Research Task-1

Compensation

COMPENSATION :-
The word ‘compensation’ means to expiate the loss suffered. The rationale or basis for
compensation may be the following three perspectives:
  As a social insurance
  As a welfare measure by the Govt.
  As a governmental obligation to protect the citizens.

History of Victim Compensation

Under the Tort Law, victims can claim compensation for the injury or the loss suffered by
them. Recently the idea of compensation to victims of the crime is gaining much more
importance. The modern welfare states have realized the importance of giving
compensation to the victims of the crime as part of their duty towards the protection of
its citizens and also as part of their general welfare. Many countries have adopted this
scheme of payment of compensation to victims, for example, countries like Canada,
Australia, New Zealand, UK, have created a fund for the payment of the compensation
to crime victims.

Compensation is now being awarded as a matter of right not in just criminal law, but
also in constitutional law, environmental law, etc.

There are pieces of evidence that show certain categories of victims of crime being
compensated either by the offender or their kinsmen or by the sovereign, even in the
olden times. In primitive law, it can be found that an injured person can take similar
blood feud from the wrong order of his kin. Later, instead of blood feud, the payment of
blood money i.e., the penalty paid by a murderer to the relative of the victim. This was
so because, in the primitive societies, the responsibility of protecting oneself against the
crime and of punishing the offenders vested with the individuals and not with the
sovereign, and therefore, the idea of private vengeance existed.

As and when the societies got systematized, the responsibility of protecting the citizens
from the crime and also that of punishing the criminal shifted to the hands of the political
authorities. But, even then, according to the old Germanic law- the Code of Hammurabi,
the Ancient Hindu Law- The Manu Law, and Islamic law, the principle of giving the
compensation to the victim by the wrongdoer continued.

At the end of the medieval age, the idea of crime, as an action against the State took its
shape, and the state was considered to be the proper authority to punish the offender,
thought the victim of the crime became the irrelevant factor.

The concept of compensation in India, goes back to 1857, when the Courts made an
attempt to regularise the pollution generated by the oriental gas company by imposing
fines on the company and giving a right to compensation against the fouling water. No

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relief was then given for violation of environ- legal right, but in personal injury cases, the
courts hardly awarded compensation for non- pecuniary loss incurred.

The advent of a right to compensation under Indian constitutional law is not very old. It
was only in the late eighties, that this concept started to grow in India under
constitutional law. This was the innovative concept developed by Indian judiciary for
securing the justice. The compensation awarded is generally on the basis of the
entitlement of the claimant. The modern concept of justice is more concerned with
providing relief to victims than the necessities of legal principles.

Laws in India Providing Compensation

Compensation in India is broadly divided into two heads namely:

Compensation under
General Laws
Code of Criminal
Procedure, 1973
Indian Constitution
Compensation under Special Laws
i. Probation of offenders act,1958
iii. Motor vehicle act,1988
iv. The Scheduled Caste and Scheduled Tribes (Prevention of
Atrocities) Act, 1989.
v. Protection of human rights act,1993
vi. Workmen compensation act,1923
vii. Protection of Women against Domestic Violence Act,2000
viii. Railways act,1989

Compensation as a Constitutional Right

According to the view of the liberal world, respect for human rights also mean, providing
adequate relief if those human rights are violated. The right of compensation for the
violation of fundamental rights is derived from the rights that were violated. As a matter
of fact, it is inherent in them, for example, a person’s right over his body, makes the
other duty bound and forbids him to attack or injure without any justification. Moreover,
this right over one’s body also gives him the right to compensation if he’s attacked
unjustifiably, in order to help the him recover mentally and physically. Compensation is
both acknowledgement of the violated right and an attempt to reimburse for the
damage.

In India, to fill the gap in the fundamental right to compensation, the apex court has
found the monetary way to expiate the abuse of the human rights. The Supreme Court
in Rudal Shah v. State of Bihar, for the very first time laid down the principle that

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compensation can be given in the cases where any fundamental right of an individual
has been injured

and that the higher courts have the authority to do so by using the writ jurisdiction and
evolved the principle of compensatory jurisprudence.

Rudal Shah v. State of Bihar

The facts involve the petitioner who was even after being acquitted by the Court of
Sessions, Bihar on June 3, 1968, was released from the jail only on October 16, 1982,
that is after more than 14 years. The petitioner thus filed the writ of habeas corpus on
the grounds that his detention was illegal and unlawful. He had also asked from the
courts for certain additional reliefs like rehabilitation, reimbursements for medical
expenses, and compensation for the unlawful confinement.

Furthermore, the reply given by the Jailor’s affidavit stated that the petitioner was
acquitted but not released since he was of unsound mind when the order for his
acquittal was passed. But, this affidavit by the jailor disclosed no data on the basis of
which he was adjudged insane, or about any specific measures are taken to cure his
illness. Moreover, what was even more important to note was that, whether or not it took
14 years to cure his mental imbalance. It is also to be taken into account that, there was
no medical opinion produced to support the fact that he was medically insane, and that
no jail record showing as to what kind of medical treatment he was being given, existed.

The Supreme Court elaborately discusses the question as to whether or not an order for
the payment of money can be passed by the Supreme Court under the Writ Jurisdiction
on the consequential deprivation of a fundamental right. Justice Chandrachud said,
“Article 21 which guarantees the right to life and liberty will be denuded of its significant
content if the power of this Court were limited to passing orders to release from illegal
detention. One of the telling ways in which the violation of that right can reasonably be
prevented and due compliance with the mandate of Article 21 secured, is to mulct its
violators in the payment of monetary compensation. Administrative sclerosis leading to
flagrant infringements of fundamental rights cannot be corrected by any other method
open to the judiciary to adopt. The right to compensation is some palliative for the
unlawful acts of instrumentalities which act in the name of public interest and which
present for their protection the powers of the State as a shield.”

Therefore, the Supreme Court clearly condemned the State authorities for its actions
and had ordered for a compensation of Rs. 30,000/-.

The decision of Rudal Shah was important in two aspects:

1.  That violation of a fundamental right can lead to a civil liability;

2.  It also formulates the bases for a theory of liability.

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The decision focused extreme concern to protect and presents the fundamental right of
a citizen than the sovereign and non-sovereign dichotomy.

According to the court, the compensation was in the nature of a palliative, i.e.,
comforting to the victim, in order to give better meaning to article 21.

Development Post Rudal Shah’s Case

After the pronouncement of the Rudal Shah’s case, another case of Sebastian
Hongray v. Union of India came up before the Supreme Court of India, wherein, the
State failed to reproduce two persons missing from the army custody. The Courts
ordered for the respondents to pay Rs. 1 lac each to the wives of the two missing
persons. This was followed by the case of Bhim Singh v. State of J & K. In this case,
the Court opined that it could set right a wrong complained of in respect of his arrest
and violation of his rights by awarding compensation. It deviated from the rule as laid in
the above two cases of Rudal Shah and Sebastian Hongray, i.e., of the rule of Habeas
Corpus being remedial, and thereby made it punitive. It forms both, a mixture of
palliative compensation and exemplary costs.

In yet another case, Saheli v. Commissioner of Police, the reasons for the award of
compensation was being expounded. The State was held liable for the death of a nine-
year-old child by Police assault beating. The Court said that an action for damages lies
for bodily harm, including battery, assault, false imprisonment, physical injuries and
death, since damages represented a solatium for mental pain, distress, indignity, loss of
liberty and death.

Furthermore, the Supreme Court in the case of Nilabati Behera v. State of

Orissa gave the jurisprudential reasoning behind the award of damages in cases of
violations of fundamental rights. The petitioner was awarded compensation for the
death of her son in the police custody. The Court held that, the principle of sovereign
immunity does not apply to the public law remedies under Article 32 and Art 226, and
said that, “a claim in public law for compensation for contravention of human rights and
fundamental freedoms, the protection remedy for enforcement and protection of such
rights and such a claim based on strict liability made by taking recourse to constitutional
remedy provided for the implementation of fundamental right is separate from and in
addition to the remedy in private law damages for tort.”

In M.C. Mehta v. Kamal Nath, the SC held that it has power under Article 32 to award
compensation to the victims of the pollution.

Relying on the three major judgements of Rudal Shah, Sebastian Hongray, and Bhim
Singh, the Andhra Pradesh High Court stated that Kasturi Lai’s Case has no application
where there is a deprivation of life or personal liberty. The Andhra Pradesh High Court
noted down the recommendations of the Law Commission first report for statutory
recognizing the liability of the State.

