Bouncing the Boundaries: Should Section 138 NI Act Complainants be Treated as “Victims” under Section 372 CrPC? – Part 1

Introduction

Recently, the Supreme Court (“SC”) in M/s Celestium Financial v. A. Gnanasekaran & Ors. (“Celestium Financial”) held that a complainant in a cheque dishonour case [under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”)] can pursue an appeal before the Sessions Court directly under Section 372 of the Code of Criminal Procedure, 1973 (“CrPC”). Ordinarily, in such a case, the complainant would have to take special leave to appeal from the High Court prior to such appeal as prescribed under Section 378 of the CrPC.

Section 372 of the CrPC reads as under:-

No appeal shall lie from any judgment or order of a Criminal Court except as provided for by this Code or by any other law for the time being in force:

[Provided that the victim shall have a right to prefer an appeal against any order passed by the Court acquitting the accused or convicting for a lesser offence or imposing inadequate compensation, and such appeal shall lie to the Court to which an appeal ordinarily lies against the order of conviction of such Court.]

The essential finding in Celestium Financial, which led to this ruling, was that the term “victim” as given under the proviso to Section 372 also included a complainant under Section 138 of the NI Act. The court enumerated two reasons for the same. Firstly, the definition of victim given under Section 2(wa) of the CrPC r/w the definition of injury as per Section 44 of the Indian Penal Code, 1860 (“IPC’) also connotes financial loss or injury, among other things. Since a cheque dishonour can lead to substantial financial loss, this reasoning has been employed by the court to equate complainants in such cases with victims. Secondly, in order to give effect to the object and reason for the insertion of the proviso to Section 372, by virtue of the amendment, it is essential to deem such a complainant as a victim for the purpose of appeals. This article aims to suggest a critical re-evaluation of the issue. The authors argue that neither the import of the term victim nor the legislative intent behind the proviso to Section 372 CrPC envision such an inclusion.

The authors seek to establish this argument in two parts. In Part I, the authors begin by firstly breaking down the legislative history of Section 372 CrPC to lay the foundation. Secondly, they put forth why Section 372 CrPC was never intended to extend victim status to complainants under Section 138 of the NI Act, addressing in particular the fact that a remedy already exists under Section 378(4) of the CrPC and including complainants as victims would essentially nullify the purpose of such a provision. In Part II, the authors build on this analysis, examining how extending Section 372 CrPC to include Section 138 complainants will create two paths for appeal, one without taking a special leave to appeal and one with; and that it sits uneasily with the inherently civil nature of a proceeding under Section 138 of the NI Act. Thereafter, the authors conclude with their findings and point out how this has a negative effect towards the fulfilment of the objective that Section 372 proviso was laid down with.

Legislative History of Section 372

The proviso bestowing the right to appeal against acquittal to victims under Section 372 CrPC was added via CrPC (Amendment) Act, 2008 (“2008 Amendment”). The same amendment also brought the definition of “victim” given under Section 2(wa) of the CrPC. In order to understand the import of the term victim in light of the proviso under Section 372 CrPC, it is essential to understand the legislative intention behind the creation of this proviso. The SC in Mallikarjun Kodagali v. State of Karnataka (“Mallikarjun Kodagali”) [Para. 16-23], while upholding the constitutionality of the proviso to Section 372 CrPC, analyzed several reports which were instrumental in bringing about this change.

The first report, i.e. the 154th Report of the Law Commission of India (August 1996) founded the discourse on the issues of victims of crime, rehabilitation and compensation of the victims, among others. The second report came in March 2003, namely the Report of the Committee on Reforms of Criminal Justice System (Justice Malimath Committee Report). This gave the first notable emphasis to victims’ right to prefer an appeal when aggrieved by an order of the trial court. It highlighted two main rights of the victims which did not exist in the current system; firstly, their right to assist the court and participate in its proceedings, especially given that their grievance was the inception of the trial, and secondly, the right to request compensation or interim reliefs from the court. An analysis of these two initial reports reveals how the focus was not merely on victims’ participation, but more importantly, their empowerment.

The third report, i.e. the Report of the Committee on the Draft National Policy on Criminal Justice, (Professor Madhava Menon Committee) of 2007, questioned the binary conception of criminal trials as a contest solely between the state and the accused. It suggested that victims should be capable of being impleaded to the trial proceedings as a party. This suggestion supplemented the idea of allowing victims to be active participants in the proceedings, and have the ability to file appeals against adverse orders.

Lastly, the 221st Report of the Law Commission of India of April 2009 highlighted the main gap in the criminal justice system in terms of victims’ participation. It stated that in the current scheme of things (prior to the amendment) the appeal against acquittal can only be filed via the District Magistrate or through the State as given under Section 378(1) CrPC and not by the victim itself. The only recourse for victims on their own accord is to prefer a revision. However, as the report enumerated, this was not an effective remedy. This is because if the revisional court finds that the accused was wrongly acquitted, then it cannot direct a conviction, and would have to instead remand the case. This is an unnecessarily time-consuming and tedious process. There must be an easier way, focused on delivering the right to appeal to the victim, even when the state or district magistrate does not prefer the appeal. The victim, as an important piece of the puzzle, cannot be a mere spectator. Thus, a provision giving the right to appeal against an acquittal to a victim will have the twin benefit of creating an effective mechanism for the victim and at the same time, will lead to greater accountability among the lower judiciary.

