Title Without Title Deed

(By Gigi P. V., Advocate, Kotlayam)

Mortgage by depositing the title deed as security in notified areas is a common practice adopted in granting loans. This is a very simple and convenient form of creating mortgage. Unfortunately the decree holders of a partition deed are practically deprived of this facility due to the lapses in the existing law and procedure related to the issuance of the final decree.

S.237(1) of the Kerala Civil Rules of Practice states that "Decrees to be engrossed on stamp paper:- The decree in a partition deed shall be prepared on non-judicial stamp paper for requisite value and shall be retained by the court and shall form part of the record and copies of the same shall be furnished to the parties in case of other decrees". Here law provides the litigants the certified copies of the final decree, which is the only document to prove their title to the property. Usually the loan applications which relies on certified copies of the final decree as the title deeds are rejected on the ground that the certified copies cannot be treated as title deeds.

The Banks are of the view that any number of the certified copies can be obtained by the concerned parties and such certificates cannot be relied on. A person with intention to cheat the bank can create any number of mortgages by depositing the certified copies of the final decree to several banks at a time. Moreover the equitable mortgage by depositing the title deeds needs no registration. Hence a prior mortgage by the same party by depositing another certified copy may not be found out on the examination of the certificate of encumbrance. Naturally such loan amounts issued by several banks at a time may exceed the actual market value of the mortgaged property and the banks are unable to realise the debts on non-repayment. Moreover in Syndicate Bank v. Modern Tiles and Clay Works (1980 KLT 550) it is held that "A copy is not a document of title and its deposit cannot be an equitable title. It is only an evidence of title". Thus the apprehension of the Bank is justifiable.

In order to find a solution to this situation two methods can be adopted. First one is that issue duplicates of the final decree on stamp paper to the parties. The second is, make an endorsement over the certified copies of the final decree that the copy shall be considered as original and such copy with such endorsement shall not be issued to the parties subsequently.

To meet the end of justice necessary provisions of the procedural law should be amended. Otherwise the unfortunate litigants of a partition suit may be deprived of getting financial assistance from the Banks and it may affect their right to enjoy the property. It may cause enormous hardship to the parties and initiation should be taken to redress their grievances.

"Interruption En-Route the Destination" of Criminal Cases -

A Study of Sharma's Cases / And II

(By T.P. Aboo, Advocate, Manjeri)

"Justice ordinarily demands that every case should reach its destination, not interrupted en-route" - observed Krishna Iyer, J. in Balwant Singh & Ors. v. State of Bihar (1997 SC (Crl.) 633). The Code of Criminal Procedure 1973 provides for premature termination of criminal proceedings before the culminator into judgments under various sections, i.e., S.227 (Discharge of the accused by the court, S.239 (Discharge by the Magistrate in warrant trial), 245 (discharge in private complaints), 256 (Non-appearance or death of complainant), 257 (withdrawal by complainant), 258 (Power of the court to stop proceedings in summons cases), 320 (compounding by the parties), 321 (withdrawal of cases by Public Prosecutor).

Apart from these provisions of Cr.P.C. the Apex Court has through its rulings issued guidelines and directions for putting an end to the criminal cases or close prosecution evidence under some special circumstances.

The important decisions on this point are "Common Cause cases (1996 (4) SCC 33), Common Cause cases (1996 (6) SCC 775), Rajdeo Sharma 's case I (AIR 1996 SC 3281), Rajdeo Sharma's case II (2000(1) KLT463).

The line of approach made by the Supreme Court in Common Cause cases was different from that of Sharma's cases. In Common Cause cases direction was for the disposal of the cases by acquittal or discharge, whereas in Rajdeo Sharma's cases the direction was to close prosecution evidence and proceed to the next step. In direction No. 1 in Sharma's case the Apex Court directed the criminal courts to close the prosecution evidence on completion of 2 years "from the date of recording the plea of the accused on charges framed in cases punishable with imprisonment not exceeding seven years and in direction No. Ill, to close evidence on completion of 3 years from the date of recording the plea of the accused "on charges framed" in cases punishable with imprisonment for a period exceeding 7 years.

2.  It is submitted that these two directions are applicable to warrant case and the cases exclusively triable by the Sessions Court - Not to summons cases as the Supreme Court used the words "recording the plea of the accused on charges framed". The procedure for the trial of warrant cases is dealt with in Chapter 19 Cr.P.C. S. 239 empower the Magistrate to discharge the accused while S.240 gives the power to frame the charge S.228 Cr.P.C. deals with framing the charge by a Court of Session.

Chapter 20 of Cr.P.C. deals with trial of summons cases. S.251 provides that the particulars of the offences shall be stated to the accused and he shall be asked whether he pleads guilty or has any defence to make but it shall be not necessary to frame a formal charge. "Recording plea on particulars stated" in a summons cases is different from "recording plea on charges framed" in warrant cases, "Sharma's case" excluding summons cases from its application.

