. Dilip S. Dahanukar, the Chairman of accused
No.I and representative at the trial, shall suffer SJ. for I month.

The accused No.2 Mr. Dilip S. Dahanukar, stands convicted for
the offence punishable under Section 138 r.w. 141 of Negotiable C
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 D
only), under Section 357(3) ofCr.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 ofRs.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 before 24-04-2006 in default of payment of the
amount of compensation the accused No.2 shall suffer further S.I. for E
2 month."

4. 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 F
by reason of the impugned judgment has been dismissed.

5. Submissions of Mr. Su bash Jha, learned Counsel appearing on behalf
of the appellant are :

i) That having regard to the provisions of Section 357(2) of the Code, G
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
H
1132 SUPREME COURT REPORTS [2007) 4 S.C.R.

A in respect therefor or for suspension of sentence.

6. 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
B compensation directed to be paid under Section (3) thereof.

7. 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
C to direct recovery of fine forthwith and if it is to be held that recover; of fine
is automatically stayed, Section 421 and 424 of the Code would become
nugatory.

8. 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
D the amount of the cheque or with both. ·

9. Before embarking upon the rival contentions raised by the parties, we
may notice the relevant provisions of the Code :

"357. Order to pay compensation. (1) .When a Court imposes a sentence
of fine or a sentence (including a sentence of death) of which fine
E
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
F 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 L:nposed in a case which is subject to appeal, no
such payment shall be made before the period allowed for presenting
G
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 I

H person to pay, by way of compensation such amount as may be
DILIP S. DAHANUKARv. KOTAKMAIDNDRA CO.LTD. [S.B. SINHA, J.] 1133

specified in the order to the person who has suffered any loss or A
injury by reason of the act for which the accused person has been
so sentenced.

* ** *
(5) At the time of awarding compensation in any subsequent civil B
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. (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 C
ways, that is to say, it may-

(a) issue a warrant for the levy of the amount by attachment and :>ale
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 D
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 ifsuch offender has
undergone the whole of such imprisonment in default, no Court shall
issue such warrant unless, for special reasons to be recorded in E
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. Any
money (other than a fine) payable by virtue of any order made under F
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 ofHigh Court or Court ofSession regarding
bail. (1) A High Court or Court of Session may direct-
G
(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 H
1134 SUPREME COURT REPORTS [2007) 4 S.C.R.

A 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
B 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 und~r this Chapter be arrested and
c commit him to custody."

10. 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
I the factors enumerated in clauses (a), (b), (c) or (d). Section 421 of the Code
D 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
E part of the sentence, it would not have any application.

11. 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
F 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.

12. An appec.: is indisputably a statutory right and an offender who has
been convicted is entitled to avail the right of appeal which is provided for
G 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.

13. We may take notice of some of the decisions operating in the field
H in this behalf.
DILIP S. DAHANUKAR v. KOT AK MAHINDRA CO. LTD. [S.B. SINHA, J.] 1135

In Garikapati Veeraya v. N. Subbiah Chaudhry & Ors. AIR [1957] SCR A
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.
B
(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. C
(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 !is 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 D
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." E
14. This Court, in Babu Rajirao Shinde v. The State of Maharashtra,
[1971] 3 sec 337, observed that a convicted person must be held to be at least
entitled to one appeal as a substantial right.

15. Yet again in Siddanna Apparao Patil v. The State of Maharashtra, F
[1970] I 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 fa only
in cases where there is a trial by jury that the right to appeal is under G
Section 418 confined only to a matter of law."

16. In State of Gujarat v. Salimbhai Abdu/ga.ffar Shaikh and Ors.,
[2003] 8 sec 50, it was held:

"10. Sub-section (4) of Section 34 of POTA provides for an appeal to H
1136 SUPREME COURT REPORTS [2007] 4 S.C.R.

A 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:

B "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
c 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
D 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
E
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 witl 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
F 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 arid
unless there is an order of the Speciaf 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,
G
therefore, a sine qua non for approaching the High Court."

17. In regard to the principles of natural justice, it was stated in Madhav
Hayawadanrao Hoskot v. State ofMaharashtra, reported in [1978] 3 SCC 552:

"11. One component of fair procedure is natural justice. Generally
H :' .- ~-. ·-····'L -~>'. I
DILIP S. DAHANUKAR v. KOT AK MAHINDRA CO. LTD. [S.B. SINHA, J.] 113 7
·y
speaking and subject to just exceptions, at least a single right of A
appeal on facts, where criminal conviction is fraught with long loss
of liberty, is basic to civilized jurisprudence. It is integral to fair
procedure, natural justice and nonnative 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 B
Court, as provided in the Criminal Procedure Code, manifests this
value upheld in Article 21."

