The Practical Importance of Supreme Court Suggestions in R. Vijayan
C.S. Raghu Raman, B.Com, LL.M.,
Assistant Professor
D.S. National Law University,
Viazg, AP.
The High Court, while restoring the conviction of respondent which was set aside by Additional Session Judge, held that ‘it could only restore the fine of Rs.2000/- imposed by the Magistrate with the default sentence but not the direction for payment of compensation of Rs.20000, being the amount of the cheque to Appellant’ under section 357(3) of the Code of Criminal Procedure, 1973, (known as ‘The Code’) as “it could not co-exist with the imposition of fine.”
Therefore, the complainant challenged this decision before Lord Justices R.V. Raveendran and R.M. Lodha of The Supreme Court[1] (Known as ‘The SC’).
The appellant argued that ‘Sections 29 and 357 of The Code and Section 138[2] of The Negotiable Instruments Act, 1881 (known as ‘The Act’) should be read harmoniously and complementary to each other; and if so done, compensation could be awarded to meet the loss sustained by the dishonor of the cheque and that if compensation could not be awarded for any reason, fine could be levied upto twice the amount of cheque and therefore the High Court ought to have restored the direction for payment of Rs.20,000/- as directed by the Lower Court to the appellant either by way of compensation under section 357(3) or from the fine under section 357(1)(b) of the Code, by increasing the fine to Rs.20000.’
Section 357(3) has been the subject-matter of judicial interpretation by The SC in several decisions.
The complete text of sec. 357 is as follows:[3]
Section 357 (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 a judgement, 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;
(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.
In State of Punjab vs. Gurmej Singh,
[4] The SC held that “a reading of Sec. 357(3) would show that the question of award of compensation would arise where the court imposes a sentence of which fine does not form a part. It was also held that section 357(3) will not apply where a sentence of fine has been imposed.”
In Sivasuriyan vs. Thangavelu[5] Lord Justices The SC after observing that “apart from sub-section (3) of Section 357 there is no other provision under the Code where under the court can exercise power to direct payment of compensation”, held that “On a plain reading of the aforesaid provision, it is crystal clear that the power can be exercised only when the court imposes sentence by which fine does not form a part.”
Therefore in the above appeal, it was held that ‘a court having sentenced to imprisonment, as also fine, the power under sub-section (3) of Section 357 could not have been exercised’ by setting aside the direction of the High Court for payment of compensation to the tune of Rs. one lakh by the appellant.
It was also observed that Sec. 357 (1) provides that “where the court imposes a sentence of fine or a sentence of which fine forms a part, the Court may direct the fine amount to be applied 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. Thus, if compensation could be paid from out of the fine, there is no need to award separate compensation. Only where the sentence does not include fine but only imprisonment and the court finds that the person who has suffered any loss or injury by reason of the act of the accused person, requires to be compensated, it is permitted to award compensation under Sec. 357 of the Code.”
Then after noting the difficulty in Vijayan, the Bench held that High Court ‘rightly did not increase the fine to cover the sum of Rs. 20,000 as compensation’ to be paid to Appellant in view of Sec. 357(1)(b) of the Code.
Very interestingly, while disposing of the Appeal at this stage, Lords Justices gave a suggestion about ‘giving interest on the amount of cheque’ as compensation to the complainant.
This is what the Lord Justices have said:
“………….the Act strongly lean towards grant of reimbursement of the loss by way of compensation, the courts should, unless there are special circumstances, in all cases of conviction, uniformly exercise the power to levy fine upto twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque should be practical and realistic, which would mean not only the payment of the cheque amount but interest thereon at a reasonable rate. Uniformity and consistency in deciding similar cases by different courts, not only increase the credibility of cheque as a negotiable instrument, but also the credibility of courts of justice.”
It is humbly submitted that the above observations cannot be brought into effect in the background of present legislation on the following reasons.
