CHAPTER I

1 INTRODUCTION

“Victimology must find fulfillment, not through barbarity but by compulsory

recoupment by the wrongdoer of the damage inflicted not by giving more pain to the
offender but by lessoning the loss of the forlorn.”

- Justice Krishan Iyer3

1.1 An Overview
The rationale of providing compensation is that it provides benefit to the victim, has
deterrent effect on the offender and the public, has a reformative effect on the
offender and also deprives him of the ill-gotten gains. Compensation for an
actionable wrong depends on whether such wrong is a crime or a tort. When it is a
crime which results in an injury, the victim can seek compensation under the Code of
Criminal Procedure. When an injury arises from torts, including crimes which are
also torts, broad frameworks of compensation exist in the Indian Law. Statutory
compensation legislations like the Motor Vehicles Act, 1988, the Employees
Compensation Act, 1923, the Public Liability Insurance Act, 1991, and the Railways
Act, 1989 provide comprehensive rules regarding compensation for matters that fall
within the scope of each statute. These include rules relating to the creation of
liability of the wrongdoer, the nature of liability (i.e., fault and no-fault), the amount
of compensation to be paid, who has the obligation to pay the compensation, and the
procedure and forum for seeking compensation.

The earliest reference of providing compensation to victims is contained in the

ancient Babylonian Code of Hammurabi which was around 1775 B.C. It was
provided that the administrator of the State has to replace the lost property of victim
of robbery if the criminal is not captured. Even in case of murder, the State had to
compensate the heirs of the deceased.

3 Maru Ram Vs. Union of India, (1981) 1 SCC 107

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When prison reforms started in Europe during 1800s, the plight of victims again
garnered attention and their interest in compensation surfaced. In the Anglo-Saxon
legal system, an English Magistrate advocated State compensation for victims of
crimes. Due to her efforts, compensation scheme was set up in Britain in the year
1964. The scheme was brought into force through the Royal Prerogative. The
payments were made ex-gratia since there was no statutory authority for it. The funds
were arranged by the vote of parliament annually. The scheme was administered by
the Criminal Injuries Compensation Board.

Later, on the recommendations of the Committee, amendments were made in the

Criminal Justice of Act 1988 for providing statutory basis for providing
compensation. The Indian Courts also recognized awarding compensation as an
equitable remedy directed against wrongdoer. It was understood that awarding
compensation will be threating and will have a deterrent effect even on the society.
The remedy of providing compensation is a weapon used for providing justice to the
victim in need of urgent relief and fair play.

The United Nation in its 96th Plenary meeting on 29.11.1985 recognized the need for
compensating victims of crime. It made a Declaration of Basic Principles of Justice
for Victims of Crime and Abuse of Power. It was noted that people throughout the
world suffer harm as a result of crime and abuse of power. The rights of these
victims were not adequately recognized. The general assembly of the United Nation
affirmed the necessity of adopting National and International norms in order to
secure universal and effective recognition and respect for rights of victims of crimes
and abuse of power. It was declared that offenders should make fair restitution to the
victims, their families and dependents. This declaration of assembly was considered
to be the magna carta of rights of victims.

The declaration define victim as a “person who individually or collectively has

suffered harm, including physical and mental injury, emotional suffering, economic
loss or substantial impairment of fundamental rights, through acts or omissions that
are in violation of criminal laws.”

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The declaration also provided for liability of the State for providing compensation. It
was provided that “when compensation is not fully available from the offender or
other sources, the State should endeavour to provide financial compensation to:

(a) Victims who have suffered for the injury of physical or mental health as a
result of serious crimes.
(b) The family and dependents of persons who have died or become
physically or mentally incapacitated as a result of such victimization.”

The declaration also provided for the establishment, strengthening and expansion of
national fund for compensation to victims. It was prescribed that victims should
receive necessary material, medical, psychological and social assistance through
governmental, voluntary, community based and indigenous means.

The aforesaid declaration also refers to the necessity of establishing and

strengthening judicial and administrative mechanisms to enable victims to obtain
redress through formal or informal procedure that are expeditious, fair, expensive
and accessible.

Article 15B of the Statute of the Council of Europe also highlights the ideology of
victimology. The Committee of Ministers of the Council of Europe adopted a
recommendation on victims of crime in the framework of criminal laws and
procedure in accordance with this Article. The preamble of the Statute of Council of
Europe highlights the principles of victimology as laid down below:

"Considering that the objectives of the criminal justice system have

traditionally been expressed in terms which primarily concern the
relationship between the State and the offender:
Considering that consequently the operation of this system has
sometimes tended to add to rather than to diminish the problems of the
victim;
Considering that it must be a fundamental function of criminal justice
to meet the needs and to safeguard the interests of the victim;

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 Considering that it is also important to enhance the confidence of the
victim in criminal justice and to encourage his co-operation, especially
in his capacity as a witness;
Considering that, to this end, it is necessary to have more regard in the
criminal justice system to the physical, psychological, material and
social harm suffered by the victim, and to consider what steps are
desirable to satisfy his needs in these respects;
Considering that measures to this end need not necessarily conflict
with other objectives of criminal law and procedure, such as the
reinforcement of social norms and the rehabilitation of offenders, but
may in fact assist in their achievement and in an eventual
reconciliation between the victim and the offender;
Considering that the needs and interests of the victim should be taken
into account to a greater degree, throughout all stages of the criminal
justice process."