18. 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 C
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." D

19. A Constitution Bench of this Court in Mardia Chemicals Ltd. and
Ors v. Union of India and Ors., [2004] 4 SCC 31 l, where the constitutionality
of provisions of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 were quested qua Section E
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 F
reasonableness. Such a condition is invalid and it is liable to be struck
down."

20. In Transmission Corporation ofA.P. v. Ch Prabhakar & Ors. (2004]
5 SCC 551, this Court held:

"The appeal is the right of entering a superior court and invoking its G
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." H
1138 SUPREME COURT REPORTS [2007] 4 S.C.R.

A 21. In Madhav Hayawadanrao Hoskot v. State of Maharashtra, (1978]
3 SCC 544, this Court held :

" .... The 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
B 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 legaf 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
c of the Constitution as made explicit by this·Court in Maneka Gandhi."

It was further held:-

"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."
D
22. 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:-

E "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. ..
F Call R & P. Appellant be released on same bail.

Appellant to furnish fresh bail bond."

23. We may also notice that appellant sought time for depositing the
amount of compensation and also asked for the indulgence of the Court for
G 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 compensati~n 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."
H
DILIP S. DAHANUKAR "·KOTAK MAHINDRA CO. LTD. [S.B. SINHA, J.] '1139
/ -.,..:
24. Although the right of appeal being a vested right cannot be taken A
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 v. State of Maharashtra, [2000] 8 SCC 437].

25. The distinction between sub-Sections (1) and (3) of Section 357 is
apparent. Sub-Section ( l) provides for application of an amount of fine while B
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.

26. Compensation is awarded towards sufferance of any loss or injury
by reason of an act for which an accused person is :;entenced. Although it c
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.
D
27. 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.

28. The purposes for application of fine imposed has been set out in
clauses (a) to (d) of sub-Sections (l) of Section 357. Clause (b) of sub-Section E
{l) of Section 357 provides for payment of compensation out of the amount
of fine. The purpose enumerated in clause (b) of sub-Section (l) of Section
357 is the same as sub-Section (3) thereof, the difference being that whereas
in a case under sub-Section {l) 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. F

29. 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
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-
G
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.

30. We must, however, observe that there exists a distinction between H
1140 SUPREME COURT REPORTS [2007] 4 S.C.R.

· A 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.

B 31. If, therefore, under sub-Section (2) of Section 357, realization of fine,
at least in respect of the factor(s) enumerated in clause (I) 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).
c In Rachhpal Singh v. 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
D
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
E 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
F well within the jurisdiction of the High Court ... "

32. Yet again in State of Punjab v. Gurmej Singh, [2002] 6 SCC 663, we
may notice a similar conclusion was arrived ·at although in a somewhat
different fact situation :
G "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
H heard the learned counsel for both parties on this aspect. Learned
DILIP S. DAHANUKAR v. KOTAK MAHINDRA CO.LTD. [S.B. SINHA, J.] 1141
/ ){

counsel for the appellant submitted that Gunneet Kaur lost both her A
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
B
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
:- has also submitted that whenever the respondent was released on
parole he met Gunneet Kaur and his wife also keeps on going to meet
her. Their relations are normal and co1dial. If that is so, nothing better c
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."

33. It is, therefore, seen that consideration for payment of compensation D
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.

34. In Hari Singh v. Sukhbir Singh & Ors., [1988] 4 SCC 551, this Court E
held:

"Sub-section (1) of Section 357 provides power to award compensation
to victims of the offence out of the sentence of fme 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
F
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. G
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 respondi11g appropriately to crime as well of reconciling the victim
H
A
1142 SUPREME COURT REPORTS [2007] 4 S.C.R.

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 powe~ liberally so
as to meet the ends of justice in a better way.

35. It was further opined:-
B
"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
c 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."
D 36. In Sarwan Singh & Ors. v. 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
E
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
F 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
G 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 '·
H injury."
t-
DILIPS. DAHANUKAR v. KOTAKMAHINDRACO.LTD. [S.B. SINHA,J.] 1143
37. The purpose of imposition of fine and/or grant of compensation to A
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 B
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 compensa!ion 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 C
jurisdiction cannot be exercised at the whims and caprice of a judge.

38. 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 D
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 E
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.