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This case opened a new outlook for individual action against the State as Article 300
has been held not to be an exception to Article 21.

Compensation Under Code of Criminal Procedure, 1973

The Code of Criminal Procedure (hereinafter referred to as CrPC) initially provided for
the compensation to victims of crime under sections 357, to be given by the accused.
With due course of time, the Courts in India realized that, in punishing the offender, it
ignored the victim. It was only in the year 2008 when the CrPC was amended to impose
a liability on the State for such compensations, based on the recommendations of the
Malimath Committee. It stated that compensation should be provided to the victim, as
not only as a token of relief but also as part of the substantial remedy. It justified it on
the grounds that it is the political, economic, and social institutions of the State that
generates crime by poverty, discrimination, unemployment and insecurity, and therefore
made it obligatory for the State to provide victim compensation in all serious crimes,
whether the offender is convicted or acquitted.

What is the Scope of S. 357 CrPC? What are its limitations?

The Scope of S. 357 was explained by the Supreme Court in Sawarn Singh v. State of
Punjab. The Court said that the aim of section S. 357 is to give compensation to the
victim or to their kin, even when fine does not form part of the sentence. But, in
providing this compensation, it is necessary for the court to keep the following things in
mind:

1.   Nature of Injury Caused

The Supreme Court in Madan Lal v. State of HP invoked this provision, where the
accused caused disfigurement of the face of the victim. In yet another case, it held that
while reducing the sentence of death to imprisonment for life in a case of serious nature,
the widow and her children were compensated for the loss they have suffered.

2.   The capacity of the Offender to pay

In a number of cases, the Supreme Court has held that the power of the Courts to
award compensation, should be just and reasonable. In Dilip S. Dahanukar v. Kotak
Mahindra Co. Ltd. and Anr., the Court said that “the amount of compensation sought
to be imposed, thus, must be reasonable and not arbitrary.” The Court in this case also
suggested, for issuing a summary enquiry, to judge the capacity of the accused to pay
the compensation.

3.   Application of Mind
1.357 of CrPC, confers a heavy duty on the Judges to apply its mind to the
question of compensation in every criminal case, or else it becomes a dead

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letter. In Maya Devi (Dead) and Ors. v. Raj Kumari Batra, the Courts have
held that “Application of mind brings reasonableness not only to the exercise of
power but to the ultimate conclusion also. Application of mind, in turn, is best
demonstrated by disclosure of mind. And disclosure is best demonstrated by
recording reasons

in support of the order or conclusion.” Even though, awarding or refusing

compensation might be in the Court’s discretion there exists a mandatory duty
on the Court to apply his mind on the question in every criminal case.

Victim Compensation Scheme Post Amendment of 2008

1.357 had a few limitations, for example, as it was held in R. Vijayan v. Baby,
wherein the Court held that “if compensation could be paid from out of the fine,
there is no need to award separate compensation. Only where the sentence
does not include fine but only imprisonment and court finds that the person who
has suffered any loss or injury by reason of the act of the accused person,
requires to be compensated, it is permitted to award compensation under
section 357 (3)”, the Parliament post recommendations of the Malimath
Committee added S. 357A to S. 357D. The Amendment Act, 2008 also provides
for the right to appeal against an order imposing inadequate compensation.

1.   Budget allocation by the State Governments

1.357A (1) directs every State Government to prepare a scheme for providing
funds for the purpose of compensation to the victim or his dependents, who
have suffered loss or injury, and who require rehabilitation. It requires every
state government to create a victim compensation fund, which would have
budgetary allocation. Sadly, only a few state governments have framed the
scheme for providing the funds for compensation. Even in the States which
have made a scheme have, the eligibility criteria to get compensation along
with the procedure different from each other. There is thus, no uniformity
neither in subject- matter nor in the amount of compensation. In Hari Singh
and State of Haryana v. Sukhbir Singh, it was held by the Court that, victim
compensation is a “measure responding appropriately to crime as well as
reconciling the victim with the offender and indeed a step forward and in our
criminal justice system.” However, the application of these provisions, are yet to
be put in practice.

2.   Additional Compensation
1.357B provides that the compensation to be paid by the State Government u/s
357A is to be paid in addition to the payment of fine to the victim given u/s 326
A or 376- D.

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3.   Treatment of Victims
1.357C provides for immediate medical relief, free of cost, to the victims of any
offence covered u/s 326 A, 376, 376 A, 376 B, 376 C, 376 D or u/s 376 E of the
Indian Penal Code, and shall immediately inform the police of such incident, in
every hospital, public or private.

4. Quantum of Compensation
According to S. 357 A (), whenever the recommendation is made by the Court for
compensation, the District or the State Legal Service Authority, shall decide the
quantum of compensation to be awarded under the scheme aforesaid.

5.   Compensation when the Offender is not found

Where the offender is not traceable or is not identified, or is absconding, but the victim
is identified, and where no trial takes place, the victim or his dependents, may make an
application to the State or the District Legal Services Authority for award of
compensation which shall be decided after due enquiry award adequate compensation
by completing the enquiry within two months.

Compensation For Acid Attack Victims

Acid attack is one of the most brutal crimes, which just not leave scars on the victim, but
also violates the very basic human rights of the victim. The Law Commission took suo
moto view of the contentions raised in the case of Lakshmi v. UOI. The Commission felt
that no definition of grievous hurt would be enough to cover the various kind of injuries
caused due to an acid attack. Moreover, the commission also suggested the
government to propose a law known as Criminal Injuries Compensation Act, providing
both interim and final monetary compensation to victims of certain acts of violence like
Rape, Sexual Assault, Acid Attacks, etc., also providing for their medical and other
expenses relating to rehabilitation, loss of earnings etc.

The Government of India took the matter seriously and passed the necessary
amendments. The amendment resulted in the insertion of sections 326A and 326B. U/s
326A the punishment includes a sentence not less than 10 years, and also fine, which
shall be just and reasonable to meet the medical expenses of the treatment of the
victim, and that any other such fine imposed should be entirely paid to the victim. Also,
the addition of 357B, as mentioned provided for compensation by the State Government
to be in addition to the payment of fine to the victim u/s 326A.

Compensation Under A Few Special Laws

1. The Motor Vehicles Act, 1988

Increased number of motor vehicles, poor maintenance of roads and negligence by
drivers has led to the increase in the road accidents, resulting in death or injuries to

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victims. To curb this menace, S. 40 of the MV Act, embodies the idea of compulsory
compensatory jurisprudence for the benefit of victims of road accidents. It makes the
owner of the vehicle obliged to pay a specific sum of compensation if the negligent act
of the driver has caused death or permanent disablement of a person.

1.163 provides for a scheme of payment of compensation in case of hit and run
motor accidents which shall contain the form, manner, and the time within
which

applications for compensation may be made, to whom it may be made, and the
procedures to be followed by administrative authorities constituted under the
Act. Furthermore, S. 163- A, provides for compensation in a structured format
as mentioned in the second schedule of the Act. Under this Section, the victim
is entitled to compensation on a fault- liability, based on the Second Schedule.

2. Workmen Compensation Act, 1923

This Act provides compensation to workmen, by their employers for injuries caused by
an accident occurred during or in the course of employment.  S. 3 obliges the employers
to pay the compensation in respect of:

1.   Any injury which resulted in the total or partial disablement of the workman
for a period exceeding seven days;
2.   Any injury resulting in the death caused by an accident which was not
caused due to the workman having been under the influence of alcohol or any
other drugs, or any willful disobedience of the workman to an order which was
expressly given, or any safety measure provided.
The Schedules I, III, and IV, annexed in the Act, lays down the process of determination
of payment of compensation by enlisting the injuries that might result in permanent
partial disablement, and the occupational diseases that might be caused.

3. Compensation in Medical Negligence Cases

In the landmark case of Jacob Mathew v. State of Punjab, and also in the
case Suresh Gupta v. Govt. of NCT, Delhi, the Supreme Court has relaxed the norms
for doctors with regard to criminal liability for medical negligence by adding the
requirement of “gross” medical negligence. However, the culpability of doctors through
civil liability has been recognized by the Courts. In the recent judgement of 2014
of, Balram Prasad v. Kunal Saha, the SC awarded a compensation of Rs. 11 Crore to
a victim, who was paid by the doctors and the private hospital deemed responsible for
the wrongful death of a patient. This was by far the largest ever given in case of medical
negligence.

