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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

Criminal Appeal Nos. 896-897 of 2017 (@Special Leave Petition (Criminal) Nos.1231-1232 of 2013)

Kumaran          …Appellant

Versus

State of Kerala & Anr.       …Respondents

J U D G M E N T

R.F. NARIMAN, J.

1. Leave granted.

2. The present appeals raise an interesting question as to whether

when compensation is ordered as payable for an offence committed

under Section 138 of the Negotiable Instruments Act, and in default

thereof, a jail sentence is prescribed and undergone, is compensation

still recoverable.

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3. In  the  present  case,  the  facts  are  that  the  complainant

approached  the  Magistrate  under  Section  138  of  the  Negotiable

Instruments Act in a transaction where the accused had borrowed a

sum of Rs.2.75 lakh from the complainant.  When the complainant

demanded the amount,  the accused issued a cheque for  the said

amount which was returned as dishonoured due to insufficiency of

funds.  The requisite demand notice was sent by the complainant to

the accused followed by the complaint.  Ultimately, the accused was

found guilty of the offence under Section 138, and was convicted,

stating:

“Considering the fact that this is an offence u/s 138 of the Negotiable Instruments Act I do not consider this to be a fit case to be proceeded under the Probation of Offenders Act.   I  am of  the  view that  simple  imprisonment  for  4 months  for  the  offence  u/s  138  of  the  Negotiable Instruments  Act  would  meet  the  ends  of  justice.   The accused  is  further  directed  to  pay  a  compensation  of Rs.2,75,000/- to the complainant u/s 357(3) of Cr.P.C. In default  of  payment  of  compensation,  he  shall  undergo simple imprisonment for 1 month.”

4. The  accused  challenged  the  aforesaid  judgment  before  the

Court of Sessions, and the Appellate Court, by an order dated 27 th

April,  2006, confirmed the conviction, but reduced the sentence to

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imprisonment till rising of the Court.  The order to pay compensation

with  the  default  clause  was,  however,  sustained.   The  accused

underwent  imprisonment  till  the  rising  of  the  Court  and  also

underwent the default  sentence for  non-payment of  compensation.

The  second  respondent  filed  CMP  No.2018  of  2008  before  the

learned  Judicial  Magistrate  under  Section  421  of  the  Criminal

Procedure  Code  for  realising  compensation  by  issuing  a  distress

warrant against the accused.  This CMP was allowed on 19 th July,

2008, and a distress warrant for the realisation of compensation was

issued.  A recalling petition filed by the accused was dismissed on

29th March, 2011.  The High Court, by the impugned judgment dated

8th August, 2012, held that despite the fact that the default sentence

was undergone,  yet,  under the provisions of  the Code of  Criminal

Procedure, compensation was recoverable, and upheld the orders of

the learned Judicial Magistrate.  

5. Shri  Siddharth Dave, learned counsel appearing on behalf  of

the Appellant, has argued before us that an accused who is directed

to pay fine, or undergo sentence of which fine forms a part, and from

which compensation is to be paid, then a court would proceed against

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the accused in the manner provided under Section 421 even though

he  may  have  undergone  the  default  sentence  awarded  to  him.

However, if the sentence is of fine or sentence of which fine forms a

part and there is no order of payment of compensation from the fine

imposed, the court would have to record special reasons in writing

before proceeding against the accused under Section 421.   Likewise,

compensation under Section 357(3) would be covered by the proviso

if  the  accused  has  undergone  the  default  sentence  awarded  and

special reasons in writing would have to be recorded before action

under Section 421 can be initiated. As in the present case, at the time

of issuance of warrant, the Magistrate did not record special reasons

in  writing for  proceeding against  the accused person,  the Division

Bench judgment ought  to be set aside.

6. Shri  C.K.  Sasi,  learned  counsel  for  the  Respondent,  has

repelled the above submissions.  According to the learned counsel,

by operation of the deeming fiction contained in Section 431 Cr.P.C.

compensation can be realized even if the accused had undergone the

default sentence.  The exception provided in the proviso to Section

421 is to achieve the object of payment of compensation to the victim

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of the offence.   According to learned counsel, the purpose of Section

421  being  victim  compensation,  the  provision  must  be  liberally

construed to meet the ends of justice.   This being so, the Division

Bench judgment cannot be faulted on any score.  

