KUMARAN Vs. STATE OF KERALA AND ANR

Tags Dishonour Of Cheque

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Crl.), 896-897 of 2017, Judgment Date: May 05, 2017

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.

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 27th April, 2006,
confirmed the conviction, but reduced the sentence to 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 19th 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 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 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 ;

(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.

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 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 (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:

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 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: 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
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 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;

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 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.

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 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 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 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 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.”

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, 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 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 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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