3.    In a decision reported in Sahadevan v. Excise Inspector (1999 (1) KLT 687) Sankaranarayanan, J. applied this decision in a summons case. The Hon'ble Court was

dealing with S. 55 of the Abkari Act (before the amendment of 1997). All the offences under the old Abkari Act were summons cases as the punishment prescribed was not for imprisonment exceeding 2 years. In Shaji v. State (2001 (1) KLT 733) Rajendra Babu, J. also did not make any difference between "plea recorded on particulars stated" and "plea recorded on charges framed though the Apex Court deliberately excluded the former from the purview of the directions in Sharma's case. In Shaji v. State (2001 (1) KLT 733) at Page 737 para 6 Rajendra Babu, J. observed "The direction number one in Raj Deo Sharma's case, 1999 (1) KLT 173 (SC) was to proceed to the next step in respect of the cases punishable with imprisonment for a period of not exceeding seven years if a period of two years had elapsed since the recording of the plea of the accused". The Hon'ble Judge left out the words "charges framed" in the above sentence which it is submitted is "the part and parcel" of the Supreme Court direction. For offences punishable below 7 years this word is very important to decide whether the offence is a warrant case or a summons case.

4.  The exceptions granted to these directions are exhaustive. The discretion not apply the dictum is "for very exceptional reasons to be recorded and in the interest of justice the court considers it necessary to grant further time to the prosecution." The exception is fettered with 4 qualifications. So it is submitted the discretion can be exercised in "rarest of rare case" - The term coined by the apex court in the case of awarding capital punishment Balwant Singh v. State of Punjab (AIR 1976 SC 2196 S. 354 (3) Cr. P.C.).

5.  The controversy regarding the starting point of "Rider Clause" granted in Sharma's case II is now settled. In Shaji v. State (2001 (1) KLT 733), Rajendra Babu, J. ruled that the starting point of the period of extension of 1 year started from 8.10.1998. Period of suspension of the operation of judgment from 14.5.1999 would stand excluded in computing the additional period of 1 year.

6.  The term "stands excluded" is a bone of contention. Some argue that what is suspended is the operation of the judgment, so that period is to be subtracted from 1 year, as the courts were free to conduct trial without the control of the judgment whereas others argue that the term "stands excluded" in other exceptions - absence of Presiding Officers and Prosecutors etc. - is used in the opposite sense- so that period is to be added with one year. The meaning of the terms must be understood with reference to the context, and in that sense the period of suspension of the judgment is to be subtracted from 1 year. There is no benefit of the "Rider Clause" now available as the period is already over by 8.10.99 minus suspension period of the operation of the judgment.

7.  Whether an order passed on the directions of "Sharma's case" in interlocutory or not and whether the prohibition of S. 397(2) Cr.P.C. will bar a revision is another dispute. In Udaya Kumar v. Superintendent of Police (2002 (1) KLT 212). Padmanabhan Nair, J. dismissed all the petitions, on the ground that all those cases were interlocutory and no revision would stand as the disposal of the cases would not have the effect of terminating the proceedings. As the Hon'ble Judge was deciding the case on particular facts it is submitted that this case is no authority on the point. In cases where no witness is examined an order as per Sharma 's case will terminate the proceedings. The Honourable High Court was dealing with S. 19(3) of PC Act, 1988. In V.C. Shukla v. C.B.I, the Apex Court (1980 SCC (Cr.) 695) had made a distinction between the Special Court Act and Cr.P.C. As the objective of the Special Court Act was "quickest despatch and speediest disposal" and it covered only specified number of criminals the Court was of opinion that, framing charge might be interlocutory under the Act, and not so under the Code. Further an order on Sharma 's case is a ruling of great moment flowing from Art. 21 of the Constitution affecting the life and liberty of the accused and as per the decisions of the Apex Court, such order cannot be interlocutory. The Supreme Court in recent decision has considered S. 317 Cr.P.C. - disposing personal attendance of the accused - in revision". In Shaji v. State (2001 (1) KLT 733) the Hon'ble Kerala High Court entertained the revision, Crl. R.P. 88/2000 on an order under Sharma's case. So it is submitted the revisional jurisdiction of the High Court and Sessions Court can be exercised on an order passed in Sharma's case.

8.  In Ramachandra Rao v. State of Karnataka (2002 (6) SCALE 516) the correctness of all Common Cause cases I and II and Sharma's case I and II was challenged and the matter is now before the Constitution Bench. In Udaya Kumar's case, 2002 (2) KLT 212 the prayer for the stay was not allowed as dictum of Sharma's case is still binding on subordinate courts under Art. 131 of the Constitution. In Sheonandan Pawan v. State of Bihar (AIR 1987 SC 877) the question whether a Constitution Bench can entertain review petition unless the judgment sought to be reviewed was set aside, was the point for consideration. The majority proceeded on the assumption that it was set aside.

9.  In Udaya Kumar v. Supdt. of Police (2002 (1) KLT 212), Padmanabhan Nair, J. observed that "In Raj Deo Sharma Case it is not stated that for getting extension, prosecution shall file written application. The Hon'ble Court proceeded further and ruled that oral request was sufficient and the court could act even on a petition filed by the accused. In Shaji v. State (2001 (1) KLT 733) the Single Bench ruling was to the effect that the court can extend one year on a request by the prosecution. Hence the distinction between granting extension for very "exceptional reasons" and granting extension of one year as per "Rider Clause" must be clear. In the former the court is acting suo-moto; prosecution or the accused are not prevented from moving the court for the relief. But the subordinate courts must exercise the discretion on the date of the expiry of 2 years or 3 years as the case may be, otherwise if the accused filed a petition after 1 year there cannot be extension retrospectively. So far as the Rider Clause is concerned Sharma's case mandates that, "additional period of one year can be claimed" by the prosecutor. It is submitted that, in this case claiming by the prosecutor is mandatory and in this respect there is conflict of opinion between two Hon'ble Single Judges of the High Court, in Shaji's case (2001 (l)KLT733)and UdayaKumar Case (2002(1) KLT 212).