The basis of computing compensation under common law lies in the principle of
“Restitutio in Integrum”, which means, that the person seeking damages due to a wrong
committed to him/ her is in the position that he/ she would have been had the wrong not
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been committed. Inconsistency in awarding compensation in medical negligence cases
is a problem that currently plagues the Indian health sector. Each and every case has to
be considered independently because of would be inappropriate to not give the facts of
every situation due to importance. The Supreme Court in Sarla Verma v. Delhi
Transport Corporation noted that: “The lack of uniformity and consistency in awarding
compensation has been a matter of grave concern… If different tribunals calculate
compensation differently on the same facts, the claimant, the litigant, the common man
will be confused, perplexed, and bewildered. If there is significant divergence among
tribunals in determining the quantum of compensation on similar facts, it will lead to

dissatisfaction and distrust in the system.” The dilemma that judges face while awarding
compensation in medical negligence cases because:

1.   Law is required to protect a patient’s rights and

2.   The law also needs to provide due sovereignty to a profession that by all
definitions are an inexact science.
The Indian legal system addresses medical negligence mainly through the consumer
courts. The policy impact of being included under the purview of the Consumer
Protection Act, 1987, is that the treatment provided by a doctor which by all definitions,
an inexact and variable science with rapid advancement and substantial responsibility,
is subject to the same scrutiny as any other service provider, therefore increasing the
propensity of the system to solve such matters purely by awarding compensation.

According to a few, large compensation is considered an ideal remedy for medical

negligence because it acts as in insurance to the victim, retribution towards negligent
doctors and hospitals, and as a deterrent to other doctors/ hospitals. The counter-
arguments include an increase in defensive medicine, professional liability premiums,
and treatment costs as symptoms of a dysfunctional system created to reward the
litigious and punish the professionals.

Now, for the question as to who shall be responsible for paying compensation, the
doctor or the hospital, it has been seen that nowadays, the hospitals as an organization
in most cases today is run not by the doctors but by the administrators. In many cases,
both doctors and the hospitals have been held responsible for paying compensation,
since, in the majority of the cases, an individual doctor may not be in a position to pay
the huge compensation until the hospitals are also made a party in the litigation.

Therefore, we can see that the calculation of compensation is not precise or accurate,
and is bound to vary from case to case. This results in the subjectivity of presiding
judges, which erodes faith in the justice system. Hence, there is an urgent need to
introduce certain broad guidelines, assessment parameters to support the health
system in providing quality health care. The compensation awarded needs to be just,
reasonable, and prudent.

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Is Compensation Palliative or Punitive??
The nature of monetary relief that a petitioner would be entitled to be of crucial nature. A
brief overlook over these cases shows that in all of them the compensation given was
palliative in nature or as exemplary costs. In many of the judgements, the Supreme
Court also concluded that the award of money in the writ would not exclude a claim to
damages in a civil court. Though, the palliative compensation is done away with the
decision of the Supreme Court in Bhim Singh’s case. However, the mentioning of the
remedy available with the civil court has been done away with due to two reasons-

1.  to ensure that the writ courts do not become submerged with litigation, and
2.  to do away with the cumbersome process of appreciation of evidence and to
calculate the damages payable.
Also, in earlier decisions, the Courts used the concept of the ‘shocking of conscience’ as
an indicator to warrant compensation. But, that was also done away with the Behera’s
case.

ANSWER 2
What are compensations that are payable under different provisions of the law in
INDIA?

Compensation is what employees receive in exchange for the services rendered in an

organization.

The term ‘compensation’ refers to all forms of financial returns and tangible benefits that
employees receive as part of the employment relationship.
In the era of globalization, where the business environment has become increasingly
complex and challenging, structuring an effective compensation package to attract and
retain talent is an important function of organizational effectiveness.

Compensation may achieve several purposes assisting in recruitment, job performance,

and job satisfaction.

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In other words we can say that Compensation is the process of providing adequate,
equitable and fair remuneration to the employees.
Some of the types of compensation given to employees are:-
1. Financial Compensation 2. Non-Financial Compensation 3. Primary Compensation 4.
Incentive compensation 5. Job Evaluation 6. Wages and Salary Administration 7.
Incentives 8. Bonus 9. Fringe Benefits 10. Social Security Measures.

Additionally, there are some types of compensation which are particularly prevalent to
the Indian Industries. They are:-

1. Basic Pay 2. Dearness or Cost of Living Allowance 3. Incentive Payments 4.

Performance-Based Remuneration 5. Bonus 6. Fringe Benefits and Miscellaneous Cash
Allowances.

Types and Forms of Compensation Provided to Employees in an Organization:-

Compensation is what employees receive in exchange for the services rendered in an
organization. The term ‘compensation’ refers to all forms of financial returns and
tangible benefits that employees receive as part of the employment relationship. In the
era of globalization, where the business environment has become increasingly complex
and challenging, structuring an effective compensation package to attract and retain
talent is an important function of organizational effectiveness.
Compensation refers to as a wide range of financial and non-financial rewards given to
employees for their services rendered to the organization. It is paid in the form of
wages, salaries and employee benefits such as paid vacation, insurance, maternity
leave, free traveling facility, retirement benefits, etc.

Compensation can be classified into two categories:

1. Financial Compensation
2. Non-Financial Compensation

Type # 1. Financial Compensation:

Financial compensation is most popular and important compensation that is given in the
form of money. It is the most important motivational factor that satisfies employees’
basic needs like food, clothing, etc.

It is further categorized into two parts:

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Direct compensation:-
Direct compensation means compensating employees by paying them money in the
following forms:
a. Wages-Wages means remuneration paid in cash for the work performed by an
employee.

b. Bonus- Bonus means extra cash paid to an employee for exceeding his performance
or on completion of specified project or target.

Other financial incentives that are directly given to employees in the form of cash.

II. Indirect Compensation (Fringe Benefits):-

Dessler refers to indirect compensation as the indirect financial and non- financial
payments employees receive for continuing their employment with the company which
are an important part of every employee’s compensation. Other terms such as fringe
benefits, employee services, supplementary compensation and supplementary pay are
used.

Armstrong says indirect compensation or employee benefits are elements of

remuneration given in addition to the various forms of cash pay. They also include items
that are not strictly remuneration such as annual holidays.
Management uses it ostensibly to facilitate its recruitment effort or influence the
potential of employees coming to work for a company, influence their stay or create
greater commitment, raise morale, reduce absenteeism in general and improve the
strength of the organization by instituting a comprehensive programme in this area.
According to Chhabra, indirect or supplementary compensation involves ‘fringe benefits’
offered through several employee services and benefits such as housing, subsidized
food, medical aid, creches and so on. It involves rewards provided by organizations to
employees for their membership, attendance or participation in the organization.
Because of the increasing costs of fringe benefits, some people also label them as
‘hidden payroll.’ Benefits currently account for almost 40 per cent of the total
compensation costs for each employee. The basic purpose of fringe benefits or
supplementary compensation is to attract and maintain efficient human resources within
the organization and to motivate them.

Types of Indirect Compensation:

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Below are some of the more popular indirect compensations offered by today’s
organizations.

a. Social Security:
This is a federally administered insurance system. According to law, both employer and
employee must pay into the system, and a certain percentage of the employee’s salary
is paid up to a maximum limit. How much is paid by employer and employee is
calculated on the average monthly wage (weighted towards the later years). It is
provided mainly to give financial security to employees when they retire.

b. Workers’ Compensation:
It is meant to protect employees from loss of income and to cover extra expenses
associated with job-related injuries or illness. The laws generally provide for
replacement of lost income, medical expenses, rehabilitation of some sort of death
benefits to survivors, and lump-sum disability payments.

c. Retirement Plans:
Retirement and pension plans, which provide a source of income to people who have
retired, represent money paid for past services. Private plans can be funded entirely by
the organization or jointly by the organization and the employee during the time of
employment.
One popular form of pension plan is the defined-benefit plan. Under this plan, the
employer pledges to provide a benefit determined by a definite formula at the
employee’s retirement date. The other major type of retirement plan is the defined
contribution plan, which calls for a fixed or known annual contribution instead of a
known benefit.

d. Paid Holidays:
These comprise Christmas Day, New Year’s Day, Independence Day, Labour Day, etc.
One relatively new concept is the floating holiday, which is observed at the discretion of
the employee or the employer.
Another relatively new concept is referred to as personal time-off or personal days.
Under this concept, organizations give employees a certain number of days with pay to
attend to personal affairs. Normally these days can be taken at the employee’s
discretion.

e. Paid Vacations:
Typically, an employee must meet a certain length-of-service requirement before
becoming eligible for paid vacation. The time allowed for paid vacations generally
depends on the employee’s length of service.

