Difference between Penal and Remedial statute
Remedial statute-
The remedial statute is beneficial to the weaker section of the community. The remedial
statute is one whereby a new favor or remedy is conferred either to make improvement in the
enforcement of a right of any person or for redress of wrong and to remove effects of mistake in
the former law.
Penal Statute -
The Penal statute are those which provides for penalties for disobedience of law.
Distinction/Difference between Remedial Statute and Penal Statute
No Remedial statutes Penal statutes
1) Remedial Statutes deal with the Penal Statutes deal with the
wrongs against an individual. wrongs against the State.
2) They deal with those matters which They deal with those
affect the Individual only matters which affect the
whole community.
3) Remedial Statutes provides a Whereas Penal Statutes provides
remedy for infringement of private punishment for public wrong
civil rights of an individual.
4) Remedial Statutes deals with such Remedial Statutes deal with such
wrongful acts for which remedy wrongful acts, the commission of
is civil action. which attracts punitive (Penal)
action.
5) The remedy for wrongful acts in Penalty such as imprisonment,
the form of damages or compensation fine, forfeiture etc.is imposed on
to the aggrieved party but the the offender
wrongdoer is not held liable for any
penalty
6) Duty is fixed by party Duty is fixed by the State
7) The injured party takes action State takes action and state is a
prosecuting agency.
8) Proof of negligence is sufficient Negligence along with criminal
intention must be proved to
constitute an offense or crime
9) The remedial statutes receive liberal or Negligence along with criminal
beneficent construction. intention must be proved to
constitute an offense or crime
10) Remedial statutes are also known
as welfare, beneficent or social justice Penal statutes are called as penal
oriented legislation
11) Remedial statutes are enforced by law In case violation of
when suit id field by the penal law, state initiate the action
aggrieved person in civil court or in against the criminal courts
the tribunal
12) The doubt is resolved in favor of the The doubt is resolved in favor of
class of person for whose benefit the the alleged offender
statute is enacted
Strict Construction Of penal statutes
General principle The rule that a statute enacting an offence or imposing a penalty in strictly
construed is now only of limited application and it serves in the selection of one when two or
more construction are reasonably open. The rule was originally evolved to mitigate the rigor of
monstrous sentences for trivial offences and although that necessity has now almost vanished,
the difference in approach made to a penal statute as against any other statute stick persists.
According to Lord Esher, the settled rule of construction of penal section is that ‘if there is
reasonable interpretation which will avoid the penalty in any particular case we must adopt that
construction. If there are two reasonable constructions can be put upon a penal provision, the
court must lean toward that construction which exempts the subject from the penalty
rather than the one which imposes penalty.
• Sham Sunder v State of Haryana
A clear language is needed to create a crime and a statute enacting an offence of
imposing penalty , to be strictly construed.
• Chief Inspector of Mines v Karam Chand Thapar
A statute providing for penal prosecution has to be construed strictly. However the rule is
of not a universal application which must be necessarily be observed in every case.
• Virtual Soft Systems Ltd v Commissioner of Income tax (2007) ( only read the
relevant para from the case)
Virtual Soft Systems Ltd v. CIT
The questions that arose before the Supreme Court in the case prior to the amendments
by the Finance Act 2002 with effect from 1 April 2003 were:
· What was meant by the words ‘in addition to any tax payable’in the charging § 271 (c)
(iii)?
· What was meant by the term ‘total income’ in Explanation 4(a) therein?
Allowing the appeals, it was held by the court that the statute crating the penalty is the
first and the last consideration and the penal provision must be construed within the term
and language of the particular statute. § 271 of the Act is a penal provision and there are
well established principles for interpretation of such a penal provision. Such a provision
has to be construed strictly and narrowly and not widely; with the object of advancing
the object and intention of the legislature.
Section 271 of the Income Tax Act , 1961 is a penal provision and there are well
established principles for the interpretation of such a penal provision. Such a provision
has to be construed strictly and narrowly and not widely or with the object of advancing
the object and intention of the legislature.
This Court as well as the various High Courts of the country have consistently held that
the statute creating the penalty is the first and the last consideration and must be
construed within the term and language of the particular statute. In Bijaya Kumar
Agarwala v. State of Orissa, 1996 (5) SCC 1, it has been held by this Court in para 17 and
18 as under:-
"17. Strict construction is the general rule of penal statutes. Justice Mahajan in Tolaram
Relumal v. State of Bombay, AIR 1954 SC 496 at pages 498- 499, stated the rule in the
following words: "(I)f two possible and reasonable constructions can be put upon a penal
provision, the court must lean towards that construction which exempts the subject from
penalty rather than the one which imposes penalty. It is not competent to the court to
stretch the meaning of an expression used by the Legislature in order to carry out the
intention of the Legislature."