10. Exception No. IV In Sharma's case is that if the inability for completing the prosecution evidence within the aforesaid period is attributive to the "conduct" of the accused in "protracting" the trial no court is obliged to close the prosecution evidence". Here the apex court has used two words "conduct" and "protracting the trial". For availing of the exception the "conduct" of the accused must be the cause of "protracting" the case.  "Conduct" of a person is formed by the continuous and consistent behaviour, single instance does not constitute "conduct". It is question of fact. In this case the subordinate courts are given discretion in the facts and circumstances of the case, either to apply or not apply the discretion. When the accused or the counsel is absent on some occasions and petition is filed to excuse the absence is accepted by the court," the "conduct" of the accused is not the cause for "protracting" the trial. It is the circumstances wherein steps are taken under Ss. 83 and 84 of Cr.P.C. or non-co-operation of the counsel as reported in 2001 (2) KLT 159 (SC) which attract this exception.

All subordinate courts are bound to apply the direction in Sharma's case No. I and II in "letter and spirit". Systematic or infrastructural inconvenience is no excuse as the Supreme Court has considered that point in the main appeal and rejected it. The Supreme Court in a subsequent decision (2001 (2) KLT 159 SC), compared this excuse to the proverbial complaint of "workers blaming the tool". It is a cardinal principle of interpretation that the plain meaning of a provision should be followed when it is clear and un-ambigous. This is true in the construction of statutes as well as understanding the decision of the High Courts and Supreme Court of India (AIR 1979 SC Maxwell on Interpretation of Statutes page 28).

Mortgage by Deposit of Title Deeds (Equitable Mortgage):-

Face to Face with Realities

(By K.R. Giri Iyer, Advocate, Ottapalam)

Three questions for consideration :-

1)     Whether registration is a mandatory requirement or not?

2)     Whether original title deed is to be deposited for satisfying the requirements of the section?       

                                 ,

3)     What is the fate of a bonafide purchaser for value who has no notice of the prior mortgage?

The first question regarding registration can be considered as a matter of prime importance.

1) Under S.58(f) of Transfer of Property Act the Law recognises equitable mortgage, which is quite easy in procedure. One who wants a loan can hand over the title deeds of his property in a notified area and he can obtain the money and the loan becomes a secured debt, which will be having first charge over all unsecured debts. Although this was just a practice followed in olden days, which was there after recognised by law. When equitable mortgage is created, Law requires nothing to be reduced in black and white. The difficulties arises when the amounts are not returned when the person who lended money claims money through legal methods there may not be any evidence to find out the actual amounts borrowed or the rate of interest fixed. So to overcome the difficulties the parties searched for the remedy and even the Banking institutions were in front row and they adopted different methods like obtaining pronotes or any collateral negotiable instrument or other documents while giving the amount and nationalised banks also started a method of recording the deposit by way of executing memorandum of deposit of title deeds and there started the main difficulty of the question regarding registration of the documents as mandated by the Registration Act.

2) The question arose for consideration even during the year 1950 and appreciating the importance of the question a Bench consisting of 4 Judges of the Honourable Supreme Court in the case of United Bank of India Ltd. v. M/s. Lekharam Sonaram & Co. & Ors. which was reported in AIR 1965 SC 1591. There the Honourable SC reversed the judgment of the Honourable High Court which was reported in AIR 1958 Patna 472. The Hon'ble Supreme Court held that "when the debtor deposits with the creditor title deeds of his property with an intent to create a security the Law implies a contract between the parties to create a mortgage and no registered instrument is required under S. 59 as in other classes of mortgage. It is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to the lender of documents of title to immovable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. But if the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. It follows that in case the document which constitutes the bargain regarding security requires registration under S. 17 of the Indian Registration Act, 1908, as a non testamentary instrument creating an interest in immovable property, where the value of such property is one hundred rupees or upwards. If a document of this character is not registered it cannot be used in evidence at all and the transaction cannot be proved by oral evidence either". And regarding the facts of the case the Hon'ble Supreme Court has stated "where the letter in question did not mention details of title deeds, which were to be deposited with the bank and neither mentioned what was the principal amount borrowed or to be borrowed nor it referred to rate of interest for the loan, the letter was not intended to be an integral part of the transaction between the parties and did not by itself operate to create an interest in the immovable property and therefore, it did not require registration.

So every case has to be interpreted independently as to whether the document constitutes an element of bargain regarding security, which may trouble both the laymen as well as the lawmen.