The recommendations cover action at the police level and State:

"1. Police officers should be trained to deal with victims in a

sympathetic, constructive and reassuring manner;
2. The police should inform the victim about the possibilities of
obtaining assistance, practical and legal advice, compensation
from the offender and State compensation;
3. The victim should be able to obtain information on the outcome of
the police investigation;
4. In any report of the prosecuting authorities, the police should
give as clear and complete a statement as possible on the injuries
and losses suffered by the victim;
In respect of Prosecution:
5. A discretionary decision whether to prosecute the offender should
not be taken without due consideration of the question of
compensation of the victim, including any serious effort made to that
end by the offender;

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 6. The victim should be informed of the final decision concerning
prosecution, unless he indicates that he does not want this
information:
7. The victim should have the right to ask for review by a competent
authority of a decision not to prosecute, or the right to institute private
proceedings;"4

It is the State which is responsible for maintaining law and order, ensuring peace,
harmony and tranquility in society. Over a period of time, focus has shifted to the
offender making good the loss of the victim, rather than the State. In modern times,
the right of the victim started receiving more attention and it became a matter of
social justice.

The law of compensation has developed over a period of time and finds mentioned in
variety of statutes dealing with different branches of law. The law relating to
compensation also remains uncodified. There is no single legislation where the law
relating to compensation has been encapsulated. There have been several ground-
breaking decisions of superior courts which have repeatedly unveiled a new
dimension to the law of compensation. In recent years, the use of the remedy as a
balm on the wounds of the victim has traveled beyond the traditional areas and has
set course into hitherto unchartered territories. There has been substantial increase in
litigation where compensation has been sought. People are becoming more aware of
their right to compensation. Even while exercising writ jurisdiction, the Hon'ble
Apex Courts has deemed it fit to award compensation. The judicial system faces new
challenges in the field of law of compensation since it is still an upcoming field of
law which is replete with discretion. Whether the legal system in our country is able
to do justice to the victims by compensating them adequately needs to be assessed.

1.2 Meaning and Scope

4 154th Report of the Law Commission of India

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Very often the focus of the adjudicating authorities is on whether the wrongdoer
should be penalized or not. Not much has been done to recompense the victim.
However, lately there have been several judicial precedents where it has been made
mandatory for all courts in the country to provide compensation to the victim.
Compensation has proved to be an effective tool for reassuring the victim that he has
not been forgotten in the judicial system.

Compensation has been defined as a payment awarded to a victim for a wrong

suffered by him. The purpose of providing compensation is to provide reparation,
restitution and for safeguarding the rights of a victim. The intention is to restore the
harm done. Traditionally, compensation was considered to be an equitable relief used
in equity courts in England which later got adopted in Indian Judicial System. Since
substantial part of the compensation laws remains unqualified, there is wide
discretion with the judges while deciding whether to award compensation and if yes,
the quantum of compensation. As there is wide discretion with the Courts on issues
relating to compensation, there has been divergent judicial opinions because of
which there is lack of uniformity and consistency.

India is no doubt a welfare State. Therefore, the principles of victimology also find
mention in the Indian Constitutional Law and in various judicial decisions. In the
case of Lala Ram & Ors. Vs. Union of India & Anr5, Welfare State was described as
following:

“A welfare State denotes a concept of government, in which the State

plays a key role in the protection and promotion of the economic and
social well being of all of its citizens, which may include equitable
distribution of wealth and equal opportunities and public
responsibilities for all those, who are unable to avail for themselves,
minimal provisions for a decent life. It refers to “Greatest good of
greatest number and the benefit of all and the happiness of all”. It is
important that public weal be the commitment of the State, where the
State is a welfare State. A welfare State is under an obligation to

5 Civil Appeal No. 243-247 of 2003 dated 24.01.2013

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 prepare plans and devise beneficial schemes for the good of the
common people. Thus, the fundamental feature of a Welfare State is
social insurance. Anti-poverty programmes and a system of personal
taxation are examples of certain aspects of a Welfare State. A Welfare
State provides State sponsored aid for individuals from the cradle to
the grave. However, a welfare State faces basic problems as regards
what should be the desirable level of provision of such welfare
services by the State, for the reason that equitable provision of
resources to finance services over and above the contributions of
direct beneficiaries would cause difficulties. A welfare State is one,
which seeks to ensure maximum happiness of maximum number of
people living within its territory. A welfare State must attempt to
provide all facilities for decent living, particularly to the poor, the
weak, the old and the disabled i.e. to all those, who admittedly belong
to the weaker sections of society. Articles 38 and 39 of the
Constitution of India provide that the State must strive to promote the
welfare of the people of the State by protecting all their economic,
social and political rights. These rights may cover means of
livelihood, health and the general well-being of all sections of people
in society, specially the young, the old, the women and the relatively
weaker sections of the society. These groups generally require special
protection measures in almost every set up. The happiness of the
people is the ultimate aim of a welfare State, and a welfare State
would not qualify as one, unless it strives to achieve the same.”

Social justice requires that law is certain and predictable and not just fair. It is a
principle of equity that the person wronged should be compensated, either by the
wrongdoer or by the State which is otherwise responsible for maintaining law and
order. It is therefore appropriate to make an assessment of whether the prevailing
laws of compensation are adequate and provides remedy to the victim.

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In this chapter, the variety of laws related to compensation shall be discussed in
brief. It shall also be ascertained as to in what circumstances, the State is liable to
compensate the victim. It shall also be considered whether the current legal regime
on compensation is adequate for compensating the victims.

1.3 Relevance in Contemporary Legal System

The laws of compensation have gained importance as the rights of the victim are
being given due consideration in adjudication. The wronged is questioned about his
personal situation, his rights and dignity. Therefore, the movement of awarding
compensation to the victim has gained momentum and mechanisms for providing
compensation have evolved. The basic principles of law of compensation are now
embodied in basics statutes like the Constitution of India and the Code of Criminal
Procedure. The fundamental rights provided in Part III of the Constitution of India
and the Directive Principles of State Policy in Part IV provide for social and
economic justice in the life of every citizen of our country. In particular, Article 41
makes it mandatory for the State to “make effective provision for securing the right
to public assistance in cases of disablement and in other cases of undeserved want.”
Article 51A provides that it is the “fundamental duty of every citizen to have
compassion for living creatures and to develop humanism.” These provisions in the
most basic statute of our country laid the foundation stone for victimology.