7. Having heard learned counsel for the parties, it is important to

set  out  all  the  relevant  statutory  provisions.   Section  357  Cr.P.C.

reads as under:  

“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 forms a part, the Court may, when passing judgment, order the whole or any part of the fine recovered to be applied-

(a)  in  defraying  the  expenses  properly  incurred  in  the prosecution;

(b) in the payment to any person of compensation for any loss or injury caused by the offence, when compensation is, in the opinion of the Court, recoverable by such person in a Civil Court;

(c)  when  any  person  is  convicted  of  any  offence  for having caused the death of another person or of having abetted  the  commission  of  such  an  offence,  in  paying compensation to the persons who are,  under  the Fatal Accidents  Act,  1855  (13  of1855),  entitled  to  recover damages from the person sentenced for the loss resulting to them from such death ;

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(d) when any person is convicted of any offence which includes theft, criminal misappropriation, criminal breach of trust, or cheating, or of having dishonestly received or retained, or of having voluntarily assisted in disposing of, stolen property knowing or having reason to believe the same  to  be  stolen,  in  compensating  any  bona  fide purchaser  of  such property  for  the loss of  the same if such property is restored to the possession of the person entitled thereto.

(2)  If  the fine is imposed in a case which is subject to appeal, no such payment shall be made before the period allowed for presenting 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  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.

(4) An order under this section may also be made by an Appellate Court or by the High Court or Court of Session when exercising its powers of revision.

(5)  At  the  time  of  awarding  compensation  in  any subsequent  civil  suit  relating  to  the  same  matter,  the Court shall take into account any sum paid or recovered as compensation under this section.”

It is important to note that sub-section (3) is a new provision

which did not exist in the old Criminal Procedure Code.   

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8. The predecessor to Section 421 was Section 386 of the Code

of Criminal Procedure, 1898, which reads as follows :

“386. Warrant for levy of fine.(1) Whenever 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  by  execution according  to  civil  process  against  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 to do so.

(2)  The  Government  may  make  rules  regulating  the manner in which warrants under sub-section (1), clause (a),  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.  

(3)  Where  the  Courts  issue  a  warrant  to  the  Collector under sub-section (1), Clause (b), such warrant shall be deemed  to  be  a  decree,  and  the  Collector  to  be  the decree-holder, within  the  meaning  of  the  Code of  Civil Procedure,  1908,  and the nearest  Civil  Court  by which

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any decree for a like amount could be executed shall, for the  purposes  of  the  said  Code,  be  deemed  to  be  the Court which passed the Decree, and all the provisions of that  Code  as  to  execution  of  decrees  shall  apply accordingly:

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

9. Section 421 of the present Code reads as follows :

“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

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(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.

(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.”

10. It may be noticed that the last part of the proviso to sub-section

(1),  namely, “or  unless  it  has  made  an  order  for  the  payment  of

expenses or compensation out of  the fine under Section 357” has

been added to the proviso for the first time.  This was done pursuant

to the 41st Law Commission Report, which will be referred to a little

later.  

11. The third important provision in the Code of Criminal Procedure

is Section 431, which reads as follows:

“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:

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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 "or an order for payment of costs under section 359" had been inserted.”

From this provision, it is clear that a deeming fiction is enacted,

viz.,  that  any  money  other  than  a  fine,  (which  would  include

compensation payable under Section 357(3) Cr.P.C.) the method of

recovery of which is not expressly provided for, shall be recoverable

as if it was a fine.  One of the bones of contention in these appeals is

the effect of the deeming fiction under Section 431.

12. Section 53 of the Indian Penal Code speaks of punishment to

which offenders are liable under the provisions of the Code.  Suffice it

to say that fine is one of them, but compensation payable is not.

13. Also  contained  in  Chapter  III  of  the  Penal  Code  which  is

headed “OF PUNISHMENTS” are the provisions of Sections 64 to 70.