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Unlike holiday policies that usually affect everyone in the same manner, vacation
policies may differ among categories of employees. Most organizations allow
employees to take vacation by the day or week but not in units of less than a day.

f. Other Benefits:
Organizations may offer a wide range of additional benefits, including food services,
exercise facilities, health and first-aid services, financial and legal advice, and purchase
discounts. The extent and attractiveness of these benefits vary considerably among
organizations. For example, purchase discounts would be especially attractive to
employees of retail store or an airline.

Type # 2. Non-Financial Compensation:

Non-financial compensation refers to compensating employee not in form of money but

in some other forms that stimulate employees’ morale and also improve his
performance.

Types of Compensation – Non-Monetary Forms of Compensation: Primary

and Incentive Compensation:
Good compensation plans, well administered have a salutary effect on the entire
enterprise. Employees are happier in their work, co-operation and loyalty are higher,
amount of output is up, and quality is better. In the absence of such plans compensation
is determined subjectively on the basis of haphazard and arbitrary decisions. This
creates several iniquities which are among the most dangerous sources of friction and
low morale in an enterprise.
Although there can be both monetary and non-monetary forms of compensation
prevailed in an enterprise, yet it is the former which is the most basic element by which
individuals are attracted to an organisation persuaded to remain, and induced to engage in behaviour
beneficial to the company.
Let us discuss the administration of monetary compensation in two parts:
1. Primary compensation, and
2. Incentive compensation.

1. Primary Compensation:

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The primary monetary compensation is basic pay in the form of wages or salaries. In
popular usage a distinction is drawn between these two words. The word ‘wage’ is used
to denote payments to hourly-rated production workers and the word salary is used to
denote payments to clerical, supervisory and managerial employees. For our purpose,
however, this distinction is meaningless because roughly the same problems are
involved in the administration of both wage and salary policies.
I. Basis of Time:
The oldest and most common system of paying employees is on the basis of time, i.e.,
rate per hour, per day, per week, per month or per year. Under this system no
consideration is given to the quality or the amount of output. The employer buys the
time of the worker, i.e., the worker is guaranteed a definite payment for a specified
period of working.

Use of time rates for salaried employees is almost universal. Time basis is more
satisfactory when units of output are not distinguishable and measurable and
employees have little control over the quality of output or when there is no clear-cut
relation between effort and output as on some machine- paced jobs; work delays are
frequent and beyond the employee’s control; quality of work is especially important;
supervision is good and the supervisors know what constitutes “a fair day’s work”, and
competitive conditions and cost control do not require precise advance knowledge of
labour costs per unit of output.
The merits of the system are as under:
i. It is simple to understand. Workers can easily calculate their remuneration.
ii. It is liked by trade unions because it does away with differences of payments and
assures a guaranteed income for a given period of work.
iii. It helps in maintaining the quality of output because the worker is not tempted to
increase his speed to produce sub-standard units to earn more.
iv. It helps in maintaining the machines and equipment in good condition by avoiding
damage to them which would otherwise result if the speed of operations is unduly
increased by workers in order to increase production.
v. It does not cause employees to overwork them and hence it results in fewer accidents
and better employee health.
This can be the only satisfactory system where the units of output are not
distinguishable or measurable or there is no clear-cut relationship between the effort
and output of a worker, as is true in the case of most of the indirect workers, like office
employees and executives.
Following are the demerits of this system:
i. As this system does not distinguish between efficient and inefficient workers, there is
no incentive for workers to improve their efficiency.

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ii. As all the workers are paid equal remuneration irrespective of their quantity of output,
the more efficient among them are tempted either to reduce their speed and efficiency
or to leave the organisation.
iii. As this system provides security to the workers, they are tempted to shirk work which
would lead to loss to the employer.
iv. In order to make the labourers work without wasting their time, the employer is
obliged to appoint personnel for supervision and this increases his cost of production.
II. Real Wages:
Wages can be expressed in two ways: nominal and real. When they are expressed in
terms of money paid to the worker they are called nominal wages. But when they are
expressed in terms of their purchasing power with reference to some base year they are
called real wages.
These wages are arrived at by making adjustment in the nominal wages for the rise or
fall in the cost of living index. Thus, if the nominal wage of a worker in 1988 was Rs.400
p.m.,

and in 1998 it is Rs.900 p.m. but if the living in 1998 has become thrice costly as in
1988, the real wage of the worker in 1998 is Rs.300 only.
There are three requisites of a sound primary compensation structure:
i. It should be internally equitable;
ii. It should be externally competitive; and
iii. It should pay individuals on the basis of their performance.
A description of these requisites now follows:
i. Internal Equity:
Internal equity means that there should be a proper relationship between the wages and
salaries of various ‘positions within the enterprise. If, for example, the salary of a
foreman, though above the average rate in the community, is lower than that of his
subordinates, the foreman is not being paid fairly.
There is inquity in the rates. In other words, the relative wages of an employee are
almost as important for him as his absolute wages. Unfair differentials in pay lower his
morale and often result in high turnover. However, one important implication of the
pursuit of equity in pay is that it loses its incentive and reward properties and becomes
merely fair compensation, just one part of the psychological contract.
ii. Externally Competitive:
Once the wages have been made internally equitable, management’s next task is to
compare them with those being paid in the community for comparable jobs. The wages
and salaries of workers must be in alignment with wages and salaries other
organisations are paying at similar levels.
If this external alignment or comparability is lacking the organisation will not be able to
retain its capable employees or attract employees from outside. The need to achieve

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external alignment is highest in times of full employment when due to shortage of labour
a new worker can choose among employers and when older employees can go to jobs
elsewhere.
To achieve external alignment the management must first know what average rates of
its key jobs are prevaling in the community. It can then fix its own wage level at this
average level or it may decide a higher or a lower level of wages for itself. In either case
the internal relationship among jobs must remain undisturbed.
iii. Individual Pay Determination:
In the final step, management has to decide whether all individuals in jobs of the same
level should be paid the same pay or different pay and how this should be determined.
There are four basic approaches to the determination of individual pay:
(a) The single rate approach,
(b) The merit approach,
(c) The automatic approach, and the
(d) Informal approach.
(a) Single Rates Approach:
When employee performance does not vary significantly on the job because everyone is
required to work at about the same pace (e.g., in simple office jobs) single rates are
frequently paid to employees on jobs. If there are any pay differences in such jobs
employees may consider these as favours.
(b) Merit Approach:
If differences in individual performance and output are important to a company then
some basis for compensating employees for these differences should be established.
Merit rating is a management practice designed to gear the pay of employees to actual
differences in work accomplishments. Merit rating systems assume that performance
can be observed with reasonable accuracy even when it cannot be objectively
measured.
‘

c) The Automatic Approach:

Under this approach both the amount of the pay increase and the period of review are
usually predetermined. In this approach since no consideration is shown to worker’s
individual performance or merit he does not have enough incentive to put in greater
effort.
(d) The Informal Approach:
Sometimes individual pay decisions are made on an informal basis without formal
guides or controls. This is most incorrect because this creates iniquities and confusion
among employees regarding what is expected of them. Lack of company-wide
standards may also result in pay decisions being influenced by personal favouritism.

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The above three requisites are complementary because each reflects different set of
factors in the total situation. Internal equity motivates an employee to progress to jobs of
higher skills and responsibility. Externally competitive rate prevents him from leaving the
organisation.
2. Incentive Compensation:
The fundamental basis for any incentive compensation programme is simple – It should
equitably and consistently recognise and compensate employees for superior
performance. Otherwise, employees may treat bonuses merely as an entitlement,
rightfully expecting their bonuses to be paid simply because they show up to work each
day and put in eight hours.
If the bonus programme ultimately treats unequal employees equally, the ability to use
the bonus as a motivational tool is severely compromised. Giving ample rewards and
recognition to star performers has the benefit of providing a role model for other
employees. As a result, standards of performance are elevated and morale is
strengthened.
A second premise of a well-crafted incentive compensation programme is that it must
direct individual behaviour toward achieving common company goals. To many people,
money is a motivator, pure and simple. To others, it is simply a form of recognition for a

job well done. Regardless, it can and should be used to induce desired behaviour
toward carefully crafted corporate objectives.
A third premise of an effective incentive programme is that it should be designed to
affect favourable change within your organisation. People, by nature, are fearful of and
resistant to change. Incentive compensation can be used as a “carrot” to induce desired
organisational change.
A fourth premise of a thoughtfully designed incentive programme is that it should allow a
substantial portion of compensation to be a variable cost. Ideally, the plan should
reward results rather than actions. In other words, a manager who consistently works
14-hour days should not necessarily be rewarded for his work ethics.
Only if the employee achieves clearly defined results, such as meeting schedules,
should they be rewarded. Therefore, if a portion of an individual’s compensation is tied
to their results, the more successful the company. As a result, what was a fixed expense
(salary) is broken into an expense with both variable and fixed components.
Naturally, the fixed and variable components of any employee’s compensation will vary
depending on the type of employee your company needs. A high variable component
will tend to attract risk-takers who will expect a larger reward for the amount of risk they
take. Conversely, a compensation plan with a high salary, or fixed component, will tend
to attract more conservative employees who value the security and stability of their
position.