There is a lack of an exhaustive code providing for compensation to victims of

various kinds. It is the duty and the obligation of the Courts to not only provide
adequate and just compensation, but also to ensure that such relief is granted at the
earliest. This is the requirement of equity and justice. It is essential that care, caution
and attention is bestowed by the adjudicating authorities. While deciding the issue
relating to compensation, the judge must examine all aspects of the wrong done, the
antecedents of the wrongdoer and the circumstances of the victim. It is expected that
the judicial decision is such that solace is provided to the victim and his family by
the concerned authorities by ensuring that they are compensated suitably. Canons of

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equity require that the loss suffered be compensated for and only then justice shall be
done.

The legal and equity remedies to victim should be robust enough that all loss has
been made good. However, it must not be forgotten that while deciding whether to
award compensation and if yes, the quantum thereof, the Court has to look at the
nature of wrong done, the justness of claim and the ability of wrongdoer to pay.

It is equitable that effective compensation is provided during administration of

justice. It is also important that a flexible system of compensation is in place as the
society is complex and the circumstances of the case could differ. Rules of the legal
system must conform with the requirements of the changing society. There must be a
balance maintained between the rights of the wrongdoer and that of the wronged.
There may be a situation where there is a conflict between the two. This is where the
adjudicating authority has to step in and balance the situation.

If the victim is not compensated for his losses, it will send a wrong signal to the
society. Having a system for providing compensation is a mode of respecting the
victim's right and is an equitable and honest remedy.

1.4 Extent of Application

The remedy of compensation has been provided in codified and uncodified law.
While applying some general legislations like the Constitution of India and the Code
of Criminal Procedure, courts have ordered for payment of compensation.

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1.4.1 Constitution of India:

In cases where fundamental right to life and liberty has been infringed by the police
and other State agencies, the Hon'ble High Court and the Hon'ble Supreme Court
may provide compensation under Article 226 and 32 of the Constitution of India
respectively. The right to life and personal liberty have been recognized as
fundamental rights under Article 21 of the Constitution of India. When these rights
are violated, one can file a petition under Articles 32 or 226 of the Constitution of
India for seeking appropriate remedy including compensation. In this context, it is
important to understand the distinction between sovereign and non-sovereign
functions of the State because in the case of Kasturi Lal Vs. State of UP6, it was held
that the State is not liable for tort that was committed by police officers in the
exercise of “delegated sovereign powers”. However, this distinction has been diluted
over a period of time so as to indemnify the victim for losses suffered by him. But
the legal position on this aspect is not clear. It may therefore be necessary that a
statutory enactment is made on the circumstances which will make the State liable
for the tortious acts of its servant.

1.4.2 Code of Criminal Procedure, 1973:

The criminal law in India and in particular, the Code of Criminal Procedure, 1973
has provisions for awarding compensation to the victim of crime or his legal heirs.
The provisions of compensation in this new statute of the year 1973 is better than
that of the old Code of the year 1898. In the earlier statute, the scope of awarding
compensation was limited. However, there were certain lacunas noticed even in the
Code of 1973 and Law Commission of India in its 152nd and 154th report
recommended certain amendments in this statute. These amendments have been
carried out. The provisions relating to compensation to victims of crime are now
contained in Sections 357, 357A, 357 B, 357 C, 358, 359 and 250 of the Code of
Criminal Procedure, 1973.

6 AIR 1965 SC 1039

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The courts must not just convict and punish the guilty, but also award compensation
to the victims of the crime. There is provision under the Code of Criminal Procedure
to not only provide compensation when the offender is traced, but also when he is at
large. A greater level of accountability is to be put on the offender when he is found
to be guilty and is convicted. However, section 357A of the Code of Criminal
Procedure also makes provision for awarding compensation when the offender is not
found. It is also a social responsibility of the criminal to restore the loss and undue
the wrong which is part of the punitive exercise. No length of imprisonment can be a
reparation to the crippled or bereaved.7

The criminal trial system has to provide justice to the accused, victim and the
society. There is still deficiency in the system which must be rectified. “Victim
reparation is still the vanishing point of our criminal law”.8 If adequate compensation
is provided to the victim, it may provide him some solace. In case the victim is
forgotten during the process, the justice system may come across as hollow. There is
a need for rehabilitation of the victim. The State must not just focus on awarding
punishment to the wrongdoer. Steps must be taken to introduce more victim oriented
legislations in the criminal adjudication system.

7 Maru Ram Vs. Union of India, (1981) 1 SCC 107.

8 Rattan Singh Vs. State of Punjab, (1979) 4 SCC 719

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1.5 Specific Laws of Compensation

1.5.1 The Consumer Protection Act, 1986:

The Consumer Protection Act, 1986 is considered as the magna carta in the field of
consumer protection for checking the unfair trade practices and deficiency in goods and
services. It promotes the welfare of the society by enabling the consumer to participate
directly in the market economy. It attempts to remove the helplessness of the consumer
which he faces against powerful business entities. It is a beneficial legislation and has
provision for compensating the aggrieved consumer.

The Consumer Protection Act provides for establishment of consumer forums and other
authorities for settlement of grievances of consumers. The statute provides that if the
district forum finds that the goods or the service complained against suffer from any
defect or deficiency, it may direct the opposite party to pay compensation to the
consumer for any loss or injury suffered due to the negligence of the opposite party.

1.5.2 The Employee's State Insurance Act, 1948:

The Employee's State Insurance Act, 1948 is another important social security
legislation in the Welfare State of India. This statute applies to factories employing 20 or
more persons. The object of this Act as provided in its preamble is to provide benefits to
the employees in cases of sickness, maternity and employment injury. It is also
mandatory under this Act for the employer and the employee to make contributions for
an insurance fund. The contributions payable in respect of each workman is based on his
average wage and at the first instance, is payable by the employer. The employer is
entitled to recover the workman's share from the wages of the workman. In case of death
of employee, the benefits of the insured employee are to be paid to persons dependent
upon him. The Employees State Insurance Act provides for sickness cash benefit,
maternity benefit and disablement and dependents' benefit. The injuries covered under

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the Act could be because of industrial accidents or it may be an occupational disease.
The injury may result in total and partial disablement or even death. The hospitals,
dispensaries and other institutions for medical care and treatment for an insured
workman is to be prescribed. The Workman's State Insurance Courts have been set up
under this statute for deciding disputes and adjudicating claims.

