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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION  

CRIMINAL     APPEAL     NO.883     OF     2012   [Arising out of Special Leave Petition (Crl.) No.2299 of 2012]

R. MOHAN …        APPELLANT

Vs.

A.K. VIJAYA KUMAR …        RESPONDENT

AND CRIMINAL     APPEAL     NO.884     OF     2012   

[Arising out of Special Leave Petition (Crl.) No.3327 of 2012]

A.K. VIJAYA KUMAR …        APPELLANT

Vs.

R. MOHAN …        RESPONDENT

JUDGMENT

(SMT.)     RANJANA     PRAKASH     DESAI,     J.   

1. Leave granted.  

2. These two appeals can be disposed of by a common  

judgment as they arise out of the same facts and challenge the

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same judgment and order dated 15/12/2011 of the Madras  

High Court.  Special Leave Petition (Crl.) No.2299 of 2012 is  

filed by accused –  R. Mohan (‘the accused’ for convenience)  

and Special Leave Petition (Crl.) No.3327 of 2012 is filed by  

complainant –  A.K. Vijaya Kumar (‘the complainant’ for  

convenience).    

3. The accused was tried by the Vth Metropolitan  

Magistrate Court, Egmore, Chennai for an offence under  

Section 138 of the Negotiable Instruments Act, 1881 (for short,  

“the said Act”) and, by order dated 16/4/2004 he was  

sentenced to undergo 3 months simple imprisonment and to  

pay compensation of Rs.5 lakhs to the complainant under  

Section 357(3) of the Code of Criminal Procedure Code (for  

short, “the Code”), in default, to undergo two months simple  

imprisonment.  In appeal, the IIIrd Additional Fast Track  

District & Sessions Judge, Chennai confirmed the conviction  

and sentence.  In revision, the High Court confirmed the order  

of conviction and sentence of three months simple  

imprisonment and to pay compensation of Rs.5 lakhs,  

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however, the High Court was of opinion that no separate  

sentence could be awarded in default of payment of  

compensation when substantive sentence of imprisonment is  

independently awarded.  The High Court, therefore, set aside  

the sentence in default of payment of compensation.  Being  

aggrieved by the said order of conviction and sentence, the  

accused has approached this court by way of Special Leave  

Petition (Crl.) No.2299 of 2012.  The complainant has filed  

Special Leave Petition No.3327 of 2012 being aggrieved by the  

order of the High Court to the extent it sets aside the order of  

sentence in default of payment of compensation.  

4.  The brief facts are as under:

The case of the complainant is that on 10/9/2001, the  

accused and his wife jointly borrowed a sum of Rs.5 lakhs  

from him and executed a promissory note in his favour.   The  

accused also issued a cheque dated 14/5/2002 in favour of  

the complainant towards the principal amount.  When the  

cheque was presented by the complainant with his banker for  

payment, it was dishonoured with bank’s remark “insufficient  

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funds”.  The complainant, thereafter, issued a statutory notice  

under Section 133 of the said Act.  The accused in his reply  

stated that he had borrowed only Rs.3,00,000/-; that he had  

paid the said amount and that the cheque was issued  only as  

a security and that it was not returned though demanded.  

The complainant then filed a Complaint under Section 200 of  

the Code.  During the trial, the complainant examined himself.  

The accused did not examine any witness in support of his  

case.  He denied the complaint’s case. He relied on an entry  

from a diary maintained by him showing that as of April,  

2002, only a sum of Rs.90,101/- was due and payable by him  

to the complainant.  

5. On these facts, the accused was sent up for trial before  

the Vth Metropolitan Magistrate, Egmore, Chennai, who  

convicted him as aforesaid.   We have already noted how the  

matter travelled upto this Court.   

6. We have heard Mr. R. Nedumaran, learned counsel  

appearing for the accused. He submitted that the courts below  

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have fallen into a serious error in convicting the accused.  He  

submitted that the importance of the diary entry (Ex.D1)  

showing that as of April 2002 only a sum of Rs.90,101/- was  

due and payable by the accused to the complainant was  

completely overlooked by all the Courts including the High  

Court.  He pointed out that the complainant has accepted that  

in the said diary entry, he had, in his own handwriting,  

acknowledged that only Rs.90,101/- was payable by the  

accused to him.  Counsel submitted that the accused had  

borrowed only Rs.3,00,000/- and had issued a blank cheque  

as security.  He had repaid that amount.  But the complainant  

misused the cheque.  Counsel submitted that the promissory  

note was not executed by the accused.  Counsel submitted  

that the order directing payment of Rs.5,00,000/- as  

compensation to the complainant is also illegal and unjust.