3) The Hon'ble Kerala High Court's decision in Hubert Peyoli v. Santhavilasath Kesavan Sivadasan reported in 1998 (2) KLT125 has created a pandemonium on the issue of registration. There the Hon'ble High Court has held as follows:- "Delivery of document of title alone is sufficient to create an equitable mortgage under the above Section. There is no necessity to execute any document. In case a document was executed for that purpose of creating a mortgage under S. 58(f) of the Transfer of Property Act, no doubt it requires registration. For creating an equitable mortgage, there must be a debt, there must be a deposit of title deeds and that intention of the parties should be that the title deeds were deposited only for the purpose of giving security of the property covered by the title deed. When the memorandum of letter was executed on the date of the deposit or delivery of the title deeds that needs registration. And after the delivery of the title deed, any letter or memorandum was executed endorsing the earlier deposit of title, which already created a mortgage that letter, needs no registration. In the instant case before me, it is quiet clear that Ext. A2 was executed on the same date on which the document was delivered. Therefore, as per the above principle laid down by the Madras High Court and by this Court in the above decisions, it is quite obvious that Ext. A2 at the outset needs registration".

4) This decision was followed by the decision reported in Joseph v. Michael after the lapse of two years and reported in AIR 2000 Kerala 240, which has cleared the confusion to certain extent. There Honourable Justice M.R. Hariharan Nair has stated in the Judgment that "the stray sentence in paragraph 4 of Hubert Peyoli 's case that when memorandum was executed on the date of deposit or delivery of title deeds that needs registration has, therefore to be understood as applicable to the facts and circumstances of that case and not as inflexible rule of universal application irrespective of the time of deposit and time of execution of the mortgage". "There is no bar in the execution of a memorandum evidencing the mortgage on the same day and the memorandum will not require registration provided it was executed after the deposit albeit on the same day".

5)  Even after the above decision the Hon'ble Kerala High Court while deciding the case of George v. Bank of India which was reported in 2001 (1) KLT 303 has observed regarding Hubert’s case that "In that case from the statement of facts it is seen that a document was executed on the same day on which the deposit was made and hence a learned Single Judge of this Court held that the document requires registration, because according to him, it was simultaneous. But here, no document is executed. Ext. A13 is only a recording of a statement".

6) Thus the question of registration is raised if there is an element of bargain recorded in the memorandum or if the deposit of title deeds and the handing over of the memorandum is simultaneously done. On this point even now there is ample possibility of raising another series of litigation on different facts and circumstances.

Another controversy is regarding the nature of documents to be deposited, i.e., second question; whether original title deed is necessary or not for creating equitable mortgage?

7) His Lordship Justice Raman Nayar while dealing with this question incidentally has stated in the case of Popular Bank Ltd. v. The United Coir Factories & Ors. reported in 1961 KLT 434 that "I do not think that the TP Act could possibly contemplate the creation of successive mortgages of the same property by the same person by the deposit, one after another, of the documents of title, which may be numerous, with nothing to show their sequence in point of time for the purpose of determining priority (except the word of the interested parties or, in case there is a writing in the shape of memorandum, a writing which can be passed by the mortgagor at any time with any day he chooses to put to it) and no means by which a mortgagee can ascertain the existence or otherwise of a prior mortgage excepting the assurance of the mortgagor. Even if it be that the mortgage holding the deed by which the mortgagor acquired title can claim priority under S.78 of Transfer of Property Act, there would still be nothing by which the priority of the remaining mortgages could be determined".

The problems of the mortgagee has clearly dealt with in the above passage by His Lordship.

8) While dealing with the question the Division Bench of Hon'ble Kerala High Court in Syndicate Bank v. Modern Tile and Clay Works and reported in 1980 KLT 550 has held as follows, "A copy of a deed of transfer is not ordinarily a document of title for the purpose of an equitable mortgage. It is only evidence of title. It is the original deed of transfer that is the document of title. This is because the rules for the issue of copies permit the obtaining of copies by an owner even while he is in possession of the original document of title. To hold that a copy of a deed of transfer is also a document of title for purpose of S. 58(f) of the Transfer of Property Act would amount to giving facilities to the owner to misuse the provision. He may get an advance from one person by delivering the original document of title and then use the copy of the document for getting an advance from some other person who may not be aware of the earlier equitable mortgage. It should be the policy of law to see that such contingencies are avoided. At the same time there may be cases where the original document is lost and there are no chances of that document being made use of for any purpose. In the absence of original deed of transfer the next best evidence of the owner's title to the property is a certified copy of that document. A certified copy in such case may with sufficient safe guards be received as a document of title. The essential pre-requisite for the use of a certified copy as a document of title is the loss of original title deed. Unless and until it is made out that the original is lost, a certified copy of a document cannot be considered to be a document of title for the purpose of S. 58(f) of the Transfer of Property Act.

9) Where as a later Division Bench of Kerala High Court in C. Assiamma v. State Bank of Mysore and Ors. reported in AIR 1990 Kerala 157 has stated "we have not understood observation of the Division Bench to mean that only in cases where the original title deed is lost that deposit of a registration copy can validly create an equitable mortgage."