1.5.3 Motor Vehicles Act, 1988:

Motor Vehicles Act, 1988 provides for payment of compensation to “victims of

accidents arising out of motor vehicles.” It is provided that owner of a vehicle has to pay
a “specific sum of compensation if his negligent act has resulted in death or permanent
disablement of a person.” The number of road accidents has increased manifold due to
the increase of motor vehicles plying on the roads. These accidents result in death or
injuries to victims. Section 141 of the Motor Vehicles Act 1988 provides for quick
payment of compensation to the victim or his family. It is provided that the claim for
compensation shall be disposed off as expeditiously as possible.

Motor Accident Claims Tribunals have been set up for the purpose of providing
compensation to the victims of motor accidents. To facilitate providing compensation to
the victims, it has been made mandatory for the police to submit a report called the
Accident Information Report to the Motor Accident Claims Tribunals within 30 days of
an accident. After receiving the report, the Claims Tribunal is required to treat the report
as a claim petition and shall conduct an inquiry into the same. For claiming
compensation, the claimant need not establish or even state that the injury was due to the
wrongful act or neglect or default of the owner of the vehicle. There is no fault liability
as per which compensation is paid under the Motor Vehicles Act of 1988. The Central
Government has also amended and updated the quantum of compensation that is to be
paid to the victims. In the year 2018 itself, the amount of compensation payable has been
enhanced.

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1.5.4 National Green Tribunal Act, 2010:

Under the National Green Tribunal Act, 2010, the National Green Tribunal has been
established for adjudicating cases relating to environmental protection and giving
compensation for damages to persons and property. Due to rapid expansion in the
industrial, infrastructure and transportation sectors as well as with increasing
urbanization, pressure has been put on our national resources. The risk to human health
and environment has also increased and has become a matter of concern. There is also
an increase in the litigation in environment related issues. The Law Commission of India
thus recommended setting up of an Environmental Court and the Nation Green Tribunal
was established.

1.5.5 Probation of Offenders Act, 1958:

Probation of Offenders Act, 1958 provides that the court may direct the released
offender/s after admonition or on probation for good conduct to pay compensation and
costs to the injured person for the “loss” or “injury” caused by his act or omission, as the
Court thinks to be reasonable. It is at the discretion of the Court to direct payment of
compensation and its quantum.

1.5.6 Protection of Human Rights Act, 1993:

Under the Protection of Human Rights Act, 1993, the National and State Human Rights
Commissions have been set up for protection of human rights which are the rights
relating to life, liberty, equality and dignity of the individual guaranteed by the
Constitution or embodied in the International Covenants and enforceable by the Courts
in India. On receiving complaint regarding violation of fundamental rights, the
commission is required to conduct an enquiry. When the enquiry is completed it may
make a recommendation to the government to award compensation to the victim. It is at

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the discretion of the government to follow the recommendation or not. The victim does
not have an indefeasible right to receive compensation under the Protection of Human
Rights Act, 1993.

1.5.7 Protection of Women against Domestic Violence Act, 2005:

Protection of Women against Domestic Violence Act 2005 provides more effective
protection of rights of women guaranteed under the Constitution of India. This statute
provides remedy to victims of violence of any kind that occurred within the family and
for matters connected therewith or incidental thereto. It is provided that “any harm,
injury to health, safety, life, limb or well-being or any other act or threatening or
coercion etc. by any adult member of the family, constitutes domestic violence. Any
woman who is or has been in a domestic or family relationship, can complain to the
concerned Protection Officer, Police Officer, Service Provider or Magistrate if she is
subjected to any act of domestic violence. Shelter home and medical facilities can be
provided to aggrieved woman. The protection order by Magistrate can be given in the
favour of aggrieved woman.”

1.5.8 Public Liability Insurance Act, 1991:

Public Liability Insurance Act, 1991 regulates the hazardous industries, processes and
operation. The main objective of the Public Liability Insurance Act 1991 is to provide
damages to victims of an accident which occurs as a result of handling any hazardous
substance. The Act applies to all owners associated with the production or handling of
any hazardous substances. Members of public who are in the vicinity of hazardous
installations and have become victims to industrial disaster are provided protection
under this Act. An industrial disaster may result in death or injury to human beings and
other living being and may also damage private and public property. Usually, the weaker
section of the society are victims of such accidents. In case they are not provided

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immediate relief, their suffering increases. There is a need to provide them immediate
relief and compensation. The workers and employees of hazardous installations are
protected under separate laws. The members of the public were usually not assured of
any relief except through long legal processes. Therefore, the Public Liability Insurance
Act was enacted to provide monetary compensation to general public except workmen
who have become victims of industrial disaster. This Act is not applicable to the
workmen as they are protected by the ordinary labour laws.

1.5.9 The Railways Act, 1989:

The Railways Act, 1989 provides for no-fault liability of the Railway administration to
pay compensation to passengers or his heirs. Section 124 of this statute provides the
extent of liability of the Railway Administration.