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Every organisation needs a mixture of both of these employees. For example, most
companies probably would not want an aggressive risk taker as a controller, conversely,
a conservative, security-conscious manager may not be what is needed to maximise
profits. Therefore, the overall compensation programme must equitably reward the
contributions of both.
Finally, the programme should have some degree of flexibility in order to meet the
unique needs of both your company and employees. Clearly, the programme should
recognise the contributions of different groups of employees. For example, the efforts of
your controller and sales manager may be equally vital to your company’s success, yet
the bonus programme should be tailored to reward them based on the unique
contributions of their individual positions.
The controller might be rewarded based on average age of accounts receivable and the
timeliness and accuracy of job cost reports, whereas the sales manager might be
rewarded based on sales, and new business opportunities identified. Additionally, the
performance of employees within a given classification may vary as to their relative
impact on your company’s success. The programme must be designed so that
individuals in similar positions are rewarded commensurate with their contribution.

Types of Compensation – Related to Workers (Job Evaluation, Wages and Salary

Administration, Incentives, Bonus, Fringe Benefits and Social Security Measures
“Worker’s compensation is really a worker’s right, rather than a benefit.” “At the most
basic level, we would expect that there is a strong relationship between GDP levels and
actual compensation levels in the different markets across the region. In the more
wealthy countries, we expect higher compensation levels in the less wealthy countries.”
Compensation is a systematic approach for providing monetary value to employees in
exchange for work performed. Compensation may achieve several purposes assisting
in recruitment, job performance, and job satisfaction. In other words we can say that
Compensation is the process of providing adequate, equitable and fair remuneration to
the employees. It includes job evaluation, wage and salary administration, incentives,
bonus, fringe benefits, social security measures, etc.
1. Job Evaluation:
It is the process of determining relative worth of jobs:
i. Select suitable job evaluation techniques
ii. Classify jobs into various categories
iii. Determining relative value of jobs in various categories
2. Wages and Salary Administration:
This is the process of developing and operating a suitable wage and salary
programmes.
It covers:
i. Conducting wage and salary survey

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ii. Determining wage and salary rates based on various factors.
iii. Administering wage and salary programmes
iv. Evaluating its effectiveness
3. Incentives:
It is the process of formulating, administering and reviewing the schemes of financial
incentives in addition to regular payment of wages and salary.
It includes:
i. Formulating incentive payment schemes
ii. Helping functional managers
iii. Review them periodically to evaluate effectiveness
4. Bonus:
It includes payment of statutory bonus according to the Payment of Bonus Act, 1965,
and its latest amendments.
In India the employees drawing above certain compensation are not covered under the
Bonus Act. However, the employer pays them suitable lump sum variable amount
depending upon their level in the organisation which is called ex gratia. This is not
compulsory on the part of the employer but acts as an incentive to the employee.
5. Fringe Benefits:
These are the various benefits at the fringe of the wage. Management provides these
benefits to motivate the employees and to meet their life time contingencies.

These benefits include:

i. Disablement benefit
ii. Housing facilities
iii. Educational facilities to employees and their children
iv. Canteen facilities
v. Recreational facilities
vi. Conveyance facilities
vii. Credit facilities
viii. Legal clinic
ix. Medical, maternity and welfare facilities
x. Company stores
6. Social Security Measures:
Management provides social security to their employees in addition to the fringe
benefits.
These measures include:
i. Workmen compensation to those workers (or their dependents) who met with an
accident
ii. Maternity benefits to women employees
iii. Sickness benefits and medical benefits
iv. Disablement benefits/allowance

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v. Dependent benefits
vi. Retirement benefits like provident fund, pension, gratuity, etc.
A lot of thinking and comparison with competitive organisations goes into fixing the
compensation of employees particularly for middle management and above levels by
the management. Some organisation pays certain amount annually to key executives
which are not a part of the regular pay and allowances. By doing this the incentive acts
to deliver enhanced performance but also ensure the loyalty of the key executive to
remain with the company.

Types of Compensation – Prevalent in the Indian Industries: Basic Pay, Dearness

Allowance, Incentive Payments, Performance-Based Remuneration, Bonus and a
Few Others
The basic types of compensation prevalent particularly in the Indian industries
are:
(1) Basic pay,
(2) Dearness or cost of living allowance,
(3) Incentive payments,
(4) Performance-based remuneration,
(5) Bonus,
(6) Fringe benefits and miscellaneous cash allowances.
Type # 1. Basic Pay:
Basic pay universally constitutes the most important component of compensation.
However, there are variations in the manner in which basic pay is determined and paid.
It may be on daily, weekly or monthly basis. In India, under the Minimum Wages Act,
1948, both the central and state governments have fixed minimum daily rates of wages
for a large number of sweated employments.
In the U.S.A., U. K. and France, there has been the practice of fixing hourly rates of
wages for several categories of workers. In the organised sectors in India, the practice
of prescribing monthly basic rates of wages under wage scales with provision of annual
increments is widely prevalent.
Basic wages are significant for workers for a variety of reasons. Generally speaking,
most other cash allowances made available to workers, such as dearness allowance,
house rent allowance, city compensatory allowance, medical allowance and so on, are
linked with the quantum of basic wages. Besides, contributions to social security funds
such as provident and pension funds, gratuity and certain cash allowances are often
linked to basic wages.
The quantum of basic pay is also taken into account in determining the scales of certain
fringe benefits, such as housing accommodation, and travelling and leave travel
allowances. Overtime payments for additional hours worked are also usually based on
basic pay.

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Type # 2. Dearness or Cost of Living Allowance:
Dearness allowance or cost of living allowance, separate and distinct from basic pay,
has been an important component of compensation in industrial and governmental
employments in India and a number of Asian countries. The basic purpose behind the
provision of dearness allowance is to offset the rise in prices of consumption goods and
to protect the real wages from being encroached by price rise.
Starting during the Second World War period on a temporary and experimental basis,
the system has become a permanent feature of the wage structure in Indian industries
and governmental and semi-governmental employments.
In general, the quantum of dearness allowance payable to industrial workers as well as
government and semi-government employees is linked with the fluctuations in the
Consumer Price Index Numbers for industrial workers worked out by Labour Bureau,
Ministry of Labour, and Government of India, which has been engaged in the task since
1946.
The specific schemes for the determination of D.A. have considerably varied from time
to time. In its earliest form, flat rates on a graduated basis without any linkage to CPI
numbers were prevalent. Subsequently, calculation of D.A. came to be made with
reference to rise or fall in the CPI numbers calculated by either the central or state
governments.
Initially, the percentage of neutralisation for the rise in prices was higher in low wage
brackets tapering off gradually when wages rose. Later, a more or less consistent
formula