7. Mr. Jayanth Muth Raj, learned counsel for the  

complainant submitted that the High Court was in error in  

observing that no sentence could have been awarded to the  

accused in default of payment of compensation when  

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substantive sentence of imprisonment was awarded.   In  

support of his submissions counsel relied on Suganthi  

Suresh     Kumar     v.     Jagdeeshan  1  ,   and K.A.     Abbas     HSA     v.    

Sahu     Joseph     and     Another  2  .  Counsel submitted that the  

impugned order of the High Court be set aside only to that  

extent.

8. So far as the merits of the case are concerned, we have  

no hesitation in recording that the High Court was perfectly  

justified in confirming the conviction and sentence.  Ex-P1 is  

the promissory note in the sum of Rs.5 lakhs executed by the  

accused and his wife in favour of the complainant.  The  

accused has not led any evidence to prove that the promissory  

note (Ex-P1) is a got up document.  In his reply, he has  

nowhere taken such a stand.  The cheque (Ex-P2) is also on  

record.  According to the accused, he had borrowed only Rs.3  

lakhs from the complainant and a blank cheque was offered as  

security to the complainant.  It is suggested in the notice that  

the said cheque was misused by the complainant.  This story  

1 2002(2) SCC 420 2 2010 (6) SCC 230

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has to be rejected in view of the promissory note (Ex-P1). The  

accused has relied on xerox copy of some pages from a diary  

maintained by him (Ex-D1).  There is an entry in Ex-D1 that  

as of April, 2002, an amount of Rs.90,101/- was payable by  

the accused to the complainant.  The complainant has  

honestly admitted that the said acknowledgement is in his  

handwriting.  It is contended by the accused that this  

disproves the complainant’s case that an amount of Rs.5 lakhs  

was due from him to the complainant and in discharge of that  

debt cheque (Ex-P2) was given to him.  It is not possible to  

accept this submission. We have carefully examined Ex-D1.  

Several chit transactions are noted in Ex-D1.   As stated by  

the complainant in his evidence, he has been carrying on  

several businesses since 1990.  The accused had borrowed  

various amounts from him on different occasions and he had  

repaid those amounts except the amount involved in the  

transaction in question.  The complainant has stated that he  

finances people and collects interest at 18% per annum.  The  

reference to `chit’  in Ex-D1 indicates that he was running a  

chit fund scheme.  The entries in Ex-D1 appear to be entries  

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in connection with the said chit fund scheme.  The transaction  

reflected in Ex-D1 cannot be confused with the loan of Rs.5  

lakhs given by the complainant to the accused evidenced by  

promissory note (Ex-P1) and cheque (Ex-P2).  The  

complainant’s evidence is wholly satisfactory.  By admitting  

that entry in Ex-D1 is in his handwriting, he comes out as a  

truthful witness.   If he had dishonest motive he would have  

never admitted that the said entry was in his handwriting.  

9. Moreover, if the case of the accused is that as of April,  

2002, only an amount of Rs.90,101/- was due from him to the  

complainant, in his reply dated 24/5/2002, he should have  

said so.  This statement is conspicuously absent in the said  

reply.  It is pertinent to note that in order to satisfy itself, the  

High Court, while hearing the revision, directed the  

complainant to produce his Income-tax Returns of the relevant  

period.  The High Court wanted to see whether the instant  

loan transaction is reflected in the complainant’s Income-tax  

Returns.   The complainant produced the Income-tax Returns.  

The High Court found that in the Assessment Year 2002-2003  

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and also for the subsequent assessment years, there is an  

entry of a sum of Rs.5 lakhs as due from the accused to the  

complainant.  The complainant could not have manufactured  

the Income-tax Returns.  Thus, the promissory note (Ex-P1),  

the cheque (Ex-P2), reply dated 24/5/2002 sent by the  

accused to the complainant (Ex-P8) and the Income-tax  

Returns to which a reference is made by the High Court lead  

us to concur with the High Court that the conviction and  

sentence awarded to the accused is perfectly justified and no  

interference is called for with the same.   

10. That takes us to the legal question whether the court can  

award a sentence in default of payment of compensation.  

Under Section 357 of the Code the Court can pass order to pay  

compensation.  Sub-Section (1) of Section 357 of the Code  

empowers the court to award compensation to the victim of  

offence out of the sentence of fine imposed on the accused.  

