Holding

A civil court is obligated under Section 357(5) CrPC to take into account any compensation paid in a criminal proceeding when adjudicating a subsequent civil suit for the same cause of action.

Summary

The appellants issued cheques for a Rs 2,00,000 loan which were dishonoured, leading to criminal proceedings under Sections 138 and 142 of the Negotiable Instruments Act. They were convicted, fined Rs 2,10,000 and the criminal court, invoking Section 357 of the CrPC, directed that Rs 2,00,000 be paid as compensation to the respondent. The respondents also filed a civil suit for Rs 3,09,000; the trial court decreed the full amount without accounting for the compensation already paid in the criminal case, and the High Court upheld that decree. The Supreme Court examined whether a civil court must consider compensation paid under Section 357(5) CrPC when passing a decree. It held that the civil court is duty‑bound to take such payment into account, even if the issue was not raised, and that the appellate court can modify the decree accordingly. The matter was remitted to the trial court to prepare a fresh decree reflecting the amounts already paid and the appropriate interest. The appeal was partly allowed.

Issues considered

Whether a civil court must consider compensation paid under Section 357(5) of the CrPC in a related criminal proceeding when passing a money decree.
Whether the appellate civil court has authority to modify a decree to reflect such compensation.
Whether the failure to consider the criminal compensation constitutes a jurisdictional error correctable under Articles 136 and 142 of the Constitution.

Legislation cited

Code of Criminal Procedure, 1973s. 357(1), s. 357(5)
Negotiable Instruments Act, 1881s. 138, s. 142

Subjects

Cheque bounceCriminal compensationSection 357 CrPCCivil decreeDebt recoveryArticle 136Article 142Negotiable Instruments ActJurisdictional errorAppeal

Judgment

[2008] 11 S.C.R. 738

y
A D. PURUSHOTAMA REDDY & ANR. I
._
v.
K. SATEESH
(Civil Appeal No. 4751 of 2008)
AGUSUT 1, 2008
B
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]
+~

Code of Criminal Procedure, 1973 - s.357 (1) and (5) -
Issuance of cheque towards payment of loan - Dishonour of '-
i
c cheque - Initiation of criminal as well as civil proceedings
against the defaulter - In criminal case direction to pay the
creditor the principal amount - Amount paid - Thereafter de-
cree passed for the principal amount as well as interest thereon
- Appeal against decree dismissed - On appeal, held: In viev'I
of s. 357, a duty is cast upon the civil court to take into consid-
D
eration the amount paid in the criminal proceeding, even if
such plea is not taken by the party - Such order can also be
.:c.-
passed by the appellate or revisional court - The mistake
committed by courts below is rectified in exercise of jurisdic-
tion under Article 136 and 142 of the Constitution - Matter
E remitted to trial court for preparation of fresh decree - Nego-
tiable Instruments Act, 1881 - ss. 138 and 142.
Appellants issued cheques in favour of the respon-
dent towards payment of loan of Rs. 2,00,0001-. The
F· cheques were dishonoured. Respondent initiated crimi-
nal proceedings uls 200 Cr.P.C. rlw ss. 138 and 142 of
Negotiable Instruments Act, 1881. Trial court convicted the
appellants and imposed a fine of Rs. 2, 10,0001- with de-
fault clause. It directed to pay Rs. 2,00,0001- out of the fine
to the respondent. Appellants paid the entire amount of
G
fine. Respondent was paid the amount as directed by the
court.
Respondent had also filed civil suit against the ap- -j.
pellants. The suit was decreed by trial court for a sum of
H 738
-1
D. PURUSHOTAMA REDDY & ANR. v. K. 739
..,... SATE ESH

Rs. 3,09,000/-. Appellant deposited Rs. 1,90,000/-. Appeal A
against the decree was dismissed.
The question for consideration before this court was
whether the court in civil proceeding can pass a money
decree without taking into consideration the amount de-
...... -.- posited in a criminal proceeding . B