providing for neutralisation for rise in prices on a common percentage basis emerged for
government and semi-government employees. However, the industrial establishments
have their own separate schemes generally worked out on the basis of negotiations.
In many countries such as the U.S.A. and Australia, there are schemes of automatic
revision of basic rates of pay when prices rise above the specified level. Many collective
agreements in the U.S.A. contain escalator clauses to avoid frequent bargaining for
revision of wage rates.
Type # 3. Incentive Payments:
In a number of industrial undertakings, employees are in receipt of incentive payments.
These incentive schemes are generally directly related to the quantum, and in some
cases, to the quality of goods produced by individual employees or a group of them.
The specific schemes vary from organisation to organisation, and with different sets of
employees in the same organisation.
There are schemes, such as the straight piece-rate system, in which the earnings of
employees vary in the same proportion as increase in output. In many schemes,
incentive payments are lower than the proportion of increase in output. There are also
schemes in which incentive payments are higher in proportion to the increase in output.
In a number of schemes, incentive payments vary in different proportions at different
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levels of output. Performance-based remuneration described below may also be
considered incentive payment.
Type # 4. Performance-Based Remuneration:
During more recent years, especially after the onset of globalisation and competition,
many categories of employees, particularly managerial and supervisory personnel, have
been receiving performance- based remuneration.
Such a remuneration is worked out on the basis of the outcome of performance
appraisal of individual employees, which takes into account the level of their
performance in such areas as extent of improvement in the quantity and quality of
products or services, acquisition of skills and capabilities, regularity of attendance,
relationship with co-employees, capacity to face challenging situations and extent of
commitment to work.
The specific schemes of performance appraisal vary from organisation to organisation
and different sets of personnel in the same organisation. Based on performance
appraisals, individual employees are allotted specific grades, and are remunerated and
given inducements based on their performance. Performance appraisal also constitutes
key to decisions in other areas of HRM such as promotion, transfer, demotion and even
separation.
Type # 5. Bonus:
Employees in a large number of industrial establishments in India have been in receipt
of profit- sharing bonus. Initially, the practice of giving bonus to industrial workers
started on an ad hoc basis primarily at the discretion of employers. However, during the
course of

time, it became a major bone of contention between employers and workmen, often
resulting in industrial unrest and work stoppages.
Many disputes on the question of bonus came up for decision by industrial tribunals and
even Supreme Court. In view of the mounting and regular unrest over the question, the
Payment of Bonus Act was enacted in 1965. The Act specifies in some detail the
formula for the calculation of bonus, and prescribes both the minimum and maximum
bonus payable to specified categories of workers.
Type # 6. Fringe Benefits and Miscellaneous Cash Allowances:
Apart from wages and salaries, incentive payments, dearness allowance and bonuses,
employees are often in receipt of several types of indirect compensation or fringe
benefits, both in cash and kind.
These include housing facilities and house rent allowance, city compensatory
allowance, leave-travel facilities, medical facilities and allowances, educational facilities
and allowances for the children of employees, social security benefits such as sickness
benefit, provident fund, gratuity and pension, concessional availability of electricity and
food-grains, transport facilities, supply of uniforms and so on.

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The nature and scale of fringe benefits vary widely from organisation to organisation. To
the employer, they are a part of labour cost. In many organisations, they constitute a
substantial portion of labour cost, surpassing even the wage bill.
Many of these fringe benefits are made available to employees voluntarily by the
employers; many have been the outcome of collective agreements and many others
have been statutorily imposed. Many employers, owning large-scale industrial
establishments and also those having their establishments in remote and isolated
areas, provide housing accommodation to their employees and have also established
well-equipped hospitals and dispensaries.
Gary Dessler and Biju Varkkey have preferred to keep various forms of compensation
into two main categories—direct financial payments such as wages, salaries, incentives,
commission and bonuses, and indirect financial payments such as employer-paid
insurance and leave travel concessions. Joseph J. Martocchio has classified seven
types of monetary or core compensation in the context of practices in the U.S.A.
These are as follows – hourly pay, annual salary, cost of living adjustments, seniority
pay, merit pay, incentive pay and person-focused pay, pay-for-knowledge and skill-
based pay. Practices in regard to forms of compensation or their combinations vary from
organization to organization depending on a set of internal and external factors.

ANSWER 3
Law relating to Victim Compensation

Introduction
Every crime produces a victim(s). The victims are generally considered as mere

informants or witnesses in criminal trials, assisting the state in its endeavor to punish

offenders, are now becoming the focal points of our criminal justice system. The criminal

justice system is basically meant to redress the victimization of these victims and to

address the issues surrounding him. However, getting justice in Indian criminal justice

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system was never a bed of roses for the victims of offence. The last few decades

however witnessed groundbreaking reforms in the approach of legal systems nationally

as well as internationally with reforms not only in statutory laws but also even in judicial

approach towards the victims of crime.

Victim compensation is one of the major aspects in reparation of the harm or injury

caused to the victim due to the commission of the crime. Monetary assistance in one-

way or the other always benefits the victims in the mitigation of their sufferings. The

renaissance of the prominence of victims in legal system is however a recent

phenomenon.

A. Ancient History of Victim Compensation

The ancient Indian History is a witness to the fact that the victims of crimes have

sufficient provisions of restitution by way of compensation to injuries. Author of the book,

“General Principle of Hindu Jurisprudence” Dr. Priyanath Sen[1] has observed-

“It is, however, remarkable that in as much as it was concerned to be the duty of the

King to protect the property of his people, if the King could not restore the stolen articles

or recover their price for the owner by apprehending the thief, it was deemed to be his

duty to pay the price to the owner out of his own treasury, and in his turn he could

recover the same from the village officers who by reason of their negligence, were

accountable for the thief’s escape.“

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Reparation or compensation as a form of punishment is found to be recognized from

ancient time in India. In ancient Hindu law, during Sutra period, awarding of

compensation was treated as a royal right. The law of Manu, requires the offender to

pay compensation and pay the expenses of cure in case of injuries to the sufferer and

satisfaction to the owner where goods were damaged. In all cases of cutting of a limb,

wounding or fetching blood, the assailant shall pay the expenses of a perfect cure or in

his failure, both full damages and a fine. It shows that the victim compensation was

never an alien concept in the justice delivery systems of the country. The edifice of the

law in our present day legal system relating to the victim compensation are provisions

contained in the Criminal Procedure Code, 1973 and various judgments of the Hon’ble

Supreme Court. The question that arises for consideration is that despite having laws

for victim compensation are these laws being satisfactorily used by those on who lies

the duty of the execution of these laws and to give beneficial effects to it. Answer is very

infrequently. The reasons are many.

Some more prominent are like the 12th century distinction of English law of wrongs into

civil wrongs and criminal wrongs which leads to misconception that the area of

compensation is something exclusively belonging to the domain of civil law and others

less obvious like the ignorance of those who can give effect to these benefactions. The

present criminal justice system is based on the assumption that the claims of a victim of

crime are sufficiently satisfied by the conviction of the perpetrator. It is a truth that in our

present day adversarial legal system between the state and the accused, the victim is

not only neglected but is lost in silence. The role of the victim is limited to report the

offence and depose in the court on behalf of prosecuting party, which is the State.

That’s all. The Malimath Committee reflected on the present criminal justice system that

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not only the victim’s right to compensation was ignored except as token provision under

the Criminal Procedure Code but also the right to participate as the dominant

stakeholder in criminal proceedings was taken away from him. He has no right to lead

evidence, he cannot challenge the evidence through cross-examination of witnesses

nor can he advance arguments to influence decision-making.

B. Compensation to the Victim: Criminal Justice System

Now accepting that there is no uniformity in the legal system in the country to address

the issue of compensation to the victims of crime, it is expedient to discuss the legal

position in respect of compensation to the victims of the offence. Post independence,

the criminal trials were governed by criminal Procedure Codes 1898 and then by 1973

Code (“Cr.PC”). Till the year 2008, there was a provision more or less similar in both the

codes for compensation to the victims of the offence that is section 545 in the old Code

and section 357 in the new Code.

(i) Ingredients

Section 357 Cr.PC: Order to pay compensation

(1) In case of Conviction and Fine is part of Sentence to Accused

When a Court imposes a sentence of fine or a sentence (including a sentence of death)

of which fine forms a part, the Court may, when passing judgment, order the whole or

any part of the fine recovered to be applied-

(a) Expenses in Prosecution: In covering the expenses properly incurred in the  

prosecution;

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(b) Compensation to Victim: In the payment to any person of compensation for  any

loss or injury caused by the offence, when compensation is, in the opinion of the Court,

recoverable by such person in a Civil Court;

(c) Compensation in case of Death:  When any person is convicted of any offence for

having caused the death of another person or of having abetted the commission of such

an offence, the fine imposed may be used in paying   compensation to the persons who

are covered for relief under the Fatal Accidents Act, 1855 (13 of 1855), entitled to

recover damages from the person   sentenced for the loss resulting to them from such

death;

(d) Compensation of Victim in other  Offense: When any person is convicted of any

offence which includes theft, criminal misappropriation, criminal breach of trust, or

cheating, or of having dishonestly received or retained, or of   having voluntarily

assisted in disposing of, stolen property knowing or  having reason to believe the same

to be stolen, in compensating any bona fide purchaser of such property for the loss of

the same if such property is    restored to the possession of the person entitled thereto.