Section 64 recognises that it shall be competent to the Court which

sentences an offender to state that, in default of payment of a fine,

the offender shall  suffer  imprisonment. Section 65 sets the limit  to

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which such imprisonment can go.  Section 68 is important and reads

as follows :

“68. Imprisonment to terminate on payment of fine.- The imprisonment which is imposed in default of payment of a fine shall terminate whenever that fine is either paid or levied by process of law.”

Section 70, which is almost determinative of the point that has

been argued in these appeals, reads as follows:

“70.  Fine  leviable  within  six  years,  or  during imprisonment – Death not to discharge property from liability.--The  fine,  or  any  part  thereof  which  remains unpaid, may be levied at any time within six years after the passing of the sentence, and if, under the sentence, the offender be liable to imprisonment for a longer period than six years, then at any time previous to the expiration of  that  period;  and the  death  of  the offender  does not discharge from the liability any property which would, after his death, be legally liable for his debts.”

14. It  is  important  at  this  juncture  to  deal  with  some  of  the

judgments of the High Courts.   

15. An early judgment of the Bombay High Court dealt with what

were  “special  reasons”  for  the  purpose  of  the  proviso  to  Section

386(1) under the old Code.  A Division Bench of the said High Court

in Digamber Kashinath Bhavarthi v. Emperor, AIR 1935 Bom 160:

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ILR LIX Bom 350,  dealt  with the proviso to Section 386(1)  in  the

following terms:  

“On June 30, 1934, the applicant was Released from jail, having served not only his substantive sentence, but also the sentence imposed upon him in default of payment of the  fine,  and  he  now  asks  that  the  warrant  for  the recovery  of  the  fine  issued  against  him  should  be withdrawn, and in support of his contention he relies on the proviso to section 386(1). That proviso provides 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 a warrant under the section unless for special reasons to be recorded in writing it  considers it necessary to do so. The proviso applies in terms only to the  issue  of  a  fresh  warrant  and  does  not  require  the withdrawal of a warrant already issued before expiration of the sentence in default of payment. But, I think that, in dealing  with  such  existing  warrants,  the  Court  should follow the policy which seems to have inspired the proviso to section 386. That policy appears to be that in general an offender ought not to be required both to pay the fine and  to  serve  the  sentence  in  default.  But  the  proviso enables a warrant to be issued for recovery of the fine, even if the whole sentence in default has been served, if the  Court  considers  that  there  are  special  reasons  for issuing the warrant. I apprehend that the special reasons should be reasons accounting for the fact that the fine has not  been recovered before the sentence in  default  has been served, and any reasons which are directed to that point  would be relevant.  It  may be that  the authorities, through no negligence on their part, did not know of the existence of  the  property  or  the  accused  may  have inherited property after he served his sentence in default; or there may not have been time to execute the warrant. Matters  of  that  sort  would  all  be  special  reasons  for

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issuing a warrant after the sentence in default had been served; and I think, in the same way, they are reasons justifying  the  Court  in  refusing  to  withdraw  a  warrant already issued. In the present case, in my opinion, there are special reasons, though not quite those which were recorded by the Judge. I think that a special reason for not withdrawing the warrant is that before the sentence in default had been served the authorities had taken steps to  enforce  this  warrant  by  levying  execution,  upon  the immoveable  property  of  the  applicant,  and  the  delay which has taken place is not, in my opinion, shown to be due  to  any  default  on  the  part  of  the  authorities.  The learned  Judge  himself  gave  as  his  reasons  for  not withdrawing the warrant  that  the offence was a serious one, and the complainant had been allotted part  of the fine.  In  my  view, reasons  of  that  sort  are  not  relevant because they do not account for the fine not having been recovered before the service of the sentence in default. For  these  reasons,  I  think  the  application  must  be refused.”

16. This judgment was followed in  Brahameshwar Prasad Sinha

v. State of Bihar,  1983 Cri LJ 8 by a Division Bench of the Patna

High Court, in which the Patna High Court held as follows :

“In Digamber  Kashinath  Bhavarthi v. Emperor (AIR  1935 Bom 160) : (1935-36 Cri LJ 1034) the Bombay High Court pointed out that special reasons mentioned in S. 386 of the old Code should be reasons accounting for the fact that  the  fine  had  not  been  recovered  from the  convict before the sentence in default had been served out and any reasons which are  directed to  that  point  would  be relevant applying that test,  I  am unable to say that  the reasons-given  by  the  learned  Sessions  Judge  is  not relevant. It must be pointed that, that the discretion is of

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the learned Sessions Judge and sitting in revision it may not be interfered with lightly.”