10) So the Division Bench has differed from the earlier Division Bench's observation. Again a single Judge of the Hon'ble Kerala High Court in the case of Indian Bank v. Bombay Hardwares & Sanitaray Stores reported in 2001(3) KLT 273 has stated as follows: "Even though S.58(1) of the Transfer of Property Act contemplates deposit of the original title deeds for creation of equitable mortgage, when the original is lost or not forthcoming, equitable mortgage can be created by depositing copies of the document." A similar issue was answered by the Division Bench of Kerala High Court in the case of State Bank of Travancore v. Velayudhan Pillai which was reported in 1995 (1) KLT 582. There the Lordships has held that "In a case where duplicate partition deed registered along with the original is deposited bonafide by one of the executants of the partition deed or persons claiming through such executants to whom only a duplicate was given as his title deed and not the original deposit of original deed need be insisted only as a rule of prudence and caution and not as a legal requirement for the purpose of validly creating an equitable mortgage."

In my humble view title deed mentioned under S.58(f) is none other than the original title deed and a person who is not in possession of original title deed can seek other modes of creating mortgage.

The third question regarding bonafide purchaser for value without notice of the mortgage is to be considered next.

11. Now even though no discussion on the point is necessary since the Transfer of Property Act does not recognise a bonafide purchaser for value and no protection is given to them under the Act. The most common problem faced by a bonafide purchaser for value who has no notice of the Mortgage even after due diligent enquiry is given below! It may happen when a person 'A' having sufficiently large plot divides and sells to different persons after constructing some rooms or flats and slates that since major portion is with him the title deeds are not handed over and registers the document and the purchaser B who sells the property to another person C who thereafter seeks a loan using his title deed and gives the original title deed of his predecessor B and certified copy of the basic deed or the title deed of the original owner A and obtains amount after depositing the title deeds and when the original mortgagee of A prays for a mortgage decree what will be the effect of the purchaser C and the Mortgagee of C and if it is a case where nothing is left with A after satisfying the debt.

To sum up:

First of all if there is no document to prove the nature of transaction, amount, period and interest it may cause serious difficulties and if there is memorandum of deposit of title deeds the question of registration will come in to play on the basis of the interpretation of the memorandum of title deeds. Secondly what are the title deeds to be deposited as contemplated in the section and whether it will cover duplicate if the document is simultaneously executed and registered and whether registration copy of the document will be sufficient and what is the effect if the original title deed if lost or missing. Thirdly if a person purchases the property for value bonafidely without any notice of the mortgage after due enquiry.

The Panacea :-

The only remedy possible to solve this problem is to delete this provision, 58(f) from the Act and makes registration compulsory regarding all other type of mortgages and reduction of the Registration charges so that the number of mortgages may increase and thereby the revenue of the Government may increase and lighten the burden of people and the number of litigation will be reduced.

Note                                                                               \

(It is curious to note that the word equitable mortgage is not at all used in Transfer of Property Act instead the word Mortgage by deposit of title deeds is used. And another aspect is that unlike the English Law of equity which is used in the case of equitable mortgage no question of equity arises in Indian Law since it is a matter of right)

Fine and Compensation

The Law declared by the Supreme Court

(By V.K. Sathyavan Nair, Kottayam)

No doubt the High Court cannot sit in judgment over what the Supreme Court said. It is also impermissible, as observed in Suganthi v. Jagadeeshan, 2002 (1) KLT 581 (SC), for the High Court to overrule the decision of the Apex Court on the ground that the Supreme Court laid down the legal position without considering any other point. The Apex Court was expressing its disapproval of the course adopted by the Kerala High Court in Rajendran v. Jose (2001 (3) KLT431). In that case the High Court set aside partly an order passed by the Sessions Court directing an accused to undergo simple imprisonment for a period of six months in case of committing default in payment of compensation awarded. The High Court did not follow the observations made in Hari Kishan and State ofHaryana v. Sukhbir Singh, AIR 1988 SC 2127. Now the moot question is what is the law declared by the Supreme Court in Hari Kishan's case. Did the Apex Court interpret S. 431 of the Code of Criminal Procedure and declare the law?

Hari Kishan's case

One of the points considered by the Supreme Court in Hari Kishan's case is the correctness of the sentence passed by the High Court. The relevant portion of the sentence reads as follows:-

"I suspend their sentence under Ss.325/149, 323/149 and S.148 IPC and order that the appellants namely Sukhbir Singh, Dhanpal, Mannu, Sirichand and Ompal be released on probation on their entering into bonds of Rs.3000/- each with one surety in the like amount for a period of one year, to the satisfaction of the trial court, undertaking to appear in the Court to receive the sentence during the said period whenever called upon to do so and in the meantime to keep peace and be of good behaviour. However, each one of the appellant would pay Rs.2,500/- as compensation payable to Joginder, injured. Compensation if not paid within two months, the appellants, namely Sukhbir Singh, Dhanpal, Mannu, Sirichand and Ompal would be called upon to serve their sentence".

The expression 'instead of sentencing him' used in the provisions governing release on probation indicates that the order of probation can be passed after conviction, but before awarding the sentence and in substitution of it. If the sentence is once awarded, no order for probation can be passed thereafter. Where an offender is released on probation the imposition of fine is illegal. So the direction to pay compensation to the injured was one of the conditions for release on probation.