Partly allowing the appeal, the Court
HELD: 1. The suit was decreed after the order was
passed in the criminal proceedings. Deposit of a sum of
-.. ~
Rs. 2,00,000/- by the appellants in favour of the respon- c
dent was directed by the Criminal Court. Such an order
should have been ~ken into consideration by the Trial
Court while passing the decree. [Para 11] [743-D]
2. In terms of sub-section (1) of Section 357 Cr.P.C. a
D
.,,. criminal court is empowered to direct that out of the
..... amount recovered from an accused by way of fine, com-
pensation of a specified amount may be directed to be
paid for any loss or injury caused by the offence, when
compensation is, in the opinion of the court, recoverable
by a person in a civil court. It is, therefore, evident that the E
amount of compensation could have been directed to be
paid by the criminal court as the same was recoverable
by the respondent as against the appellants in a civil court
al~o. [Para 11] [743-F-G]
F
3. An appeal from a decree, furthermore, is a continu-
ation of suit. The limitation of power on a civil court should
also be borne in mind by the appellate court. Such an or-
der can also be passed by the Appellate Court or by the
High Court or by the Court of Sessions when exercising
G
its power of revision. [Para 11] [743-E, 743-H, 744-A]
4. Having regard to the provisions of Sub-section (5)
of Section 357 Cr.P.C., a duty was cast upon the High Court
to take into account the fact that a sum of Rs. 2,00,000/-
had already been paid by the appellants to the respon- H
740 SUPREME COURT REPORTS [2008] 11 S.C.R.

A dent. It is futile to urge that on the date pn which the civil
court passed the decree, the. appellants were. not con-
victed. As the appeal is a continuation of the suit and in
that view of the matter as the appellants had in total de-
posited a· sum of Rs. 4,00,000/-, Le., Rs. 2, 10,0001.: in the
B criminal proceeding and Rs. 1,90,000/- in the-civil proceed-
ings, out of which a sum of Rs. 3,09,000/- has been with-
drawn by the respondent, the High Court was obligated
to take th~_ same into consideration. Such consideration
. wa!?
• t
required to be bestowed
••
on
.
the• trial court/Higti
• .
court
despite the fact that the said provision was not· brought
C to its notice. Actus curiae-neminem: gravabit (no person shall
·be prejudiced by ·an .act of court)· is a well-known maxim.
(Paras 13,16 and 17] [744-D-F, 747 E-F] ·
Dilip S. Oahanukar v. Kotak Mahindra Co.· Ltd.· and Anr.
D 2007 \6) SCC 528; Manish Jalan v. State of Kamataka JT
2008 (7) SC 643; New India Assurance Co. v. Nusli Neville
Wadia and Ani 2007 (14) SCALE 556 - referred to.
5." This Court in exercise of its jurisdiction under Ar-
ticle 136 as also under Article 142 of the Constitution of
E India can direct rectification of a mistake committed by
the courts below. The matter is remitted to the trial Judge.
Trial Judge is directed to take into cqnsideration the
amount of compensation deposited by the appellants in
the criminal case and for the said purpose, a fresh decree
F should be drawn up while correcting the decree in terms
of the order of this Court. While preparation of the fresh
decree various dates on which the diverse amounts had
been deposited by the appellants should be taken into
consideration and calculate the interest payable there-
G upon. [Paras 17 and 18] [747 F-G-H, 748 A-B]
Case Law Reference
2007 (6) SCC 528 Referred to: Para 14
JT '2008 (7) SC 643 Referred to. Para 14
H 2007 (14) SCALE 556 Referred to. Para 15
D. PURUSHOTAMA REDDY & ANR. v. K. 741
....,., SATEESH [S.B. SINHA, J]