17. A Single Judge of the Allahabad High Court in  Parasnath v.

State AIR 1969 All 116 held as follows :

“There is no provision in the Indian Penal Code like Sec. 68 providing that, on the undergoing of the whole period of imprisonment,  the fine shall  not  be recoverable.  The procedure  for  recovery  of  such fines is  provided  for  in Sec. 386 of the Code of Criminal Procedure. Sub-sec. (1) of Sec. 386, Cr. P.C. which is relevant, provides:

“386(1)—Whenever  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 by execution according to  civil  process against  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 to do so.”

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The absence of any specific provision to the effect that the fine shall not be realisable if the whole of the period of imprisonment  for  default  has  been  undergone  and  the language of the proviso to sub-sec. (1) of Sec. 386, Cr. P.C.  lead  to  the  conclusion  that  the  undergoing  of imprisonment awarded in default of payment of the fine does not operate as a discharge or satisfaction of the fine which  may  nevertheless  be  levied  in  the  manner prescribed by Sec. 386(1), Cr. P.C.”

18. A Single Judge of  the Kerala High Court  in  Saji  Kumar vs.

Soman Pillai,  2006 (3)KLT 679, set out Section 421 of the Code of

Criminal Procedure and held that the fiction contained in Section 431

Cr.P.C. must be extended logically until its object is accomplished.  A

non-fine must be deemed to be a fine for the purpose of recovery,

and until recovery is complete, the fiction must continue.  Having so

held,  the learned Judge stated that  the  proviso  to  Section 421(1)

would apply not merely to Section 357(1), but also to Section 357(3)

and this being so, held that despite the fact that the default sentence

had  been  undergone,  compensation  under  Section  357(3)  is

recoverable.  The impugned judgment before us of the same High

Court approved of the conclusion of the aforesaid judgment, but with

completely  different  reasoning.   According  to  the  Division  Bench,

“compensation” is not a “sentence” and this being the case, would not

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be covered by the proviso to Section 421(1). This would make it clear

that since compensation is otherwise recoverable, despite the default

sentence having been undergone, ultimately, a warrant can be issued

under the first part of Section 421(1).

19. At  this  stage,  it  is  important  to  refer  to  a  few judgments  of

various High Courts on the reach of Section 70 of the Penal Code.  In

Kirpa Ram v. Emperor AIR 1914 Lahore 539, a Division Bench of

the Lahore High Court adverted to Section 70 of the Penal Code and

added  that  a  fine  can  be  collected  even  after  the  imprisonment

awarded in default has been undergone.   

20. In  Collector  of  Broach  and  Panchmahals  v.  Ochhavlal

Bhikalal, AIR 1941 Bom 158, a Division Bench of the Bombay High

Court  held  that  Section  386  of  the  Cr.P.C.  (i.e.  the  predecessor

Section  to  Section  421  of  the  present  Code)  relates  only  to

procedure,  whereas  the  substantive  law as  to  payment  of  fine  is

contained in Section 70 of the Penal Code.  This being the case, it

was held that the limitation period of six years from the date of the

sentence barred the darkhast that was presented in that case.  

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21. In  State v. Krishna Pillai,  AIR 1953 Travancore-Cochin 233,

the law was stated thus:

“The jurisdiction of the trial court to impose a sentence of imprisonment  in  default  of  payment  of  fine  is  merely permissive.  It  is  not  imperative  to  award  a  term  of imprisonment in default of payment of a fine. Section 64, Penal Code (S. 53, Travancore Code) only states that it shall be competent to the court to impose a sentence of imprisonment  for  non-payment  of  fine.  Further, imprisonment  in  default  of  payment  of  fine  does  not liberate an accused person from his liability to pay the fine imposed on him. Such imprisonment does not serve as a discharge or satisfaction of the fine, but is imposed as a punishment for nonpayment. The fine would remain alive for  collection  for  six  years  after  the  passing  of  the sentence.  Assuming the accused counter-petitioner  has no means now to pay the same, it can be recovered from any property acquired by him within the period specified. Even his  death  will  not  discharge from the liability  any property which would, after his death be legally liable for his debts. (Section 70, Penal Code, corresponding to S. 59, Travancore Penal Code).”