From the above, it is clear that the amendment was intended made to provide an effective remedy to the victims who were hitherto remediless. As the SC in Mahabir v State of Haryana [Para 53] confirmed, the statement of objects and reasons for introducing the proviso to Section 372 CrPC clarifies that victims, as the worst sufferers of crime, must be given rights to ensure a balance in the criminal justice system. The proviso thus reflects a fundamental shift in criminal justice philosophy, treating the victim as an essential component that deserves a voice and a solution, rather than being a peripheral figure. The real question now is whether this legislative vision has translated into meaningful judicial practice.

Section 372 CrPC Does Not Envisage Section 138 NI Act Complainants as “Victims”

The SC in Celestium Financial, while interpreting the proviso in Section 372 CrPC, failed to take into account the legislative intention behind it. The Hon’ble Apex Court, in numerous cases has reiterated that the interpretation of a provision should be done by looking at the legislative intention with which it was enacted in the first place.[i] Further, interpretation of a provision must harmonize the text with its context, as the true meaning of a provision emerges only when its language is read in light of the purpose and intent behind its enactment.

The legislative intention behind Section 372 CrPC has already been examined in the previous section of this article. Now, the authors will explain why the legislature did not envisage extending this provision to Complainants under Section 138 of the NI Act. The authors shall establish this with a three pronged argument: a) A remedy of appeal already exists with the complainants in form of Section 378(4), b) Providing the remedy under Section 372 CrPC to complainants will lead to dual appellate remedies c) A proceeding under Section 138 of the NI Act is a “civil sheep” in a “criminal wolf’s” clothing. Please refer to Part II of this article for Sections b) and c).

Existing Remedy of Appeal under Section 378(4)

The legislative intent underlying the introduction of the proviso to Section 372 CrPC was to provide a remedy to those victims who previously had no remedy to appeal against acquittal. In stark contrast to this intended objective, complainants under Section 138 NI Act already enjoy a statutory right to appeal against acquittal under Section 378(4) CrPC.

Section 378(4) CrPC reads as under:

“S. 378: Appeal in case of acquittal

(4) If such an order of acquittal is passed in any case instituted upon complaint and the High Court, on an application made to it by the complainant in this behalf, grants special leave to appeal from the order of acquittal, the complainant may present such an appeal to the High Court.”

Therefore, Section 378 gives an aggrieved complainant under Section 138 of the NI Act a right to appeal against an order of acquittal passed by the lower court. However, to be able to avail the same, they would have to first take special leave to appeal from the High Court.

This pre-requisite is not without reason. While discussing the intention behind leave to appeal under Section 378, the SC has stated in Govindaraju @ Govinda vs State By Sriramapuram P.S. & Anr [Para 6] that an acquittal confers the right of a free citizen to the accused. This can be taken away from him via an appeal only when the trial court judgement is perverse on facts or law. The court held that   a leave to appeal is an additional stage between the order of acquittal by the trial court and consideration of the judgement on merits by the appellate court, to ensure that the findings rendered by the trial court are conclusively erroneous. This finding makes it clear that the mandated leave of appeal is not simply a procedural formality, but has an essential meaning attached to it. The present judgement, by creating a route under Section 372 for the complainant under Section 138 of the NI Act is taking away the sanctity of the hurdle deliberately created under Section 378(4) of the CrPC. Furthermore, the Kerala High Court held in Sree Gokulam Chit And Finance Co. (P) Ltd vs Damodaran N. [Para 16] that the special leave of the High Court under Section 378(4) CrPC was provided as a safeguard to deter the continuation of baseless appeals, after the accused has been acquitted by law.

To condense the above judgements, the legislative intention behind mandating a special leave to appeal under Section. 378(4) of the CrPC is firstly, to render greater scrutiny of the trial court findings before taking away the status of the acquitted individual; secondly, to create a special mechanism for “complainants” appealing against an order of acquittal by the trial court and thirdly, to prevent meritless appeals against a lawful order of acquittal.  Therefore, it is essential that complainants under Section 138 of the NI Act follow this route, albeit complicated. This position is bolstered by the 2008 Amendment, where the Parliament,  while inserting the proviso to Section 372 CrPC, neither excluded complainants from Section 378(4) nor expressly brought them within the fold of Section 372. This indicates a conscious recognition that a separate appellate remedy already existed for private complainants.

Thus, complainants under Section 138 of the NI Act have always had an appellate remedy under Section 378(4) and cannot be considered “remediless victims” for whom the proviso to Section 372 was enacted. Therefore, the legislative intention behind this proviso was never to include Section 138 complainants within the term “victim.”

Conclusion

This brings Part I to a close. In this, the authors have laid down the legislative vision behind Section 372 CrPC, namely, to confer appellate remedies on those who are remediless. Thereafter, they enumerate how complainants under Section 138 of the NI Act are, in fact, not remediless; given that they are already vested with an independent statutory right of appeal under Section 378(4) CrPC. Part II will take forward the analysis by engaging with further arguments that militate against the inclusion of Section 138 NI Act complainants within the scope of Section 372 CrPC, before the authors conclude with their overarching findings.

[i] R.S. Raghunath v. State of Karnataka (1992) 1 SCC 335 [12]; State of W.B. v. Union of India 1962 SCC OnLine SC 27 [69]; South Asia Industries (P) Ltd. v. S. Sarup Singh 1965 SCC OnLine SC 47 [7]; British Airways Plc. v. Union of India (2002) 2 SCC 95 [8].

*Anmol Aggarwal and Ria Bansal are Final Year Students at Rajiv Gandhi National University of Law