CIVIL APPELLATE JURllSDICTION : Civil Appeal No. A
4751 of 2008
From the final Judgment and Order dated 22.12.2006 of
the High Court of Karnataka at' Bangalore in Regular First Ap~
peal No. 1171 of 2006
_, .... B
S.N. Bhat for the Appellants.
Jana Kalyan Das for the Respondent.
The Judgment of the Court was delivered by
5.8. SINHA, J : 1. Leave granted. c
2. Whether in a suit for recovery of money on a cheque
issued by the defendant but dishonoured, the amount received
by the plaintiff-creditor in a criminal proceeding ·should be ad-
justed, is the core question involved herein.
D
..,,. 3. Plaintiff - Respondent filed a suit against the appel-
lants, which was marked as O.S. No. 1844 of 2004, for recov-
ery of a sum of Rs. 3,09,000/- with interest. In the plaint, it was
averred that Shri K. Balasubramanyam (father of the respon-
dent) and Defendant No. 1 (Appellant No. 1 herein) were good E
friends. Defendant Nos. 1 and 2 had been carrying on busi-
ness. They approached the plaintiff through Shri K.
Balasubramanyam for financial assistance and obtained a loan
of Rs. 2,00,000/- (Rs. 1,00,000/- on 15.03.2001 and Rs.
1,00,000/- on 25.03.2001 ). Two promissory notes were also F
executed therefor.
4. Defendants - Appellants purported to be in discharge
of the said debt issued two cheques bearing Nos. 3960 dated
15.03.2003 and 3959 dated 31.05.2003 drawn on Bank of In-
dia, which on presentation, were returned dishonoured. lhdis- G
putably, a complaint under Section 200 of the Code of Criminal
...- Procedure, 1973 read with Sections 138 and 142 of the Nego-
~
tiable Instruments Act, 1881 (for short "the Act"), marked as C.C.
No. 19337 of 2003, was filed.
. H
742 SUPREME COURT REPORTS . [2008) 11 S.C.R
'•"f"

A •A judgment of conviction and sentence against the appel-
lant was passed therein by an order dated 15.12 .2005 sen~ ·
tencing h.im to pay a sum of Rs. 2, 10,000 by way of fine and in
d~fault thereof to undergo simple imprisonment for a period of
three months. It was also directed that out of the said amount.of
s fine, a sum of Rs. 2,00,000/- would be paid to the complainant +-
byway of compensation in terms of Section 357 of the Code of
Criminal Procedure (for short "the Code") and the r~m~ining
amount was to be payable to the State. In the said crim.inal pro-
ceedings, the appellants deposited a sum of Rs. 31,500/- on
c < 7.02.2006, Rs. 68,500/- on 21.07.2006 and Rs. 1,10,000/- on
13.12.2006.
::5. O.S. No. 1844 of 2004 was decreed by the Trial Court
by a"j_udgment and order dated 23.01.2006, ordering: '·
"This suit is hereby decreed for·a sum of Rs, ·3;09,000/-
D
(Rupees three lakhs nine thousand only) with .co.urt costs
. and.cur:rent-ihterest at 6% p.a. 'on the:principal amounlof
. Rs. i,o0,0001- from the date of suit till realization. The
defenda'nts are jointly and severally liable to pay the decrial
. amow:1t."
E
· -· 6. lri the civil proceedings also, the appellants admittedly ·
have deposited a~sum of Rs. 1,90,000/-.•An· appeal was pre-
ferred thereagainst before the High Court of Karnataka at Ban-
galore marked as R.F.A. No. 1171 of 2006, which by reason of
F the:impugned judgment has been dismissed.-·.· · ·
.. . .:· ·· ... _·
7. The principal contention raised herein is that the Trial
Court and consequently the High Court committed a se'rious
error in decreeing the suit in its entirety, ~Le.; for a sum ·ofRs .
.. 3,09,0001~ with interest without taking irito consideration the facf
G that' an ambLirit·of Rs, 2,10,000/- had already been deposited
by the appellants in the said criminal proceedings. ·-
. ..·; . . . ··'

8, Contention of th.e respondent, however, is .~hat as the
said question was not and could not have been.raised before.
H . the Trial Court, the impugned judgment is sustainable. It was
D. PURUSHOTAMA REDDY & ANR.. v. K. 743
SATEESH [S.B. SINHA, J]