1.5.10 The Fatal Accidents Act, 1855:

The Fatal Accidents Act, 1855 covers deaths due to actionable wrongs that do not fall
under any of the statutory compensation regimes. This statute recognizes the liability of
a tortfeasor whose wrongful act, neglect or default (including criminal acts and
omissions) results in the death of another person.9 In such cases, a suit for damages is
maintainable for the benefit of the parent, spouse or child of the deceased. The plaintiff
has the burden of proving that death was caused by the defendant’s wrongful act, neglect
or default and that, had the deceased been alive, s/he would have a valid cause of action
for damages against the defendant for such act, neglect or default. Therefore, the
plaintiff is entitled to compensation under the Fatal Accidents Act only from the
wrongdoer, and only upon proving the defendant’s wrongdoing. This legislation does
not quantify or limit the amount of compensation that can be awarded under the Act. It
does however provide a broad guideline to the effect that the Court should award
damages “proportioned to the loss resulting from such death” to the beneficiaries under

9 Section 1(3), Fatal Accidents Act, 1855.

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the Act.10 Claims under this Act are adjudicated in civil courts and ordinary rules of civil
procedure are followed.

1.5.11 The Scheduled Castes and the Scheduled Tribes (Prevention of

Atrocities) Act, 1989:

The Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989
aims to “prevent the commission of offences of atrocities against the members of the
Scheduled Castes and Scheduled Tribes, and for the relief and rehabilitation of the
victims of such offences.” Section 21 of the Act provides that the “State shall take such
measures as may be necessary for the effective implementation of the Act and in
particular, and without prejudice to the generality of the provisions contained therein,
the State shall take such measures and may include the provision for adequate facilities,
including legal aid, to the persons subjected to atrocities to enable them to avail
themselves of justice.” Adequate facilities as mentioned in Section 21 (2)(i) includes
adequate compensation to a member of the Scheduled Castes or the Scheduled Tribes
who has suffered insult and intimidation in public view in terms of clause (x) of sub-
section (1) of Section 3. There is no discretion available in this regard and it is
mandatory for the government to provide “(a) adequate facilities, including legal aid, to
the persons subjected to atrocities to enable them to avail themselves of justice; (b)
provide for the travelling and maintenance expenses to witnesses, including the victims
of atrocities, during investigation and trial of offences; and (c) provide for the economic
and social rehabilitation of the victims of atrocities.”

1.5.12 Employees Compensation Act, 1923:

Employees Compensation Act, 1923 which was earlier called the Workman's
Compensation Act 1923 provides for payment of compensation to a worker by a

10 Section 1 (4), FAA.

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prescribed category of employers for the injuries suffered during the course of
employment, irrespective of any fault or breach of duty on the part of the worker.

1.6 State Liability

Article 300 of the Constitution of India provides that the government of India may sue or
be sued. A juristic personality has been conferred upon the State. The earlier legal
system which understood that the king can do no wrong is no longer applicable. Now the
suit can lie against the government. Even the government can file a suit just like any
other person. The contractual liability of the State under the Constitution of India is the
same as that of an individual under the ordinary law of contract. The contractual
obligations of the State are governed by the law of contract. However, when a tortious
act is committed by a public servant, it gives rise to a claim for damages. No person is
usually made liable for the wrongs done by another person. However, if the public
servant has done a tortious act in exercise of the non-sovereign functions of the State,
the State shall be liable for the same. Therefore, the distinction between sovereign and
non-sovereign functions of the State is important to understand.

The fundamental rights guaranteed under the Constitution of India are protected against
any arbitrary action of the State. Article 12 of the Constitution provides the definition of
State. This expression has been given a wide meaning during its interpretation in various
judicial proceedings. The State can be held responsible for the tortious act of its
employees and this obligation of the State is called vicarious liability as it is held
responsible for the act for someone else. As per the Oxford English Dictionary, 3rd
Edition (1944) Vol. II, vicarious means one that takes place of another. Vicarious
liability thus means that one person takes the place of another so far as liability is
concerned. In certain cases, master is held liable for the act of his servant and the
principal is held liable for the acts of his agent.

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Liability is a broad term usually held to include every kind of legal obligation,
responsibility or duty. It can arise from contract, express or implied, from a duty
imposed by law or as a consequence of tort committed.11 According to Salmond, liability
or responsibility is the bond of necessity that exists between the wrongdoer and the
remedy of the wrong. The meaning of liability can wide enough to include every kind of
responsibility having character of debt and obligations, by which one is bound in law of
justice to perform. It is a condition of being responsible for a possible or actual loss,
penalty, evil, expense or burden.12

The concept of vicarious liability arose for social-policy reasons. If a servant injures
another by his negligence, his master should be liable for it. Similarly, when an agent
deceives another by fraud, his principal should be held responsible. It is immaterial
whether the servant or agent was acting for the benefit of his master of principal or not.
The master or principal are held liable because it is them to had put the servant/agent in
a position where he can injure another. The master or principal may not be personally at
fault. However, it is still appropriate for making them responsible for the wrong doing. If
they are not held responsible, the victim may not have any way of redressal as the
servant or agent is not likely to have the means to pay. The inadequacy of compensation
that can be provided by the servant or agent has given rise to the concept of vicarious
liability.

The reason why the State is made vicariously liable is that the public servant cannot
provide adequate compensation and therefore, the machinery for enforcement of
fundamental rights may become nugatory if the State is not made liable.

The amplitude of the law of compensation and the areas to which it extends shall be
discussed in the following chapters. The wide disparity in the quantum of compensation
for the same injury shall also be demonstrated. It will also be examined whether the

11 Mayfield Vs. First National Bank of Chattanooga, 137 F. 2D 1113 (1943)

12 Burke Vs Burke, 8 RFL (3d) 393

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development in law in this field has been consistent and has contributed to the
advancement of justice.

1.7 Award of Compensation as an Instrument for

Administering Justice

Generally speaking, justice is done when adjudication is in accordance with law. It is but
natural that it is fair and just that if the needs of the victim and his family are understood
and fulfilled. There is also a humanitarian responsibility to assist a victim. The
assistance is not only an act of compassion, but also a requirement of law in a welfare
State.

Awarding compensation can serve various purposes. It also has a deterrent effect on the
wrong doer and the society. A message is sent across that in case of any wrong doing,
the delinquent will have to undo the loss suffered by the victim.