1. When ‘twice the amount of the cheque, being the maximum amount, is imposed as ‘fine’ under Sec.138, then ‘the payment of interest’ on the amount of fine, has no ‘legislative sanction’ under Act.[6]
2. ‘Compensation’ can never be given under Sec. 357(3) of The Code, when ‘fine’ is imposed as part of sentence, with or without a term of imprisonment.[7]
If interest is calculated on the actual amount of cheque, by segregating the actual amount out of twice the amount of fine already imposed, as compensation to complainant, it will still be in contravention of the legislative provision as it amounts to calculating interest on the fine.
For example, Rs. 20000 is imposed as fine, being twice the amount of a cheque of Rs.10000 that was dishonored. The interest, say, for two years at 9% per annum on the actual amount of cheque Rs. 10000 (half of the fine) comes to Rs. 1800. Total amount of compensation come to Rs. 11800.
Is this payment with interest on part of the fine is in contravention of the legislative provision? Is it permissible? are highly controversial and debatable issues.
Therefore, in view of the above circumstances there are two alternate solutions to the point of payment of compensation to the complainant.
1. The first solution, without offending the legislative provision, is ‘to pay the whole amount of fine imposed up to twice the amount of cheque’ as per Sec. 138 as compensation to the complainant.’
Or
2. As an alternative solution, the Court may, under Sec. 357(3) of the Code pay any amount of compensation, including interest on the actual amount of cheque to complainant where ‘fine’ does not form part of the sentence with at least one day of sentence of imprisonment[8] on conviction of the accused.
It is humbly submitted that the first solution is more preferable as it satisfies the complainant since he receives ‘twice the amount of cheque’ in not approaching the Court to institute Civil Suit to recover any more amount.
Of Course, when a civil suit is filed to recover any amount, Sec. 357 (5)[9] can be kept in mind.
Another problem correctly noted down by SC is regarding the filing of Civil Suits is as follows:
“in spite of section 143 (3) of the Act requiring the complaints Sec. 138 of the Act to be concluded within six months from the date of the filing of the complaint, such cases seldom reach finality before three or four years let alone six months. These cases give rise to complications where civil suits have not been filed within three years on account of the pendency of the criminal cases. While it is not the duty of criminal courts to ensure that successful complainants get the cheque amount also, it is their duty to have uniformity and consistency, with other courts dealing with similar cases.”
This above solution will also obviate the necessity of filing of civil suits for recovery of the amount.
The Lower Courts can take these suggestions, ‘though obiter’, as binding, even pending an Amendment to the Act, as suggested by the SC, since these suggestions, in view of their great practical importance and relevance when of thousands of cases are pending in the courts to be disposed of, have come from the Highest Court of the country.
If ‘fine’ up to twice the amount of cheque is imposed’[10] as per SC suggestions, the indiscriminate use of cheques by account holders will largely come down as it will have some deterrent effect.
The author is of firm opinion that there is nothing wrong in following these suggestions.
[1] R. Vijayan V. Baby & Another (2012) 1 SCC 260
[2] The section says: “ ………………..be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both:
[3] Clauses C and D of Sec. 357 (1) and Sec. 357(2) are not relevant here.
[6] This may be the reason that Lord Justices have suggested for an Amendment to the Act
[7] This happened to be the mistake committed by the Lower Court which was not confirmed by the appellant the High Court and Supreme Court.
[8] This slight sentence may be deprecated as flea-bite sentence on the convict as already observed by SC in Suganthi Suresh Kumar vs Jagdeeshan on 15 January, 2002
[9] Sec. 357 (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. See D. D.Purushotham Reddy v. K Sateesh (2008) 8 SCC 505
[10] The Lord Justices have also observed that the difficulty caused by the ceiling imposed by section 29(2) of the Code of Criminal Procedure, 1973 in imposing a fine on conviction of the drawer of the cheque has been subsequently solved by the ‘first proviso to section 143 in the Act with effect from 6.2.2003 conferring powers on Judicial Magistrate of the First Class in imposing a fine exceeding Rs.5,000/- in case of conviction”