The Supreme Court upheld the correctness of the order, but enhanced the quantum of compensation and the counsel for the appellants expressed his willingness to pay any amount as determined by the Court. The compensation was enhanced to Rs. 50,000/-. The Supreme Court modified the order only to the extent of compensation and in all other respects the order of the High Court is kept undisturbed.

While discussing the question of compensation the Supreme Court has recommended to all the courts that the power to award compensation may be liberally exercised to meet the ends of justice in a better way and to make the criminal justice system meaningful. The Supreme Court has also laid down some guidelines to fix the compensation fairly and reasonably. These observations are contained in paragraphs 10 and 11 of the judgment in Hari Kishan's case. The last sentence in paragraph 11 reads: 'The court may enforce the order by imposing sentence in default'. This passing observation has to be understood with reference to the context and reading the judgment as a whole.

Fine and Compensation

It cannot be disputed that there is a distinction between fine and compensation. The two concepts have entirely different connotations. Fine is a mode of punishment prescribed under S.53 IPC that can be imposed on the offender on conviction. In some cases it is the only punishment. Sentencing an offender to pay fine is governed by Ss. 63-70 of the Indian Penal Code.

Awarding compensation is not a punishment envisaged by Indian Penal Code. Compensation to victim is exclusively governed by Ss.357, 358, 359 and 431 Crl.P.C. Under S.357(1) an order to pay Compensation out of the fine recovered can be passed by the Court.

(a)     to the complainant for meeting expenses properly incurred in the prosecution.

(b)     to any person who has suffered loss or injury by the offence when he can recover compensation in a civil court.

(c)     to a person entitled to recover damages under the Fatal Accidents Act; and

(d)     to a bonafide purchaser of property which has become the subject of theft, criminal misappropriation, criminal breach of trust, cheating etc.

Sub-s.(3) of S.357 enables the court to order payment of compensation even in cases where substantive sentence of imprisonment only is awarded.

Compensation to persons groundlessly arrested

S.358 Cr.P.C. provides for compensation to persons groundlessly arrested. It is expressly provided under sub-s.(3) that compensation awarded under S.358 may be recovered as if it were a fine and if it cannot be so recovered the person by whom it is payable shall be sentenced to simple imprisonment for such term not exceeding thirty days.

Costs in non-cognizable cases

S.359(1) empowers the court to order payment of the entire cost that may have been incurred by the complainant. The said section governs payment of cost in non-cognizable cases. It is also expressly provided under S. 359(1) that in default of payment the accused shall suffer simple imprisonment for thirty days. There is no such default clause in the case of sub-s. (3) of S. 357 where the Court is empowered to order payment of compensation.

Warrant for levy of fine

S.421 Cr.P.C. applies when the offender is sentenced to pay a fine. Fine should be recovered by distress and sale of both moveable and immovable properties. Generally an offender ought not to be required both to pay the fine and to serve the sentence in default. Some exceptions are given in proviso to sub-s. (1) of S.421 and one such exception is where there is an order for the payment of expenses or compensation out of the fine under S.357. Under S.431 any money other than a fine can be recovered as if it were a fine. Proviso to S. 431 says that an order for payment of costs under S. 359 is also an exception to the general rule that an offender shall not be required to pay the fine and to serve the sentence in default. Even if the offender has undergone the whole of such imprisonment in default, amount may be recovered from him, in the case of an order for the payment of expenses or compensation out of the fine under S. 357 or in the case of an order for payment of costs under S. 359.

S.431 Cr.P.C.

A close reading of these relevant Sections would indicate clearly that the Code of Criminal Procedure does not envisage imposition of imprisonment in default of payment of compensation ordered under sub-s.(3) of S.357. S.431 regulates the execution of the orders relating to payment of any money other than fine. This is the long standing and consistently affirmed legal position.

What is 'the law declared?'

Arts.141 and 142 are designedly made comprehensive to enable the Supreme Court to declare the law and to give such directions or pass such orders as are necessary to do complete justice. But it is the law declared by the Supreme Court that binds the courts and not judgment. A decision is binding not because of its conclusion but in regard to its ratio and the principle laid down therein.

In the course of judgment the court may advert to various observations not precisely relevant to the issue. The fundamental motion is that the law should result from being applied to live issues and argued on both sides. It is not unlikely that dicta of Judges who are masters of their fields enjoy greater acceptance and prestige than the ratioes of lesser Judges.

True that principles of 'obiter', 'per incuriam' and 'distinguishable on facts' which may perhaps apply to the decisions of courts of co-ordinate jurisdiction cannot be applied to a declaration of law made by the Supreme Court and such principles cannot restrict the scope of Art.141. Nonetheless the Apex Court itself has stated that the observations of the Supreme Court should not be read as statutory enactments. No doubt the law declared by the Supreme Court binds courts in India but it has to be remembered that the Supreme Court does not enact (AIR 1965 SC 1887). When a question was never required to be decided an observation thereon cannot be held to declare the law binding on all courts in India (AIR 1961 SC 915). However a passing casual observation is not entitled to same weight as even obiter dictum.

'Declared' means made clear or manifest. Interpretation, ascertainment and evaluation are parts of the process of declaration. With the deliberate intention of settling the law the Supreme Court shall pronounce upon the question. Then only the process of declaration is completed.