The compensation provided also rehabilitates the person who has been wronged by the
illegal acts. Awarding of compensation is inherent in doing justice. The rules that lead to
doing justice emerge from the cumulative humanitarian behavior of people. In case any
decision of the administrators of justice is in contravention to the common rules of
conduct, it is unjust. Justice and fairness go hand in hand. Compensation protects the
interest, property and safety of people. In economic terms, providing compensation
ensures that the victim receives his share of benefits which ensures a system of a fair
play. Till recently, the judicial attitude was more inclined towards protecting the interest
of the offender. As a result, the victim was being ignored. However, in the recent years,
there have been some remarkable changes in the attitude of the administrators of justice.
There have been some judicial decisions which have made it mandatory to award
compensation to the victim in every case. It has been held that if the trial court does not
deem it appropriate to award compensation, it shall record reasons for the same.
However, in practice, this dictum is not being followed strictly by the trial courts. Our
judicial system continues to be accused oriented.

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The courts play a pivotal role in upliftment of victims. Victims are usually from the
lower strata of the society and lack in resources for livelihood. It is the duty of the State
to protect the life and property of all individuals. Therefore, it is also the duty of the
State to protect the interest of the victims and ensure that they also benefit from the
welfare State. Thus, awarding compensation has an important role in the quest for justice
which is on top of the objectives of the Republic of India and is a constitutional
mandate.

A lot needs to be done in the Indian legal system for the complete development of
compensatory jurisprudence. Though in the recent years, the legislature and the judiciary
has provided for and made it mandatory to award compensation, the implementation is
still lacking. Due to the long drawn litigation, even people are reluctant to approach the
adjudicating authorities for enforcing their right to compensation. Most of them are not
even aware that they are entitled to receive compensation. People lack knowledge of the
right to compensation because of illiteracy and poverty and the consequential lack of
awareness. There is therefore a need to educate the people in this regard. Otherwise, they
shall continue to be silent sufferers.

The right to compensation is an equitable remedy and it is only just and fair that the
victim be compensated for loss or injury sustained by him. This field of law has evolved
over a period of time so as to serve the role of justice and fair play. There are various
considerations that the adjudicating authority should have while determining the right of
the compensation of the claimant. It is essential that a decision with regard to award of
compensation, be it interim or final, must be taken expeditiously. More often than not,
the victim is in immediate need of rehabilitation. Any delay on part of the adjudicating
authority shall defeat the purpose of awarding compensation. It must also be noted that
a delay on part of the claimant to seek equitable remedy of compensation must not be
looked upon with suspicion in every case. In case there are cogent reasons for the delay,
the court must condone the same.

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In appropriate cases, the adjudicating authority may provide interim compensation,
which if not provided may cause substantial hardship to, or substantially prejudice the
claimant. There is discretion with the courts in this regard which must be exercised
carefully and cautiously.

The claim of compensation should have a nexus with the injury suffered by the claimant.
The claimant must not himself be the wrong doer and taking advantage of his own
wrong. The claim must be reasonable and the award should be passed by taking into
consideration the financial capabilities of the delinquent.

There may be cases where the claimant is a legal heir of the victim. The victim may
have died or may be physically incapacitated from making a claim himself. The court
must be careful in assessing the locus standi of the person filing the claim. He should
have sufficient interest in the matter to which the application relates.

There is also an increase in misuse of the provisions relating to compensation since the
procedure for obtaining compensation has been simplified and is quicker. As a
consequence, there is greater scope for persons making illegal claims. For example, a
person can make a false complaint with the police of being a victim of crime like that of
a sexual offence like rape and simultaneously seek compensation from the legal services
authority.

A person who has acquiesced and allowed another person to do some wrong cannot later
complain of it and seek compensation. If the claimant could and should have objected
earlier and obviated the situation which resulted in harm being caused to him, he is not
entitled to receive compensation.

The adjudicating authority may also deem it fit to refuse or reduce compensation if the
conduct of the claimant reeks of malice. It should be made sure that the claimant has not
concealed any material facts and has come to the court with clean hands. The courts are
in existence for doing justice and not to serve the ulterior interests of the malevolent who

22
are trying to have illegal gains. If a case is based on falsehood, it must be dismissed at
the outset and proceedings should be initiated against the person who has made false
claims.

1.8 Hypothesis

The following are the hypotheses for this research:

Compensation is an important tool with the adjudicating authorities to alleviate

grievances of the victim. It is significant for doing effective justice and is based on the
equitable principles of law.

The power of awarding compensation is discretionary and is to be considered in the facts

of each case. There is no gainsaying the fact that the discretion of the courts is to be
exercised within the parameters of the relevant legislation.

The law of compensation evolves over a period of time keeping in view the need of the
ever changing society and inflation.

The award of compensation cannot be fixed and is to be decided on the basis of the facts
of each case. There are several factors that are to be taken into the consideration while
deciding the issue of compensation. Therefore, it is not appropriate to specify a
particular amount as compensation for a particular injury.

The law of compensation cannot be constant and uniformly applied in similar facts and
circumstances. However, at the same time, it may not be fair and just to have varied
amounts provided as compensation under different legislations for the same loss and
injury.

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Since there is wide discretion with the adjudicating authority on whether to award
compensation or not and the quantum of compensation, there is a possibility of divergent
views of administrators of justice and conflicting decisions. This also leads to
unpredictability in the subject matter of compensation.

Despite there being risk of arbitrariness and unpredictability, the discretion of judges
cannot be restricted. However, broad parameters can be enlisted within which the
discretion of awarding compensation is to be exercised.

The research has been undertaken for this thesis in the light of various provisions in
Constitution of India, Criminal laws, other enactments and decisions of Hon'ble
Supreme Court and various Hon'ble High Courts. By taking into consideration the
rationale behind awarding compensation as deterrence and a fair and adequate remedy to
the victim, the present research has been carried out. The study also analyses the concept
of providing compensation in view of the Directive Principles of State Policy with the
objective of realizing a welfare State.