22. In  K. Vemmana Shenoy v. Collector of South Kanara,  AIR

1964 Mys.  64,  a Single Judge of  that  High Court  adverted to the

amending Act of 1923, by which a substantial change was made to

Section  386  of  the  Cr.P.C.,  which  made  it  clear  that  the  offender

should not be made to pay fine as well as undergo imprisonment in

default of payment of the fine in the absence of special reasons to be

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recorded in writing.  The learned Single Judge held that Section 70

IPC read with Section 386(1) proviso would necessarily lead to the

conclusion that in the absence of special reasons to be recorded in

writing,  the  fine  cannot  be  recovered  after  the  offender  has

undergone imprisonment in default of payment.  

23. A  conspectus  of  the  aforesaid  judgments  would  show  that

compensation under the old Cr.P.C. was always recoverable as a part

of  fine,  and  that  even  after  default  imprisonment  having  been

undergone, a fine could still be collected in the manner provided by

Section 386.  The requirement of special reasons was introduced by

the  amending  Act  of  1923.   The  special  reasons  outlined  in  the

Bombay High Court judgment of 1935 as well as in the Mysore High

Court judgment of 1964 would show that it is enough that sufficient

reasons or some good reason be given in order that fine be realized

even after default imprisonment has been undergone.  The Courts

held that despite the fact that the reach of Section 386(1) proviso was

only  qua  warrants  that  issued  after  default  imprisonment  was

undergone, yet, the principle of the proviso to Section 386(1) would

apply  even  to  warrants  issued  before  default  imprisonment  was

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undergone.  The law, therefore, till the enactment of the 1973 Code, made

it clear that Section 386, and Section 70 IPC read together would lead to

the conclusion that fines were recoverable even after default imprisonment

was undergone, provided there were special reasons for recovery of

the  same.  With  the  Code  of  1973  came  an  interesting  change.

Sub-section (3) was added to Section 357, which was an entirely new

provision making it clear that the Court may, when passing judgment,

order the accused to pay by way of compensation such amount as

may be specified in the order to the person who has suffered loss or

injury by reason of the act for which the accused person has been

sentenced.  This is provided that the Court imposes a sentence of

which fine does not form a part.  Another important change was made

in Section 421(1).   The proviso to the said sub-section was altered

because  the  41st Law  Commission  Report,  in  recommending

amendments to the old Section 386 stated, after noticing the Bombay

High Court judgment in Digambar’s case (supra) as follows :

“28.10.  Fine  should  be  recoverable  when compensation has been ordered.  – We notice that in the  above  judgment  the  fact  that  the  complainant  has been  allotted  part  of  the  fine  was  not  considered  a relevant special reason for purposes of the proviso as it stands.   A  contumacious  offender  should  not,  in  our

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opinion, be permitted to deprive the aggrieved party of the small  compensation  awarded  to  it  by  the  device  of undergoing  the  sentence  of  imprisonment  in  default  of payment of the fine.  When an order under Section 545 has  been  passed  for  payment  of  expenses  or compensation out of fine, recovery of the fine should be pursued, and in such cases, the fact that the sentence of imprisonment in default has been fully undergone should not be a bar to the issue of a warrant for levy of the fine. We recommend that the proviso to section 386(1) should make this clear.”

24. Following paragraph 28.10,  the words “or  unless it  made an

order for the payment of expenses or compensation out of the fine

under Section 357” was added to the proviso which was contained in

old Section 386(1) and continued in Section 421(1).

25. At  this  juncture,  it  is  important  to  note  that  in  Vijayan  v.

Sadanandan K. (2009) 6 SCC 652, this Court held :

“29. To appreciate the said legal position, the provisions of Section 431 are set out hereinbelow:

“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

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sub-section (1) of Section 421, after the words and figures ‘under Section 357’, the words and figures ‘or an order for payment of costs under Section 359’ had been inserted.”