The same principle was echoed in the Judgment of the five Judge Bench in the case
of Sanjay Dutt v. State through C.B.I., 1994 (5) SCC 402, which approved an earlier
expression of the rule by us in Niranjan Singh Karam Singh Punjabi v. Jitendra Bhimraj
Bijjaya, 1990 (4) SCC 76, at page 86 para 8.
"Therefore, when a law visits a person with serious penal consequences extra care must be
taken to ensure that those whom the legislature did not intend to be covered by the express
language of the statute are not roped in by stretching the language of the law."
• Aneeta Hada v Godfathers Travels and Tours Ltd (2012)
The appellant, Anita Hada, an authorised signatory of International Travels Limited, a
company registered under the Companies Act, 1956, issued a cheque dated 17th January,
2011 for a sum of Rs.5,10,000/- in favour of the respondent, namely, M/s. Godfather
Travels & Tours Private Limited, which was dishonoured as a consequence of which the
said respondent initiated criminal action by filing a complaint before the concerned
Judicial Magistrate under Section 138 of the Act. In the complaint petition, the Company
was not arrayed as an accused. However, the Magistrate took cognizance of the offence
against the accused appellant.
Section 141 in The Negotiable Instruments Act, 1881
21
[ 141 Offences by companies. —
(1) If the person committing an offence under section 138 is a company, every person
who, at the time the offence was committed, was in charge of, and was responsible to the
company for the conduct of the business of the company, as well as the company, shall be
deemed to be guilty of the offence and shall be liable to be proceeded against and
punished accordingly: Provided that nothing contained in this sub-section shall render
any person liable to punishment if he proves that the offence was committed without his
knowledge, or that he had exercised all due diligence to prevent the commission of such
offence: 22 [Provided further that where a person is nominated as a Director of a company
by virtue of his holding any office or employment in the Central Government or State
Government or a financial corporation owned or controlled by the Central Government or
the State Government, as the case may be, he shall not be liable for prosecution under this
Chapter.]
(2) Notwithstanding anything contained in sub-section (1), where any offence under this
Act has been committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to, any neglect on the part
of, any director, manager, secretary or other officer of the company, such director,
manager, secretary or other officer shall also be deemed to be guilty of that offence and
shall be liable to be proceeded against and punished accordingly. Explanation.— For the
purposes of this section,—
(a) “company” means any body corporate and includes a firm or other association of
individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.]
Section 138 in The Negotiable Instruments Act, 1881
18
[ 138 Dishonour of cheque for insufficiency, etc., of funds in the account. —Where any
cheque drawn by a person on an account maintained by him with a banker for payment of any
amount of money to another person from out of that account for the discharge, in whole or in
part, of any debt or other liability, is returned by the bank unpaid, either because of the amount
of money standing to the credit of that account is insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from that account by an agreement made with that bank,
such person shall be deemed to have committed an offence and shall, without prejudice to any
other provisions of this Act, be punished with imprisonment for 19 [a term which may be
extended to two years], or with fine which may extend to twice the amount of the cheque, or with
both: Provided that nothing contained in this section shall apply unless—
(a) the cheque has been presented to the bank within a period of six months from the date on
which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for
the payment of the said amount of money by giving a notice in writing, to the drawer of the
cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the
return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the
payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the
receipt of the said notice.
Explanation.— For the purposes of this section, “debt or other liability” means a legally
enforceable debt or other liability.]
Relevant paras from the judgement
✓ The word ‘deemed’ used in Section 141 of the Act applies to the company and the persons
responsible for the acts of the company. It crystallizes the corporate criminal liability and
vicarious liability of a person who is in charge of the company. What averments should
be required to make a person vicariously liable has been dealt with in SMS
Pharmaceuticals Ltd. (supra). In the said case, it has been opined that the criminal
liability on account of dishonour of cheque primarily falls on the drawee company and is
extended to the officers of the company and as there is a specific provision extending the
liability to the officers, the conditions incorporated in Section 141 are to be satisfied. It
has been ruled as follow:-
✓ “It primarily falls on the drawer company and is extended to officers of the
company. The normal rule in the cases involving criminal liability is against
vicarious liability, that is, no one is to be held criminally liable for an act of
another. This normal rule is, however, subject to exception on account of specific
provision being made in the statutes extending liability to others. Section 141 of
the Act is an instance of specific provision which in case an offence under Section
138 is committed by a company, extends criminal liability for dishonor of a
cheque to officers of the company. Section 141 contains conditions which have to
be satisfied before the liability can be extended to officers of a company. Since the
provision creates criminal liability, the conditions have to be strictly complied
with. The conditions are intended to ensure that a person who is sought to be
made vicariously liable for an offence of which the principal accused is the
company, had a role to play in relation to the incriminating act and further that
such a person should know what is attributed to him to make him liable.” After so
stating, it has been further held that while analyzing Section 141 of the Act, it will
be seen that it operates in cases where an offence under Section 138 is committed
by a company. In paragraph 19 of the judgment, it has been clearly held as
follows: -
✓ 40. In this context, we may usefully refer to Section 263 of Francis Bennion’s Statutory
Interpretation where it is stated as follows: -
✓ “A principle of statutory interpretation embodies the policy of the law, which is in
turn based on public policy. The court presumes, unless the contrary intention
appears, that the legislator intended to conform to this legal policy. A principle of
statutory interpretation can therefore be described as a principle of legal policy
formulated as a guide to legislative intention.