The research is also carried out with the proposition that the legal system needs an
overhaul for removing the ambiguity in the distinction between the sovereign and non-
sovereign functions of the State. This is particularly so because of the increase in
awareness amongst people of their right to claim compensation from the State for the
wrongs caused to them.

This thesis also highlights the concern of having a comprehensive legislation for
providing compensation for various injuries. The legislation should be such that there is
room for discretion of the judiciary to award compensation depending on the facts of the
case.

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1.9 Object of Study

Keeping in mind the compensatory jurisprudence in existence in the welfare State of

India, the following are the aims and objectives of this thesis:

• To examine the need of providing compensation.

• To analyze the adequacy of legislative schemes of compensation under the
general laws of Constitution of India and Code of Criminal Procedure.
• To analyze the adequacy of legislative schemes of compensation under special
law like Consumer Protection Act, 1986, Fatal Accidents Act, 1855,
Employee's State Insurance Act, 1948, Motor Vehicle Act, 1998, National
Green Tribunal Act, 2010, Probation of Offenders Act, 1958, Protection of
Human Rights Act, 1993, Protection of Women from Domestic Violence Act,
2005, Railways Act,1989, Schedule Castes and Schedule Tribes Act, 1989 and
Workmen Compensation Act, 1923.
• To examine the liability of the State for tortious acts of its servants and its
extent.
• To examine the judicial decisions on compensation provided under different
laws.
• To critically examine the quantum of compensation awarded under different
statutes and its sufficiency.
• To examine the need for having a comprehensive legislation for compensating
victims.
• To examine the need for having uniformity in the quantum of compensation
prescribed under different laws for the same injury and loss.

Compensatory jurisprudence has gained substantial importance and is lately being

discussed in litigation of different forms. Without awarding compensation to the victim,
the administrators of justice shall not be doing complete and effective justice. It is the
duty of the State to undo the loss suffered by the victim. It is the State who is duty bound

25
to protect the property and person of his people. If it fails to do so, it must itself pay
compensation for the harm suffered.

Maintaining law and order is no doubt the paramount duty of the State. In case of any
loss suffered due to the tortious lapses of a public servant, the State becomes vicariously
liable for the acts of its servants.

Even ancient Hindu law provided payment of compensation for the loss caused to the
owner of property by reason of an offence against the property. It is also logical that the
one who damages the goods of another, intentionally or unintentionally, shall give
satisfaction to the owner and also pay to the king/State a fine equal to the damages.13

There may be cases where grant of compensation may put an end to the litigation as the
claimant may get satisfied and may not want to pursue the case. Therefore, providing
compensation also helps in reduction of pendency of cases. Courts are fora of the last
resort and must provide complete justice by not forgetting the victim in the adjudication
process. It is imperative that the adjudication process meets the expectations of people.
This is possible if the rights of the victims are respected and adequate recompense is
provided whenever there is a violation. Unless this is done, the people of the Country
would not feel satisfied about their rights being meaningful and honoured. Providing
compensation is a powerful tool to set right a wrong done in an effective and satisfactory
manner. Keeping in view the immense importance of compensation, this research
analyses the power of the courts to award compensation.

There have been a few inadequacies in the law of compensation. Despite there being a
framework for providing compensation, its implementation is not upto the mark. There
is still wide discretion in the hand of the adjudicating authority whether to award
compensation or not. This is so despite repeated directions given by the superior courts
that compensation must not be forgotten in a trial.

13 Epochs in Hindu Legal History, 1st ed. (1958) pp.104-106 by UC Sarkar

26
In the case of Satya Prakash Vs State14, the Hon’ble High Court of Delhi went to the
extent of interpreting the word 'may' as mentioned in the statute as 'shall'. The Hon'ble
Delhi High Court held that the word ‘may’ in Section 357(3) Code of Criminal
Procedure means ‘shall’ and therefore, Section 357 Code of Criminal Procedure is
mandatory. Section 357 Code of Criminal Procedure “confers a duty on the Court to
apply its mind on the question of compensation in every criminal case.” It was ordered
that “if the Court fails to make an order of compensation, it must furnish reasons.” It was
held that “monetary compensation will at least provide some solace. Justice remains
incomplete without adequate compensation to the victim.” The Court held that “justice
will be complete only when the victim is also compensated.”

The Hon'ble High Court of Delhi observed that “award of monetary compensation for
redressal on finding an infringement is part of the indefeasible right to life of a citizen
and is, therefore, useful and at times perhaps the only effective remedy to apply balm on
the wounds of the family members of the deceased victim, who may have been the bread
earner of the family.”

Despite mandate like the aforesaid issued by superior courts, in practice, the trial courts
ignore the issue of compensation. Also, since there is wide discretion with the courts in
this regard, there are diverted judicial opinions on the same facts of cases which gives
rise to uncertainty.

While deciding the issue of compensation, there are various factors which have a
bearing on the decision. Since the factors are so varied and diverse, the law of
compensation becomes complex and difficult to administer uniformly. This has a
deleterious effect on the effectiveness of providing compensation as a tool of
administration of justice. Several arguments put forth in this regard by various players in
the Indian legal system have inspired this research. This research shall examine the

14 Crl. Rev. Petition No. 338/2009

27
views of the jurists in this regard. It shall be also studied whether the present law of
compensatory jurisprudence in India has achieved its object of imparting justice.

The divergent amount of compensation provided in different legislations for the same
harm suffered shall also be studied and discussed in this thesis. The cause or the lack of
it for disparity shall be understood and revealed in this study. There has been no
effective research done on this subject matter, which is also why, this research has been
propelled.

This thesis is an original product which aims at highlighting the importance of

compensation and its contribution in administration of justice. The study has been done
while discussing the judicial trends on this subject.