39. Prosecution under the Act may be contemplated as a measure of
deterrence, but the same is never meant to be a persecution. F
40. 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 v. State of Haryana, [2006] 3 SCC 178, it is stated : G
" ... 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 additfonal compensation in a civil court, in
the enforcement of the private law remedy in tort, nor come in the way H
1144 SUPREME COURT REPORTS [2007) 4 S:C.R.

A of the criminal court ordering compensation under Section 357 of the
Code of Criminal Procedure."

41. It does not appeal to us that although a compensation payable out
of 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
B (3) thereof, the same would not attract the said provision. [See P. Suresh
Kumar v. R. Shankar, (2007] 4 SCALE 143]

42. 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
C to award compensation under Section 357(3) is not an ancillary power. It is
an additional power.{See Ba/raj v. State, (1995) Cr!. Law Journal 3217}.

43. Clause (b) of sub-Section (1) of Section 357and sub-Section (1) of
Section 357 and sub-Section (3) of Section 357 seek to achieve the same
D 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. Eve~ assuming that Mr. Lalit was correct in his submission, still
then sub-Section (3) would be squarely attracted.
E
44. 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.

F Legal fiction, it is well-settled, must be construed having regard to the
purport of the statute. {See Sadashiv Dada Patil v. Purushottam Onkar Patil
(D) By Lrs., (2006] IO SCALE 21; MP. State Electricity Board v. Union of
India & Ors., [2006] 9 SCALE 194; Maruti Udyog Ltd. v. Ram Lal & Ors.,
(2005] 2 SCC 638; and Bharat Petroleum Corpn. Ltd. v. P. Kesavan & Anr.,
G 12004] 9sec112.}

45. 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
H of the Code provides for a legal fiction in terms whereof any money other than
f
DILIP S. DAHANUKAR v. KOTAK MAHINDRA CO.LTD. [S.B. SINHA, J.] 1145
a fine shall be recoverable as if it were a fine. Even according to Mr. Lalit, A
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.

46. We are, however, not oblivious of the fact that in Stanny Felix Pinto B
v. 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.

47. This Court in an appropriate case may have to consider as to C
whether in economic offence like N~gotiable 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 D
not concerned herein with such a situation.

48. 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 E
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.

49. 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 F
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.

50. Doctrine of Purposive Interpretation in a situation of this nature, in
our opinion, shall be applied. G
51. In R (Haw) v. 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 H
1146 SUPREME COURT REPORTS {2007] 4 S.C.R.

A begins with the following words:

'A purposive construction of an enactment is one which gives
effect to the legislative purpo,se 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-
B 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 '°°'
52. 44. The passage from Bennion continues:
c
' .. .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 orie of construction, even where· this involves
D 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.
E 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
w!s apparent that the draftsman and Parliament .. ad by
inadvertence overlooked, and so omitted to deal with, an
eventuality that required to be dealt with if the purpose of the
F 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
attention been drawn to the omission before the Bill passed into
law. Unless this third condition is fulfilled any attempt by a court
G 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
H argument that in Jones v. Wrotham Park Settled Estates, Lord
"
DILIPS.DAHANUKARv.KOTAKMAIDNDRACO.LTD.[S.B.SINHA,J.] 1147

Diplock was mistaken.in saying that for a rectifying construction A
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 finn) (2000) B
2 All ER 109, (2000) 2 All ER 109, (2000) l WLR 586]."'

{See also K.L. Gupta v. Bombay Municipal Corpn., [1968] I SCR 274:
AIR (1968) SC 303; Maruti Udyog Ltd. v. Ram Lal, [2005] 2 SCC 638 : [2005]
SCC (L&S) 308]; Reserve Bank of India v. Peerless General Finance &
Investment Co. Ltd, [1987] l SCC 424; Punjab Land Development and C
Reclamation Corpn. Ltd v. Presiding Officer, Labour Court, [1990] 3 SCC
682; Bairam Kumawat v. Union ofIndia, [2003] 7 SCC 628 and Pratap Singh
v. State of Jharkhand, [2005] 3 SCC 682.}

53. Unfortunately, the Legislature has not made any express provision
in this behalf. In absence of any express provision, the question must be D
considered having regard to the overall object of a statute. We have noticed
hereinbefore that Article 21 of the Constitution oflndia 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 E
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. F
'- 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. AfortiiJri a part of the amount of compensation may be directed
to be deposited, but the same must be a reasonable amount.
G
54. 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.
H
1148 SUPREME COURT REPORTS [2007) 4 S.C.R.

A 55. The Parliament has dealt with the imposition of substantive sentence v'

and a sentence of fine vis-a-vis payment of compensation differently.