✓ 41. It will be seemly to quote a passage from Maxwell’s The Interpretation of Statutes
(12th Edition) : -
✓ “The strict construction of penal statutes seems to manifest itself in four ways: in
the requirement of express language for the creation of an offence; in interpreting
strictly words setting out the elements of an offence; in requiring the fulfilment to
the letter of statutory conditions precedent to the infliction of punishment; and in
insisting on the strict observance of technical provisions concerning criminal
procedure and jurisdiction.”
✓ 42. We have referred to the aforesaid passages only to highlight that there has to be strict
observance of the provisions regard being had to the legislative intendment because it
deals with penal provisions and a penalty is not to be imposed affecting the rights of
persons whether juristic entities or individuals, unless they are arrayed as accused. It is
to be kept in mind that the power of punishment is vested in the legislature and that is
absolute in Section 141 of the Act which clearly speaks of commission of offence by the
company. The learned counsel for the respondents have vehemently urged that the use of
the term “as well as” in the Section is of immense significance and, in its tentacle, it
brings in the company as well as the director and/or other officers who are responsible
for the acts of the company and, therefore, a prosecution against the directors or other
officers is tenable even if the company is not arraigned as an accused. The words “as
well as” have to be understood in the context. In Reserve Bank of India v. Peerless
General Finance and Investment Co. Ltd. and others[44] it has been laid down that the
entire statute must be first read as a whole, then section by section, clause by clause,
phrase by phrase and word by word. The same principle has been reiterated in Deewan
Singh and others v. Rajendra Prasad Ardevi and others[45] and Sarabjit Rick Singh v.
Union of India[46]. Applying the doctrine of strict construction, we are of the considered
opinion that commission of offence by the company is an express condition precedent to
attract the vicarious liability of others. Thus, the words “as well as the company”
appearing in the Section make it absolutely unmistakably clear that when the company
can be prosecuted, then only the persons mentioned in the other categories could be
vicariously liable for the offence subject to the averments in the petition and proof
thereof. One cannot be oblivious of the fact that the company is a juristic person and it
has its own respectability. If a finding is recorded against it, it would create a concavity
in its reputation. There can be situations when the corporate reputation is affected when
a director is indicted.
✓ 39. It is to be borne in mind that Section 141 of the Act is concerned with the offences by
the company. It makes the other persons vicariously liable for commission of an offence
on the part of the company. As has been stated by us earlier, the vicarious liability gets
attracted when the condition precedent laid down in Section 141 of the Act stands
satisfied. There can be no dispute that as the liability is penal in nature, a strict
construction of the provision would be necessitous and, in a way, the warrant.
Held : Applying the principle of strict interpretation of penal statutes, the supreme
court has held that only drawer of the cheque can be made liable for penal action
under sec 138 of NI Act 1881 and not another person who had merely negotiated the
transaction out of which debt has arisen and was only a joint account holder along with
the drawer, but had not signed the cheque. Court was of the view that 141 was not
attracted and was strictly interpreted to hold that a prosecution there under cannot be
maintained only against an officer of the company, without arranging the company as
an accused , since officers of a company can only be held vicariously liable for the
offences committed by a company.
• Rule of construction in penal statutes does not prevent the court from interpreting a
statute according to its current meaning and applying the language to cover developments
in science and technology not known at the time of passing the statute.
In R v Ireland (1987), Psychiatric injury caused by silent telephone calls was held to
amount to assault and bodily harm under the Offences against Person Act, 1861 in the
light of the current scientific appreciation of the link between the body and psychiatric
injury.
R v Fellows
Data stored in computer disc, a technology not anticipated in 1978,was held to amount to
“indecent photograph” within the meaning of Section 1 of the protection of Children Act
,1978 (even before its amendment in 1994) which penalises taking or distribution of
indecent photograph of children under the age of 16.
• Following are some of the propositions important in relation to strict construction of
penal statutes. if the scope of prohibitory words cover only some class of persons or some
well defined activity, their scope cannot be extended to cover more on consideration of
policy or object if the statute. Prohibitory words can be widely construed only if indicated
in the statute. On the other hand if after full consideration no indication is found the
benefit of construction will be given to the subject. If the prohibitory words in their own
signification bear wider meaning which also fits in with the object or policy of the statute.
Sanjay Dutt case
Interpretation of remedial statutes : liberal construction of Remedial Statute