Section 431 makes it clear that any money other than a fine payable  on  account  of  an  order  passed under  the Code shall be recoverable as if it were a fine which takes us to Section 64 IPC.

30. Section 64 IPC makes it clear that while imposing a sentence of fine, the court would be competent to include a default sentence to ensure payment of the same. For the  sake  of  reference,  Section  64  IPC  is  set  out hereinbelow:

“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.”

31. The  provisions  of  Sections  357(3)  and  431  CrPC, when read with Section 64 IPC, empower the court, while making an order  for  payment  of  compensation,  to  also include a default sentence in case of non-payment of the same.”

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26. This statement of the law was reiterated in  R. Mohan v. A.K.

Vijaya Kumar, (2012) 8 SCC 721 (see paras 26 to 29).

27. These two judgments make it clear that the deeming fiction of

Section  431  Cr.P.C.  extends  not  only  to  Section  421,  but  also  to

Section 64 of the Indian Penal Code.  This being the case, Section 70

IPC, which is the last in the group of Sections dealing with sentence

of imprisonment for non-payment of fine must also be included as

applying directly to compensation under Section 357(3) as well.  The

position in law now becomes clear.  The deeming provision in Section

431 will apply to Section 421(1) as well, despite the fact that the last

part of the proviso to Section 421(1) makes a reference only to an

order for payment of expenses or compensation out of a fine, which

would  necessarily  refer  only  to  Section  357(1)  and  not  357(3).

Despite this being so, so long as compensation has been directed to

be paid, albeit under Section 357(3), Section 431, Section 70 IPC and

Section 421(1)  proviso would make it  clear that  by a legal  fiction,

even  though  a  default  sentence  has  been  suffered,  yet,

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compensation would be recoverable in the manner provided under

Section 421(1).  This would, however, be without the necessity for

recording  any  special  reasons.   This  is  because  Section  421(1)

proviso contains the disjunctive “or” following the recommendation of

the Law Commission, that the proviso to old Section 386(1) should

not be a bar to the issue of a warrant for levy of fine, even when a

sentence of imprisonment for default has been fully undergone.  The

last part inserted into the proviso to Section 421(1) as a result of this

recommendation of the Law Commission is a category by itself which

applies to compensation payable out of a fine under Section 357(1)

and,  by  applying  the  fiction  contained  in  Section  431,  to

compensation payable under Section 357(3).   

28. As is well known,  a legal fiction is not to be extended beyond

the purpose for which it  is  created or beyond the language of the

section by which it is created. For example, see Prakash H. Jain v.

Marie  Fernandes, (2003)  8  SCC 431 at  438.  However, once  the

purpose of the legal fiction is ascertained, full effect must be given,

and it should be carried to its logical conclusion. This is clear from the

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celebrated  passage  in  East  End  Dwelling  Co.  Ltd. v.  Finsbury

Borough Council, 1951 (2) All ER 587 at 589:  

“if you are bidden to treat an imaginary state of affairs as real,  you must  surely, unless prohibited from doing so, also  imagine  as  real  the  consequences  and  incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of those in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs”.  

29. The legal fiction enacted under Section 431 is not limited to “the

purpose of this Act” unlike Section 6A of the Central Sales Tax Act, as

was the case in  Ashok Leyland Limited v.  State of Tamil Nadu,

(2004) 3 SCC 1 at para 32,76. Thus it is clear that the object of the

legal fiction created by Section 431 is to extend for the purpose of

recovery of compensation until such recovery is completed -  and this

would necessarily take us not only to Section 421 of the Cr.P.C. but

also to Section 70 of the Penal Code, a companion criminal statute,

as has been held above.     

30. This being the case, we uphold the conclusion of the judgment

dated 8th August, 2012 of the Division Bench of the Kerala High Court

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but  for  the  reasons  given  in  this  judgment.   The  appeals  are

dismissed accordingly.    

………………………………..J.                                              (R.F. NARIMAN)

     ….…………………………… J.         (NAVIN SINHA)

New Delhi; May 5, 2017.

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