Section 357(3) is relevant. It reads thus:

“357. Order to pay compensation. –  

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(1) xxx xxx xxx

(2) xxx xxx xxx

(3) When a Court imposes a sentence, of  which fine does not form a part, the Court may,  when passing judgment, order the accused person to  pay, by way of compensation, such amount as may  be specified in the order to the person who has  suffered any loss or injury by reason of the act for  which the accused person has been so sentenced.”  

Thus, if a fine is not a part of the order of sentence, the  

court may order the accused to pay compensation to the  

person who has suffered any loss or injury because of the act  

of the accused for which he is sentenced.  

11. In Hari     Singh      v.      Sukhbir     Singh     &     Ors.  3  , the accused  

were convicted and sentenced under Section 325 read with  

Section 149, Section 323 read with Section 149 and Section  

148 of the IPC.  They were released on probation of good  

conduct. Each of them was ordered to pay compensation of  

Rs.2,500/- to the injured.  In default  of payment of  

compensation, they were directed to serve their sentence.  This  

3 (1988) 4 SCC 551

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court inter alia considered whether the compensation awarded  

to the injured could be legally sustained.  This court observed  

that the power of the court under Section 357(3) to award  

compensation is not ancillary to other sentences, but it is in  

addition thereto and is intended to do something to reassure  

the victim that he or she is not forgotten in the criminal justice  

system.  This court further observed that it is a measure of  

responding appropriately to crime as well as of reconciling the  

victim with the offender.  Describing it as a constructive  

approach to crime, this court recommended to all courts to  

exercise this power liberally so as to meet the ends of justice  

in a better way.   It was clarified that the order to pay  

compensation may be enforced by awarding sentence in  

default.  The relevant observations of this court may be  

advantageously quoted.    

“11. 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  

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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.”

12. While dealing with a case under Section 138 of the said  

Act in Suganthi     Suresh     Kumar,   relying on Hari     Singh  , this  

court reiterated the same view and held that the court can  

impose a sentence of imprisonment on the accused in default  

of payment of compensation ordered under Section 357(3) of  

the Code.  

13. Undoubtedly, there is no specific provision in the Code  

which enables the court to sentence a person who commits  

breach of the order of  payment of compensation.  Section 421  

of the Code provides for the action which the court can take  

for the recovery of the fine where the accused has been  

sentenced to pay a fine.  Proviso thereto states how to deal  

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with a situation where default sentence is prescribed. Section  

421 reads thus:  

“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  ways, that is to say, it may—

(a) issue a warrant for the levy of the amount by  attachment and sale of any movable property  belonging to the offender;

(b) issue a warrant to the Collector of the district,  authorising him to realise the amount as arrears of  land revenue from the movable or immovable  property, or both, of the defaulter:

Provided that, if the sentence directs that in default  of payment of the fine, the offender shall be  imprisoned, and if such offender has undergone the  whole of such imprisonment in default, no court  shall issue such warrant unless, for special reasons  to be recorded in writing, it considers it necessary  so to do, or unless it has made an order for the  payment of expenses or compensation out of the  fine under Section 357.

(2) The State Government may make rules  regulating the manner in which warrants under  clause (a) of sub-section (1) are to be executed, and  for the summary determination of any claims made  by any person other than the offender in respect of  any property attached in execution of such warrant.  

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(3) Where the court issues a warrant to the  Collector under clause (b) of sub-section (1), the  Collector shall realise the amount in accordance  with the law relating to recovery of arrears of land  revenue, as if such warrant were a certificate issued  under such law:

Provided that no such warrant shall be executed by  the arrest or detention in prison of the offender.”

14. Section 431 of the Code provides for recovery of any  

money (other than a fine) payable by virtue of any order made  

under the Code and the recovery of which is not otherwise  

expressly provided for. Compensation awarded by a court can  

fall in this category. Section 431 says that such money shall  

be recoverable as if it were a fine.  Section 431 of the Code  

reads thus:  

“431. Money ordered to be paid recoverable as  fine.—Any money (other than a fine) payable by  virtue of any order made under this Code, and the  method of recovery of which is not otherwise  expressly provided for, shall be recoverable as if it  were a fine:

Provided that Section 421 shall, in its  application to an order under Section 359, by virtue  of this section, be construed as if in the proviso to  sub-section (1) of Section 421, after the words and  figures ‘under Section 357’, the words and figures  

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‘or an order for payment of costs under Section 359’  had been inserted.”

Thus, one has to again fall back on section 421 of the  

Code for recovery of compensation directed to be paid by the  

court.  For the purpose of mode of recovery, compensation is  

put on par with fine (See K.A.     Abbas     HSA  .)

15. Section 64 of the IPC also needs to be quoted because it  

provides for sentence of imprisonment for non-payment of fine.  