The law declared in Hari Kishan 's case

In Hari Kishan's case, the Supreme Court did not consider the scope of S.431 Cr.P.C. That question was never required to be decided in that case. The construction of S.431 Cr.P.C. was not strictly necessary for the disposal of the case. There is not even a reference to S.431 Cr.P.C. The High Court released the accused on probation and one of the conditions was that compensation if not paid within two months the accused would be called upon to serve their sentence. The Supreme Court upheld the order modifying the quantum of compensation and the court had no occasion to consider the interpretation of S.431 Cr.P.C. True that there are some guidelines to quantify the compensation and also a recommendation to the Courts to use the power to award compensation to victims liberally. The Courts are bound to follow them scrupulously. But there is no declaration of law regarding the interpretation and scope of S.431 Cr.P.C. on a reading of the judgment in Hari Kishan's case as a whole it can be seen that the last sentence in paragraph 11 is only a passing casual observation and not a declaration of law that the court can order imprisonment in default of payment of compensation in every case.

It is an observation made without adverting to well-accepted principles and the plain and literal interpretation of S.431 Cr.P.C. The clear language of the Section is capable of only one meaning, namely that any money other than fine can be recovered in the manner provided in the Section. It cannot be said that Hari Kishan's case is an authority binding on courts in construing and applying S.431 and allied provisions of Cr.P.C. and ordering imprisonment in default of payment of compensation in all cases.

The decision in 2002 (1) KLT 581 (SC)

The decision rendered by Supreme Court in Suganthi v. Jagadeeshan has not considered the above material aspects. It seems 2001 (3) KLT 431 is overruled mainly inspired by judicial discipline. It is submitted that the legal proposition that the court may enforce an order to pay compensation by imposing sentence in default as laid down in 2002 (1) KLT 581 (SC) requires reconsideration.

Quo Vadis Article 141

(By T.P. Kelu Nambiar, Senior Advocate)

"The law declared by the Supreme Court shall be binding on all courts within the territory of India", is the mandate of Art.141 of the Constitution of India. The scope of this Article itself has been the subject of several decisions of the Supreme Court. A seven-Judge Bench, in Moti Ram, held that the observations in the judgment of the Supreme Court which are in the nature of obiter dicta cannot be relied upon solely. A three-Judge Bench, in Gasket Radiators, held that the Supreme Court's decisions should not be followed generally like statutes irrespective of their fact situations. "Nor can be read a judgment", observed the Supreme Court, "on a particular aspect of a question as a Holy Book covering all aspects of every question whether such questions and facets of such questions arose for consideration or not in that case". The Supreme Court has also ruled, in more decisions than one, that there is no law declared where the court gives no reasons.

Recently, a two-Judge Bench of the Supreme court, in Suganthi, (2002 (1) KLT 581 (SC)), has chastised a learned single Judge of the High Court of Kerala for violation of the mandate in Article 141. Pronouncing the judgment on behalf of the Bench, Mr. Justice K.T. Thomas, faulted Mr. Justice T.M. Hassan Pillai of the High Court of Kerala for committing an impropriety by expressing that a legal direction of the Supreme Court should not be followed by the Subordinate Courts in Kerala.

As the mandate in Art. 141 is not binding on me, I make myself bold to assert, with respect though, that the High Court was right, and the Supreme Court was wrong in finding that the High Court was wrong; Mr. Justice Hassan Pillai was not wrong; Mr. Justice K.T. Thomas was not right.

In Rajendran v. Jose (2001 (3) KLT 431), Mr. Justice T.M. Hassan Pillai was considering the cumulative effect of Ss.357(3), 421 and 431 of the Code of Criminal Procedure. S.357(3) says:

"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."

S. 421(1) may be read:

"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:

S. 431 reads as follows:

"Any money (other than a fine) payable by virtue of any order made under this Code, and the methods of recovery of which is not otherwise expressly provided for, shall be recoverable as if it were a fine:

Provided that S.421 shall, in its application to an order under S.359, by virtue of this section, be construed as if in the proviso to sub-s. (1) of S.421, after the words and figures "under S.357", the words and figures "or an order for payment of costs under S.359" had been inserted."

After noticing S.357(3) and S.431 of the Code, Hassan Pillai, J. observed as follows, in paragraph 3 of the judgment:

"Two ways provided for the recovery of fine under S.421 Cr.P.C. are: (a) issue warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender (here in this case, the revision petitioner) and

(b) issue 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. The Court is empowered to recover the compensation awarded by taking action in either or both of the above stated two ways. So, default clause imposed by the learned Sessions Judge i.e. to undergo imprisonment for six months in case of commission of default in payment of compensation awarded cannot be sustained or salvaged and the court below (trial Magistrate) is to take steps to recover the compensation awarded as provided under S.421 and 431 Cr.P.C."

