Case: Dilip S. Dahanukar Vs. Kotak Mahindra Co. Ltd.

the international covenants operating in the field. 66. It is of some significance to notice that in Jolly George Varghese and Another vs. 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 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 Gandhis case [1978] 1 S.C.R. 248 as developed further in Sunil Batra v. Delhi Administration, Sita Ram and Ors. v. State of U.P. and Sunil 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 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 a procedure is inferable from Article 11 of the Covenant. But this 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, superficially read, that if at any time after the passing of 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 11(of the Covenant) and Article 21(of the Constitution). The simple default to 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 on dishonest disowning of the obligation under the decree. Here considerations of the debtors 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. 67. 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 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. 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. 68. 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. 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 courts duty to duly protect his right. 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 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 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. 69. We, therefore, are of the opinion: 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; ii) The Appellate Court, however, while suspending the sentence, was entitled to put the appellant on terms. However, no such term 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 relevant factors including the one referred to in Sub-Section (5) of 357 of the Code of Criminal Procedure; v) No unreasonable amount of compensation can be directed to be paid. 70.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]33. We must, however, observe that there exists a distinction between 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. If, therefore, undern (2) of Section 357, realization of fine, at least in respect of the factor(s) enumerated in clause (1) ofn 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 of48. 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 ton (2) of Section 357 of the Code. Section 431 of 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 Mr. Lalit,n (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 imposed49. We are, however, not oblivious of the fact that in Stanny Felix Pinto vs. 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 details50. This Court in an appropriate case may have to consider as to whether in economic offence like Negotiable Instruments Act, the Courts should at all invoken (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 not concerned herein with such a situation51. 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 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 fine52. If realization of an amount of compensation payable to a victim as envisaged under Clause (d) ofn (1) of Section 357 is to be stayed undern (2) thereof, there is no reason why the amount of compensation payable in terms ofn (3) shall not receive the same treatment. Doctrine of Purposive Interpretation in a situation of this nature, in our opinion, shall be applied54. 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 aWe have noticed hereinbefore that Article 21 of the Constitution of India 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 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 ton (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 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 reasonable amount55. 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 custody56. The Parliament has dealt with the imposition of substantive sentence and a sentence of fines payment of compensation differently57. A penal statute, in the event, the different meanings are possible to be given, must be construed liberally in favour of an accused58. 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 prevail59. In a case of this nature, the Court must invoke the doctrine of purposive construction.n (2) of Section 357 was enacted for a definite purpose. It must be given its full effect65. We, generally, agree with the observations made by the learned Judge, the same shall, however, be subject to any observations made hereinbeforeThe 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 oneThe right to appeal from a judgment of convictions the 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 fieldIt 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 Rs.. 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. 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 harshWe 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 appliedWe would, however, like to put a note of caution that the right of an accused unnecessarily need not be enlarged but it is the courts duty to duly protect his rightWe 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 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 boths (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 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 notWe, therefore, are of the opinion:i) In a case of this nature,n (2) of Section 357 of the Code of Criminal Procedure would be attracted even when Appellant was directed to pay compensation;ii) The Appellate Court, however, while suspending the sentence, was entitled to put the appellant on terms. However, no such term 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 relevant factors including the one referred to inn (5) of 357 of the Code of Criminal Procedure;v) No unreasonable amount of compensation can be directed to be paid.