1.10 Research Methodology

This research has been carried out by using doctrinal methods of research for analyzing
the potential of compensation as a mode for administration of justice. Doctrinal research
involves analysing case laws and legal propositions through legal reasoning. There are
primary and secondary resources of such legal research. Primary sources are
Constitution of India, Code of Criminal Procedure, Consumer Protection Act, 1986,
Employee's State Insurance Act, 1948, Motor Vehicle Act, 1998, National Green
Tribunal Act, 2010, Probation of Offenders Act, 1958, Protection of Human Rights Act,
1993, Protection of Women from Domestic Violence Act, 2005, Railways Act,1989,
Fatal Accidents Act, 1855, Schedule Castes and Schedule Tribes (Prevention of
Atrocities) Act, 1989 and Workmen Compensation Act, 1923. The second resources
include the law commission reports, international conventions and legislations,
commentaries, reference books, journals, magazines, newspaper articles, official
statistics and internet sources.

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This thesis studies the discretion available with the courts and other adjudicating
authorities to decide whether compensation is to be awarded. It discusses the potential of
compensation for advancement of justice. The application of the tool of awarding
compensation shall also be analyzed. Since the primary source of study are judicial
decisions, there is no need that was found to carry out empirical research.

The thesis is based on the examination and critical evaluation of the various judicial
decisions. The efficacy of the process of awarding compensation has also been analyzed.

1.11 Chapterisation and Scheme of Study

This thesis is divided into six chapters. The first chapter is the 'Introduction' of the
research which deals with the basic concept such as meaning of 'compensation' and its
essence. The scope of awarding compensation in the context of litigation has also been
discussed. It has been the primary function of a welfare State to use all effective tools of
advancement of justice, which also finds mention in this chapter. The responsibility of
the State to undo the loss of the victim for the tortious acts of its servants has also been
explained. This chapter also explains that the maxim 'the king can do no wrong' has no
application in today's day and age. The vicarious liability of the State, the aims and
objectives, hypotheses and methodology adopted for this research are explained in this
chapter.

Chapter 2 analyses compensation under general laws of Constitution of India and the
Code of Criminal Procedure. A welfare State like India has to protect the democratic
interest of people. As a necessary corollary, in case the rights of the people are violated,
there has to be a remedy available for redressal. Chapter 2 demonstrates how the
supreme law of the nation i.e. the Constitution of India also provides for remedy of
compensation in case the rights of any persons are violated. This chapter locates the
liability and compensation regime within the framework of constitutional obligations for

29
ensuring social justice and welfare, and to enable citizens to live their lives with dignity.
Chapter 2 also provides an overview of the criminal adjudication process which provides
for compensation for injuries resulting from an actionable wrong. Various provisions
under the Code of Criminal Procedures which provide for compensating a victim of
crime shall be discussed.

Chapter 3 discusses laws under different statutes dealing with compensation for fatal and
other kinds of injuries and losses. The various provisions which provide for State
compensation schemes, private no-fault liability and fault liability shall be analyzed.
Judicial decisions passed in the context of different statutes providing for compensation
shall also be discussed in this chapter. These decisions have been passed subject to the
principles prescribed under the different statutes dealing with compensation. The chapter
not only states the pronounced principles, but also evaluates the law and its
implementation. An endeavor shall be made to ascertain if the law on this subject matter
is an effective remedy for a victim.

Chapter 4 discusses the doctrine of vicarious liability of the State for the tortious acts of
its servants. The concept of agency and the principle “respondeat superior” shall also be
assessed. The role of the Constitution of India towards providing remedy of
compensation to its citizens when the State does misfeasance and non-feasance through
its employees shall be discussed. The distinction between the sovereign and non-
sovereign functions of the State shall be analyzed in terms of its relevancy. A balance
needs to be maintained between the fence of sovereign immunity and interests of
aggrieved persons.

Chapter 5 briefly summarizes the current legal regime for compensating the loss of life
and for other injuries and losses. After an analysis in this regard, the inadequacies of the
framework shall be identified. Many questions have been raised as to effectiveness of
compensation law in providing timely and necessary succor to victims. The sector-
specific regime of protection for victims of wrongful acts enacted by the Parliament like

30
the Motor Vehicles Act, 1988, the Public Liability Insurance Act, 1989, the Employees
Compensation Act, 1923, etc. are largely uneven and fragmented. Different
compensation amounts are awarded by the State under the various state based
compensation schemes.15 There is no consistent principle for determining the amount of
fixed State compensation, which varies from scheme to scheme and State to State.16 The
public policy reasons for such disparate treatment to victims of fatal accidents and other
injuries are unclear and will be discussed in this chapter.

Chapter 6 is the last chapter in which the possibility of reform in the law of
compensation shall be discussed. In the light of constitutional framework and keeping in
mind the existing statutory compensation mechanisms, this chapter proposes reforms to
the existing laws relating to compensation to victims. The possible solution to alleviate
inadequacies in compensatory jurisprudence by having a comprehensive legislation shall
be assessed. There is no published study at present on this subject matter. With the aim
of filling the void, an attempt has been made to do extensive research on the subject.

15 Similarly, under Section 357A, CrPC, victims of crime are entitled to differential rates of
compensation, which varies from state to state. For e.g., under the Delhi Compensation Scheme
2015, the compensation for loss of life is between Rs. 3-10 lakhs. On the other hand, Orissa
compensates Rs. 1.5 lakhs for the loss of life of an earning member and Rs. 75000/- for the loss
of life of a non-earning member; and Tamil Nadu compensates upto Rs. 3 lakhs.
16 In Manjusri Raha v. B.L. Gupta, [1977] 2 SCR 944, the Hon’ble Supreme Court took strong
objection to varying amounts of compensation for Motor Vehicle Accidents on the one hand, and
aircraft accidents on the other, calling such an “invidious distinction…absolutely shocking on a
judicial or social conscience..” The Law Commission in its 149th Report stated that “there is no
valid justification for such disparity,” and therefore called for uniformity in compensation
amounts provided under various laws.

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