It reads thus:

“64. Sentence of imprisonment for non-payment  of fine.—In every case of an offence punishable with  imprisonment as well as fine, in which the offender  is sentenced to a fine, whether with or without  imprisonment, and in every case of an offence  punishable with imprisonment or fine, or with fine  only, in which the offender is sentenced to a fine, it  shall be competent to the court which sentences such  offender to direct by the sentence that, in default of  payment of the fine, the offender shall suffer  imprisonment for a certain term, which imprisonment  shall be in excess of any other imprisonment to  which he may have been sentenced or to which he  may be liable under a commutation of a sentence.”

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16.  The above provisions were examined by this Court in  

Vijayan     v.      Sadanandan     K.     &     Anr.  4    After quoting them, this  

Court rejected the submission that where there is default in  

payment of compensation ordered by the court, recourse can  

only be had to Section 421 of the Code because there is no  

provision enabling the court to award a default sentence.  This  

Court observed that if such a view is taken, the very object of  

sub-section (3) of Section 357 would be frustrated and the  

relief contemplated therein would be rendered somewhat  

illusory.  

17. We respectfully concur with this view.  In K.     Bhaskaran    

v  .     Sankaran     Vaidhyan     Balan  5   while considering Section 357  

(3) of the Code this Court expressed that if the Judicial  

Magistrate of the First Class were to order compensation to be  

paid to the complainant from out of the fine realised the  

complainant will be the loser when the cheque amount  

exceeded the said limit.  In such a case a complainant would  

4 (2009) 6 SCC 652 5 (1997) 7 SCC 510

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get only the maximum amount of rupees five thousand  

because Judicial Magistrate First Class can as per Section 29  

(2) of the Code pass a sentence of imprisonment for a term not  

exceeding three years, or of fine not exceeding Rs. 5,000/-, or  

of both (the said amount is now increased to Rs. 10,000/-).  

This Court clarified that in such cases the Magistrate can  

alleviate the grievance of the complainant by taking resort to  

Section 357(3) of the Code.   

18. The idea behind directing the accused to pay  

compensation to the complainant is to give him immediate  

relief so as to alleviate his grievance. In terms of Section 357(3)  

compensation is awarded for the loss or injury suffered by the  

person due to the act of the accused for which he is  

sentenced.  If merely an order, directing compensation, is  

passed, it would be totally ineffective.  It could be an order  

without any deterrence or apprehension of immediate adverse  

consequences in case of its non-observance. The whole  

purpose of giving relief to the complainant under Section  

357(3) of the Code would be frustrated if he is driven to take  

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recourse to Section 421 of the Code.  Order under Section 357  

(3) must have potentiality to secure its observance. Deterrence  

can only be infused into the order by providing for a default  

sentence.  If Section 421 of the Code puts compensation  

ordered to be paid by the court on par with fine so far as mode  

of recovery is concerned, then there is no reason why the court  

cannot impose a sentence in default of payment of  

compensation as it can be done in case of default in payment  

of fine under Section 64 of the IPC.  It is obvious that in view  

of this, in Vijayan, this court stated that the above mentioned  

provisions enabled the court to impose a sentence in default of  

payment of compensation and rejected the submission that  

the  recourse can only be had to Section 421 of the Code for  

enforcing the order of compensation.  Pertinently, it was made  

clear that observations made by this Court in Hari     Singh   are  

as important today as they were when they were made.  The  

conclusion, therefore, is that the order to pay compensation  

may be enforced by awarding sentence in default.  

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19. In view of the above, we find no illegality in the order  

passed by the learned Magistrate and confirmed by the  

Sessions Court in awarding sentence in default of payment of  

compensation.  The High Court was in error in setting aside  

the sentence imposed in default of payment of compensation.  

20. In the result, we dismiss the appeal arising out of Special  

Leave Petition (Crl.) No. 2299 of 2012 filed by the accused and  

allow the appeal arising out of Special Leave Petition (Crl.) No.  

3327 of 2012 filed by the complainant.  We set aside the  

impugned order of the High Court to the extent it quashes the  

sentence in default of payment of compensation.  We restore  

the order passed by learned Magistrate dated 16/4/2004  

awarding two months simple imprisonment in default of  

payment of compensation of Rs.5 lakhs under Section 357(3)  

of the Code.  We grant two months’ time to the accused to pay  

the said amount of compensation to the complainant from the  

date of receipt of this order.   

……………………………………………..J.        (AFTAB ALAM)

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……………………………………………..J.     (RANJANA PRAKASH DESAI)

NEW DELHI, JULY 3, 2012.

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