furthermore urged that in view of the well-settled principle of law A
that pendency of a criminal matter would not be an impediment
in proceeding with a civil suit, the impugned judgment should
not be interfered with.
9. A suit for recovery of money due from a borrower indis-
putably is maintainable at the instance of the creditor. It is fur- 8
thermore beyond any doubt or dispute that for the same cause
of action a complaint petition under terms of Section 138 of the
Act would also be maintainable.
10. The question, however, is as to whether the courts in c
one proceeding can issue directions to deposit amount in favour
of the plaintiff without taking into consideration the amount de-
posited by the defendant in the other.
11. We have noticed hereinbefore that whereas the judg-
ment of conviction and sentence was passed on 15.12.2005, D
the suit was decreed by the civil court on 23.01.2006. Deposit
...,,. of a sum of Rs. 2,00,000/- by the appellants in favour of the
respondent herein, was directed by the Criminal Court. Such
an order should have been taken into consideration by the Trial
Court. E
An appeal from a decree, furthermore, is a continuation of
4 suit. The limitation of power on a civil court should also be borne
in mind by the appellate court. Was any duty cast upon the civil
court to consider the amount of compensation deposited in
terms of Section 357 of the Code is the question. In terms of F
..- sub-section (1) of Section 357 of the Code, a criminal court is
empowered to direct that out of the amount recovered from an
accused by way of fine, compensation of a specified amount
may be directed to be paid for any loss or injury caused by the
offence, when compensation is, in the opinion of the Court, re- G ·.
coverable by a person in a Civil Court. It is, therefore, evident
that the amount of compensation could have been directed to
~ be paid by the criminal court as the same was recoverable by
the respondent as against the appellants in a civil court also.
Such an order can also be passed by the Appellate Court or by H
744 SUPREME .COURT REPORTS [2008] 11 S.C.R.

A the High Court or by the Court of Sessions when exercising its
power of revision.
. .
12. Sub-section (5) of Section 357 of the Code, which is
relevant for our purpose, reads as under:
B "35_7. Order to pay coml?ensation -
*** . *** ***
(5) At the· ·time of awarding com.pensation in any
subsequent civil suit relating to ·thE:f same matter, the Court
c shall take into account any sum paid or recovered as
compensation under this section."
.13. Evidently, a duty has been cast upon the civil courts to
take into account the sum paid or recovere.d as compensation
in terms of Section 357 of the Code. It js futiie t6 urge that on the
D date. on which the civil court passed the decree the appellants
were not convicted. As noticed hereinbefore, the appeal is a
continuation of the sui_t and in that view of the matter as the ap:- ~
pellants had in total deposited a sum of Rs. 4,00,000/-, i.e., Rs.
2~ 10,000/- in the criminal proceeding and Rs. 1,90,·000/- in the
E civil proceedings, out of which a sum of Rs. 3,09,000/- has been
withdrawn by the respondent, the High Court was obligated to
take.the same.into consideration. In other words, having regard.
to the provisions, of Sub-section (5) of Section 357 of the Code~
a duty was cast upon the High Court to take into account the
F fact that.'a sum of Rs. 2,00,000/- had already been paid by the
appellants to the respondent. Con.cededly, both the proceed-
ings were maintainable. Law recognizes the same·. The Parlia- -...
ment must have the situation of this nature in mind while enact-
ing Clause (b) of Sub-section (1) of Section 357 of the Code
G arid Sub-section (5) thereof.
14. In Dilip S. Oahanukar v. Kotak Mahindra Co. Ltd. and
Another [(2007) 6 SCC 528], while considering a question as
to what should be the reasonable amount in the matter of grant ""1
of compensation vis-a-vis the power of the appellate court to
H issue an interim direction in relation thereto., this Court held;
D. PURUSHOTAMA REDDY & ANR. v. K. 745
SATEESH [S.B. SINHA, J]

"38. The purpose of imposition of fine and/or grant of A
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 imposed, thus, must
be reasonable and not arbitrary. Before issuing a direction B
.:~ to pay compensation, the capacity of the 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 c
to impose fine is limited and direction to pay compensation
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 D
jurisdiction cannot be exercised at the whims and caprice
of a judge.
39. If a fine is to be imposed under the Act, the amount of
which in the opinion of Parliament would be more than
sufficient to compensate the complainaht; can it be said, E
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-section (5) of Section 357
also provides for some guidelines. Ordinarily, it should be F
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
realisation of the amount iri question must also be t>orne G
in mind. A criminal case is not a substitution for a civil suit,
far less execution of a decree which may be passed.
40. Prosecution under the Act may be contemplated as a
measure of deterrence, but the same is never meant to be
a persecution. H
~