(2) Payment of Compensation subject to Appeal

If the fine is imposed in a case, which is subject to appeal, no such payment  shall be

made before the period allowed for presenting the appeal has elapsed, or, if an appeal

be presented,  before the decision of the appeal.

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(3) Sentences without Fine

When a Court imposes a sentence, of which fine does not form a part, the Court may,

when passing judgment, order the accused person to pay, by way of compensation,

such amount as may be    specified in the order to the person who has suffered any loss

or injury by   reason of the act for which the accused person has been so sentenced.

(ii)The Court empowered to impose Compensation

The High Court or Court of Session or appellate court, when exercising its powers of

revision may also make an order under aforesaid section. At the time of awarding

compensation in any subsequent civil suit relating to the same matter, the Court shall

take into account any sum paid or recovered as compensation under this section.

C. Theory behind the Compensation of Victims

So this was the only provision in Criminal Procedure Code to compensate the victims of

offence. The compensation was to be payable by the accused and on his conviction.

This provision therefore prescribes the person as well as the circumstance (i.e.

conviction of the accused) in which the compensation can be paid to the victim. It is a

fact that majority of people who are accused of and are convicted of crimes are poor

and therefore this provision of accused depended compensation was never a

satisfactory answer to the woes of victims of crime. The payment of compensation by

the offender is not possible

where there is acquittal or where the offender is not apprehended. Further, the payment

remains suspended till the limitation period for the appeal expires or if an appeal is filed,

till the appeal is disposed off. The delay in the realization of the amount often adds to

the woes of the victim. In that event is it not the duty of the state to compensate the
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victims of crime. Jeremy Bentham an English jurist and philosopher advocated

compensation to victims, holding that, “satisfaction” should be drawn from the offender’s

property, but if the offender is without property…. It ought to be furnished out of the

public treasury, because it is an object of public good. Jeremy Bentham advocated the

theory of strict liability, which claims that compensation should be awarded because the

social contract between the victim and his government has been broken. That is, the

victim has a legal claim against the state for its failure to prevent the crime that

produced the victimization. Since the government limits the ability of the individual to

protect him and instead gives that power to law enforcement personnel and taxes the

individual to support those personnel, then the victim can hold the government liable

when its law enforcement activities are unsuccessful. And, the case against the

government is enhanced when one considers the barriers it creates against the victims

being restituted by the offender, including the aforementioned doctrine of mutuality

which limits the chances of civil recovery, and the states imprisonment of the offender-

which impedes his ability to reimburse the victim2.

D. Recommendations, Judicial Activism and Amendment to include Victim

Compensation in Judicial System:-

The states duty to rehabilitate the victim of crime cannot be put any lower than its

responsibility of rehabilitating the criminal. In India, however the state remained itself

away from this obligation of compensating the victims till 2008, when the Criminal

procedure Code was amended to impose a liability on state for such compensations.

The

14th Law Commission in its report recommended state compensation, which is justified

on the grounds that it is the political, economic and social institutions of the state system

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that generates crime by poverty, discrimination, unemployment and insecurity. The

Malimath Committee3 was also of the view that the principle of compensating victims of

crime has for long been recognized by the law though it is recognized more as a token

relief rather than part of a punishment or substantial remedy. Victim compensation is a

State obligation in all-serious crimes, whether the offender is apprehended or not,

convicted or acquitted. This is to be organized in a separate legislation by Parliament.

Victim compensation is an important aspect of victim restitution in criminal justice

system. Supreme Court judgment recently in the case of Ankur Shivaji Gaikwad Vs.

State of Maharashtra[2], has observed that a long line of judicial pronouncements of

Supreme Court of India recognized a paradigm shift in the approach to victims of crime

who are held entitled to reparation, restitution or compensation for loss or injury suffered

by them.

It is in consonance with this shift in the approach towards victims for compensating

them that an amendment was made in the Code of Criminal Procedure, 1973 whereby a

new provision i.e. Section 357 A has been added which provides for the Victim

Compensation Scheme. Earlier a provision for compensation to the victims of crime was

section 357 Code of Criminal Procedure in which the mandate was a direction to the

convict to pay compensation to the victims of crime, if the court on conviction of

accused so directs. However in many cases as we see that the convicts are from very

poor back ground or are reluctant to pay compensation considering their prolonged

incarcerations, the victims seems to be remediless.

(i)      New Provision for Victim Compensation

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It appears that in order to overcome the situation, a new section 357 A Code of Criminal

Procedure was added in the Code of Criminal Procedure by an amendment in the year

2009. This was the much-needed relief to the victims of offences and therefore one of

the most progressive legislation in recent times. It reads as-

Section 357A of CrPC- Victim compensation scheme

(1) Scheme for Compensation: Every State Government in co-ordination with the

Central Government shall prepare a scheme for providing funds for the purpose of

compensation to the victim or his dependents who have suffered loss or injury as a

result of the crime and who require rehabilitation. The purpose of preparing the scheme

by the state governments in consultation with the central government was to have

uniform schemes of victim compensation throughout India but this was probably not

done while preparing the schemes and the result is that there is great disparity in

compensations to victims in these schemes.

(2) Power to Decide Quantum of Compensation: Whenever a recommendation is

made by the Court for compensation, the District or the State Legal Service Authority, as

the case may be, shall decide the quantum of compensation to be awarded under the

scheme aforesaid.

(3) Inadequate Compensation/Compensation in case of Acquittal or Discharge: If

the trial Court, at the conclusion of the trial, is satisfied, that the compensation awarded

under section 357 is not adequate for such rehabilitation, or where the cases end in

acquittal or discharge and the victim has to be rehabilitated, it may make

recommendation for compensation.

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(4) Compensation when Offender is Untraceable:  Where the offender is not traced or

identified, but the victim is identified, and where no trial takes place, the victim or his

dependents may make an application to the State or the District Legal Services

Authority for award of compensation which shall be decided after due enquiry award

adequate compensation by completing the enquiry within two months.

(5) Collateral Relief to Victim: The State or the District Legal Services Authority, as the

case may be, to lessen the suffering of the victim, may order for immediate first-aid

facility or medical benefits to be made available free of cost on the certificate of the

police officer not below the rank of the officer in charge of the police station or a

Magistrate of the area concerned, or any other interim relief as the appropriate authority

deems fit.

(ii)    Position of States in Victim Compensation

In Goa there is a provision of compensation of Rs Ten Lacs to the rape victim whereas

the scheme of Delhi provides for Rs Three lacs as maximum compensation with states

like UP having provisions of further low compensations to such victims. However, in

order to avoid these disparities the Supreme Court has given a landmark judgment

in Suresh vs. State of Haryana[3] observed that there is need to consider upward

revision in the scale for compensation in victim compensation schemes and pending

such consideration Authorities are directed to adopt the scale notified by the State of

Kerala in its scheme, unless the scale awarded by any other State or Union Territory is

higher. It will therefore mean that if a victim compensation Scheme of a State prescribes

lesser compensation for some offence, then in that event, the victim compensation

scheme of the State of Kerala has to be followed. This has an effect of making

compensations uniform throughout the country if followed in its right spirit. The

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Government of Delhi in compliance of section 357A Code of Criminal Procedure has

framed a Victim Compensation Scheme

for Delhi called as ‘’Delhi Victim Compensation Scheme, 2011’’. It has come into force

on 02.02.2012.   The Nodal agency for deciding the quantum of compensation under

the Victim Compensation Scheme is the District or the State Legal Services Authority,

as the case may be. Clause 1 also speaks of creating a fund under the scheme.

E. Section 357 read with Section 357A of the CrPC.

Under this provision 357 A Code of Criminal Procedure, the State is also liable to pay

compensation to the victims of crime apart from the accused under section 357 Code of

Criminal Procedure. There are many situations after the commission of the offences in

which the compensation can be awarded.

At the conclusion of the trial.

Inadequate compensation

Accused not traceable or no trial commenced

Earlier under section 357, the compensation was awarded only in the eventuality of the

conviction of the accused but now not only on conviction but also on acquittal or

discharge of the accused or in case of untraced status of the accused, compensation

can be granted. This is a positive development that takes into account practical reality of

an already crumbling criminal justice system, which is not in a position to bring to book

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all offenders. It means that the new section 357 A Code of Criminal Procedure has

substantially widened the scope of compensating the victims of crimes.