56. A penal statute, in the event, the different meanings are possible to
be given, must be construed liberally in favour of an accused.

B 57. 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 ;Jrevail.

58. 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
C definite purpose. It must be given its full effect.

59. Reliance has been placed on a judgment of a learned Single Judge
of the Andhra Pradesh High Court in V. Prasada Rao v. The State of A.P. &
Anr., (2002) Crl. Law Journal 395. The learned Judge opined that the purpose
D of stay in sub-Section (2) of Section 357 would cover a case both under sub-
section (I) 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.
E
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
F 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.
G
60. 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 (I) gets automatically stayed in the event of filing an
H
DILIPS. DAHANUKARv. KOTAKMAIDNDRACO.LTD. [S.B.SINHA,J.] 1149

appeal there is no reason as to why the stay shall not operate in :A
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 {I) 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 (I) alone nor its application be excluded to B
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 C
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 automatically. Imposing a condition in this D
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."

60. In K. Bhaskaran v. Sankaran Vaidhyan Ba/an & Anr., [1999] 7 SCC
... 510, this Court held : E
"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). F
No lir_nit 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 G
exceeding Rs 5000 the Court has power to award compensation to be
paid to the complainant."

{See also Suganthi Suresh Kumar v. Jagdeeshan, [2002] 2 SCC 420.}

61. Recently, in National Insurance Co. Ltd v. Laxmi Narain Dhut, H·
[2007] 4 SCALE 36, a Division Bench of this Court laid down the law in the
1150 SUPREME COURT REPORTS [2007] 4 S. C.R.

A following tenns:
"A statute is an edict of the Legislature and in co~struing 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.
B 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
c 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 anJ circumstances that may emerge after
enacting a statute where its application may be called for. Nonetheless,
D the function of the Courts is only to expound and not to legislate.
Legislation in a modem 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
infonnation derived from past and present experience. It may also be
E 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 legislation in hand may be called for, and, words
chosen to communicate such indefinite referents are bound to be in
F 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
G 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).

62. It is also well settled that to anive at the intention of the legislation
H dependin~ on the objects for which the enactment is made, the Court can
resort to historical, contextual and purposive interpretation leaving textual
,,--
1

DILIP S. DAHANUKAR v. KOTAK MAHINDRA CO.LTD. [S.B. SINHA, J.) 1151
interpretation aside." A
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 B
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 fonnulate a plan of
Government. That aim, that policy is not drawn, like nitrogen, out of C
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. D
63. 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.

64. The right to appeal from a judgment of conviction vis-a-vis the
E
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
~ F
65. It is of some significance to notice that in Jolly George Varghese
and Anr v. 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 G
of human dignity and the worth of the human person enshrined in
Article 21, read with Arts. 14 and 19, obligates the State not to
incarcerate except under law which is fair, just and reasonable in its
procedural essence. Maneka Gandhi's case [19781 I S.C.R. 248 as
developed further in Sunil Batra v. Delhi Administration, Sita Ram H
1152 SUPREME COURT REPORTS (2007) 4 S.C.R.

A and Ors., v. State of UP. and Suni/ 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
B 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 aprocedure is inferab~ from Article I I_ of the Covenant. But this
c 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,·supe~y
D read, that if at any time after the passing-uf 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 l l(ofthe
Covenant) and Article 21 (of the Constitution). The simple default to
E 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
F 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."
G 66. 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
H
DILIPS. DAHANUKARv. KOTAKMAfllNDRACO. LTD. [S.B. SINHA,J.] 1153
Rs. 5000/-. The very fact that the Parliament did not think it fit to put a ceiling A
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.
B
67. We are of the opinion that having regard to the aforementioned
factors 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.
c
68. 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.

69. 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 D
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 E
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.

~ 70. We, therefore, are of the opinion : F
(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;
(it) The Appellate Court, however, while suspending the sentence,
was entitled to put the appellant on terms. However, no such term G
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
H
1154 SUPREME COURT REPORTS (2007] 4 S.C.R.

A relevant faetors including the one referred to iii Su~S~ction (5)
of 357 of the Code of Criminal Procedure;

(v) No unreasonable amount of compensation can be directed to be ·
paid. . '

71. In the facts and circumstances of the case, we, however, think it
B reasonable to direct the appellant to deposit a sum of Rs. I Iakh 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. ·
c 72. These appeals are allowed to the aforemention~ el{tent. In the facts
and circumstances of this case, there shall be no order as to costs ..

v.s. Appeals allowed.

.\ ~

J.