746 SUPREME COURT REPORTS (2008] 11 S.C.R.
y
A 41. Even in a case where violation of fundamental right
guaranteed under Article 21 is alleged, the amouht of
compensation cannot be arbitrary ·or unreasonable even
under public law."
· [See also Manish Ja/an v. State of Karnataka JT 2008
-B · (7) SC 643)
-r~

This Court therein adopted the doctrine of purposive con-
struction. It was opined that compensation directed to be paid
should:be a reasonable one.
c 15. In. New India Assurance Co. v. Nusli Neville Wadia
and Anr. [2007 (14) SCALE 556], it was·held:
"50. Except in the first category of cases, as .has been
noticed by us hereinbefore, Sections 4 and 5 of the Act,
in our ·opinion, may have to be construed differently in
D
view of the decisions rendered by this Court. If the landlord
being a State within the meaning of Article 12 of the
Constitution of India is required to prove fairness and
reasonableness on its part in initiating a proceeding, it is
for it to show how its prayer meets the constitutional
E requirements of Article 14 of the Constitution of India. For
proper interpretation not only the basic principles of natural
justice have to be borne in mind, but also principles of
constitutionalism involved therein. With a view to read the
provisions of the Act in a proper and effective manner, we
F are of the opinion that literal interpretation, if given, may
give rise to an anomaly or absurdity which must be -A
avoided. So as to enable a superior court to interpret a
statute in a reasonable manner, the court must place itself
in the chair of a reasonable legislator/ author. So done,
.G the rules of purposive construction have to be resorted to
which would require the construction of the Act in such a
manner so as to see that the object of the Act fulfilled; ....,
which in turn would lead the beneficiary under the statutory
scheme to fulfill its constitutional obligations as held by
H the court inter alia in Ashoka Marketing Ltd (supra).
D. PURUSHOTAMA REDDY & ANR. v. K. 747
SATEESH [S.B. SINHA, J]

51. Barak in his exhaustive work on 'Purposive Construe- A
. tion' explains various meanings attributed to the term "purpose".
It would be in the fitness of discussion to refer to Purposive
Construction in Barak's words:
"Hart and Sc:1chs also appear to trea_t "purpose" as a
s'ubjecti~e concept. I say "appear'' because, although Hart ' B
and Sachs claim that the interpreter should imagine himself
or herself in the legislator's shoes,. they introduce two
elements of objectivity: First, the interpreter should assume
that the legislature is composed of reasonable people
s·eeking to achieve reasonable goals in a reasonable C
manner; and second, the interpreter should accept the
non-rebuttable presumption that members of the legislative
body sought to fulfill their constitutional duties in good faith.
This formulation allows the interpreter to inquire not into
the subjective intent of the author, but rather the intent the D
author would have had, had he or she acted reasonably."
16. Submission of the learned counsel for the respondent
that the said question was not raised before the learned Trial
Judge or before the High Court is of no moment. Sub-section
(5) of Section 357 of the Code casts a duty upon the court. It E
was for the Trial Court/High Court to take the same into consid-
eration. Such consideration was required to be bestowed de-
spite the fact that the said provision was not brought to its no-
tice.
F
17. Actus curiae neminem gravabit (no person shall be
prejudiced by an act of court) is a well-known maxim. In any
event, this Court in exercise of its jurisdiction under Article 136
as also under Article 142 of the Constitution of India can direct
rectification of a mistake committed by the courts below.
G
18. We, therefore, are of the opinion that the impugned
judgment should be modified and is directed to be modified
accordingly. The matter is remitted to the learned Trial Judge.
The learned Trial Judge is directed to take into consideration
the amount of compensation deposited by the appellants in the H
748 SUPREME COURT REPORTS [2008] 11 S.C.R.

A criminal·case and for the said purpose, the learned frial Judge
should draw up a fresh decree while correcting the decree iri
terms of the order of this Court. The learned Trial Judge shall,
while preparing a fresh decree, take into consideration the var-i-
ous dates on which the div.erse amounts had been deposited
s by the appellants and calculate the inter~st payable thereupon. ,., '
19. The appeal is allowed to the aforementioned extent. In
the facts and circumstances· of the ·case, there shall be no order
a~ to costs. - · ·
'•

K.K.T.. Appeal partly allowed.