After observing as above, the learned Judge said, in paragraph 4:

"The learned Sessions Judge imposed sentence in default on the basis of the observation made by the apex court in Hari Kishan (or Hari Singh) & State ofHaryana v. Sukbir Singh (AIR 1988 SC 2127), that court may enforce the order by imposing sentence in default. It appears that while disposing of that appeal attention of apex court was not drawn specifically to the provisions of S. 431 Cr.P.C. providing for recovery of money (other than fine) payable by virtue of any order made under the Criminal Procedure Code. In a later decision (Balraj v. State of U.R, AIR 1995 SC 1935) the Supreme Court directed that "if the appellant fails to pay this amount within three months from today, the same may be collected as provided under S.431 Cr.P.C. and be paid to PW2. Compensation of Rs.10000 was awarded by the Supreme Court by way of compensation to PW2. This Court in Siby v. Vilasini (1998 (2) KLT 462) took the view that "provisions contemplated in Ss.431 and 421 Crl.P.C. are conspicuously clear that amount of compensation awarded under S. 357(3) can be recovered under the Revenue Recovery Act."

The case before the Supreme Court, in the decision reported in 2002 (1) KLT 581 (SC) (Suganthi), was one relating to a prosecution for an offence under S. 138 of the Negotiable Instruments Act. The trial Magistrate sentenced the accused to undergo imprisonment till rising of the Court and pay a fine of Rs.5000/-. The complainant filed the appeal before the Madras High Court on the premise that the sentence was grossly inadequate. He had contended before the High Court that the trial Magistrate should at least have invoked the provision under S.357(3) of the Code of Criminal Procedure. However the High Court was not inclined to interfere with the sentence passed nor did the High Court invoke S.357(3) of the Code. The Supreme Court was approached in these circumstances.

No question akin to the question involved in Rajendran arose in Suganthi. The Supreme Court found that the sentence imposed in the case was inadequate and remitted the case back to the trial court for passing appropriate sentence on the respondent after hearing both sides.

In Suganthi, K.T. Thomas, J., while referring to the observations in Bhaskaran (1999 (7) SCC 510) to the effect that the Magistrate in a case like that in hand can alleviate the grievance of the complainant by making report to S.357(3) of the Code of Criminal Procedure, referred to Hari Singh case, to which reference had been made in Bhaskaran. In Bhaskaran, reference to Hari Singh was in paragraph 31 alone. Paragraph 31 may be read:

"However, the Magistrate in such cases can alleviate the grievance of the complainant by making resort to S.357(3) of the Code. It is well to remember that this Court has emphasised the need for making liberal use of that provision (Hari Singh v. Sukhbir Singh). No limit is mentioned in the sub-section and therefore, a Magistrate can award any such as compensation. Of course while fixing the quantum of such compensation the Magistrate has to consider which would be the reasonable amount of compensation payable to the complainant. Thus, even if the trial was before a Court of a Magistrate of the First Class in respect of a cheque which covers an amount exceeding Rs.5000 the Court has power to award compensation to be paid to the complainant."

Paragraph 11 of the judgment in Hari Singh quoted by Thomas, J. In Suganthi was not the relevant aspect considered in paragraph 31 in Bhaskaran. (Mr. Justice K.T. Thomas should have known it better, as his Lordship himself had rendered the judgment on behalf of the two-Judge Bench in Bhaskaran.) Therefore, for the purpose of deciding Suganthi, Rajendran was not relevant. But Thomas, J. referred to Rajendran and said that the learned Judge who decided Rajendran has directed that the decision of the Supreme Court in Hari Singh is not to be followed as the Supreme Court laid down the said legal position without adverting to S.431 of the Code. Hassan Pillai, J. did not issue any such direction in Rajendran. Hassan Pillai, J. had noticed Hari Singh as also another decision of the Supreme Court in Balraj (AIR 1995 SC 1935) in which the Supreme Court had held that if the appellant fails to pay the amount of compensation, the same may be collected as provided under S.431 of the Code. Therefore Hassan Pillai, J. followed the correct later decision of the Supreme Court, noticing that the earlier decision in Hari Singh did not notice the provisions of S.431 of the Code when the Supreme Court made a passing observation that "the Court may enforce the order by imposing sentence in default". Hari Singh was decided by a Bench of two Judges. Balraj was also decided by a Bench of two Judges; but it is a later decision. There was nothing wrong in Mr. Justice Hassan Pillai following the decision in Balraj when the earlier decision in Hari Singh did not accord with the later decision. I should think that the following observation in Suganthi is unkind and unnecessarily vehement:

"Hence learned single Judge of High Court of Kerala has committed an impropriety by expressing that the said legal direction of this court should not be followed by the subordinate courts in Kerala. We express our disapproval of the course adopted by the said Judge in Rajendran v. Jose, 2001 (3) KLT 431. It is unfortunate that when the Sessions Judge has correctly done in a course in accordance with the discipline the single Judge of the High Court has incorrectly reversed it."

Draft Art.117, which is now Art.141, was introduced, discussed and passed in the Constituent Assembly of India, on the 27th May, 1949. From the speeches of Shri. H.V. Kamath and the Hon'ble Dr. B.R. Ambedkar, it would be evident that the Supreme Court was not considered infallible, unlike the House of Lords, and it was therefore that the Supreme Court was not sought to be bound by the decisions of the Supreme Court. The Supreme Court overruling its own decisions, till then followed by all Courts in India, are galore. Who knows the fate of Suganthi ! Quo Vadis Art.141 !

Tail-piece: Some awkward decisions are so 'distinguished' that they are never followed at all: Ronald Irving.