F. Other Relevant Provisions for Victim Compensation

(i)   Section 372 CrPC

Section 372 of the Cr.PC. has been amended, containing the following proviso:

“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.”

(ii)    Meaning of ‘Dependent’

The term ‘’Dependent’’ of victim has been defined in the Delhi Victim Compensation

Scheme. Dependent includes wife, husband, father, mother, unmarried daughter and

minor children of the victim as determined by the authority empowered to issue

dependency certificate that is Collector, or any other authority authorized by the

Government.

(iii)  Victim Compensation Disbursement

(1)     Procedure for Disbursement of Compensation

For disbursement of compensation to the victim, there shall be a fund called ‘’The Victim

Compensation Fund’’ from which the amount of compensation, as decided by the DLSA

has to be paid to the victim or to her dependents. The procedure for granting

compensation is provided in section 5 of the aforesaid scheme. Whenever the court

makes recommendation for compensation:

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The DLSA, examines the case, verify the contents of the claim with regard to the

loss or injury or rehabilitation as a result of crime and may also called for any other

relevant information necessary for consideration of the claim.

The quantum of compensation has to be decided by DLSA on the basis of loss or

injury or requirement for rehabilitation, medical expenses to be incurred on treatment

and such incidental charges, such as funeral expenses etc.

The compensation has to be deposited in a Nationalized Bank of the victim or her

dependents.

Out of the amount so deposited, 75 per cent of the same is put in a fixed deposit for

a minimum period of three years and the remaining 25 per cent shall be available for

the utilization and initial expenses by the victim as the case may be.

In case of a minor, 80 per cent amount of the compensation is to be deposited

which can be drawn only on attainment of the age of majority, but not before three

years of the deposition. However, in exceptional cases, the aforesaid amount may be

withdrawn for educational or medical needs of the beneficiary at the discretion of

DLSA.

The interest on the same has to be credited directly by the bank in the saving

account of the victim/dependent on monthly basis.

This scheme also provides for the provision of immediate first aid and medical

benefit or any other interim relief to the victim on a certificate of a police officer not

below the rank of officer in-charge of police station or a Magistrate of the area

concerned.

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Legal Services Authorities also provides interim compensation in suitable cases

where the victim needs immediate medical treatment/rehabilitation. Such interim

compensation can be payable on recommendations of SHO concerned and

Magistrate dealing with the case. This interim compensation is provided under section

8 of the scheme.

Legal Services Authority also has the power to institute legal proceedings before

competent court of law for recovery of compensation granted to the victim/his or her

dependents from the persons responsible for causing loss or injury as a result of

crime. In this regard it also worthwhile to mention that the courts may also grant

interim compensation to the victims. The relevant judgments are 

Shri Bodhisattwa Gautam vs Miss Subhra Chakraborty[4] and Suresh vs State

of Haryana[5]

(2)     Limitation and Limit of Compensation

Victim Compensation Scheme also has a schedule providing for minimum and

maximum amount of compensation in different categories of offences. The quantum of

compensation cannot be less than a minimum amount and cannot be more than the

maximum amount provided in the schedule attached to the Victim Compensation

Scheme. For example in cases of rape the minimum amount of compensation that can

be recommended is Rs. 2 lacs and maximum as Rs. 3 lacs. The limitation period for

filing a claim Under section 357(4) Code of Criminal Procedure is in cases when the

offender cannot be traced or identified is 3 years from the date of occurrence of crime.

(3)     Precedents

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The judicial response has always been positive in dealing with the benevolent

provisions of compensation.

In Hari Krishna & State of Haryana v. Sukhbir Singh[6], Supreme Court judgment

mandated courts to exercise Section 357 liberally and award adequate compensation,

particularly in cases where the accused is released on admonition, probation or when

the parties enter into a compromise. At the same time, the court cautioned that the

compensation must be reasonable, fair and just; taking into account the facts and

circumstances of each case, nature of the crime, veracity of the claim and ability of the

accused to pay. The court further observed that the payment by way of compensation

must, however, be reasonable. What is reasonable may depend upon the facts and

circumstances of each case. The quantum of compensation may be determined by

taking into account the nature of the crime and the ability of the accused to pay. If

perhaps, there are more than one accused they may be asked to pay in equal terms,

unless their capacity to pay varies considerably. A reasonable period for payment of

compensation, if necessary by installment, may also be given. The court may enforce

the order by imposing sentence in default. Thus, the court must be satisfied that the

victim has suffered loss or injury due to the act, neglect or default of the accused to be

entitled to recover compensation. This loss or injury may be physical, mental or

pecuniary.

Recently again the Supreme Court in

 Ankush Shivaji Gaikwads(supra) while considering the amended provision of Code of

Criminal Procedure reiterated its view and further impressed that now the courts have to

give reasons for not compensating the victim while deciding the case. The court

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observed that the amendments to the Code of Criminal Procedure brought about in

2008 focused heavily on the rights of victims in a criminal trial, particularly in trials

relating to sexual offences. Though the 2008 amendments left Section 357 unchanged,

they introduced Section 357A under which the Court is empowered to direct the State to

pay compensation to the victim in such cases where the compensation awarded under

Section 357 is not adequate for such rehabilitation, or where the case ends in acquittal

or discharge and the victim has to be rehabilitated. Under this provision, even if the

accused is not tried but the victim needs to be rehabilitated, the victim may request the

State or

District Legal Services Authority to award him/her compensation. This provision was

introduced due to the recommendations made by the Law Commission of India in its

152nd and 54th Reports in 1994 and 1996 respectively. In India the principles of

compensation to crime victims need to be reviewed and expanded to cover all cases.

The compensation should not be limited only to fines, penalties and forfeitures realized.

The State should accept the principle of providing assistance to victims out of its own

funds.

The court summed up its judgment as follows:

 “While the award or refusal of compensation in a particular case may be within the

Court’s discretion, there exists a mandatory duty on the Court to apply its mind to the

question in every criminal case. Application of mind to the question is best disclosed by

recording reasons for awarding/refusing compensation. It is axiomatic that for any

exercise involving application of mind, the Court ought to have the necessary material,

which it would evaluate to arrive at a fair and reasonable conclusion. It is also beyond

dispute that the occasion to consider the question of award of compensation would

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logically arise only after the court records a conviction of the accused. Capacity of the

accused to pay which constitutes an important aspect of any order under Section 357

Code of Criminal Procedure would involve a certain enquiry albeit summary unless of

course the facts as emerging in the course of the trial are so clear that the court

considers it unnecessary to do so. Such an enquiry can precede an order on sentence

to enable the court to take a view, both on the question of sentence and compensation

that it may in its wisdom decide to award to the victim or his/her family.”

The prominent feature of this judgment is that now the courts are obliged to give

reasons for not recommending compensation to the victims of the crime. Now

concluding with the hope that the judgment of Supreme Court in

Ankush Shivaji Gaikwads (supra) case gets due attention from all those who are

concerned with the administration of criminal justice system and that in the changed

legal scenario in favour of the victims, this “neglected and forgotten lot” called victims

may not again be lost in oblivion groping in the dark for their precious rights of

compensation for their injuries.

Conclusions

There are provisions for compensation to the victims of crime in Cr.PC.

The compensation is to be provided by Legal Service Authorities on the

recommendation of Courts.

The compensation can be interim that is during investigation or trial or can be final

at the conclusion of the trial.

The compensation is payable according to the ‘Victim Compensation Schemes’ of

respective States.

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The courts have to give reasons in case it is not recommending compensation to

the victims of crime at the conclusion of the trial.

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References

 Compensation Law in India – Overtime and Night Work Compensation at Workplace -

Paycheck.in
 Types of Compensation (businessmanagementideas.com)
 Right to Compensation - Compensation definition under the Indian Law (ipleaders.in)
 rudal shah v state of bihar (indiankanoon.org)

Book References

 Robert Ilias- “Victims of The System” ED. 1983 page 24

 Report of Committee on Reforms of Criminal Justice System, Ministry of Home
Affairs, Government of India (2003) Vol.1
 [1] Dr. Priyanath Sen: “General Principle of Hindu Jurisprudence”, Page 335
 [2] S.L.P. (Crl.) No.6287 of 2011
 [3] Criminal Appeal NO. 420 of 2012
 [4] 1996 AIR 922
 [5] Criminal Appeal No. 420 of 2012
 [6] (1988) 4 S.C.C. 551

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