compensation definition
Image Source -

*This article is written by Ayushi Dubey, of Damodaram Sanjivayya National Law University, Visakhapatnam.

Respect for the rights of individuals is the true bastion of democracy.”

The fundamental rights enshrined in the constitution would be meaningless unless and until there are effective measures adopted for its enforcement. There can be no right without a remedy (Ubi jus ibi remedium).

The word ‘compensation’ means to expiate the loss suffered. The rationale or basis for compensation may be the following three perspectives:

  1.   As a social insurance
  2.   As a welfare measure by the Govt.
  3.   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.

Download Now

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 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 Compensation under Special Laws
Code of Criminal Procedure, 1973 i. Probation of offenders act,1958
Indian Constitution 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 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.

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.

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 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.

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 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 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.

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.


The jurisprudence of compensation is relatively young but has made significant headway since the Rudul Shah’ Case. The new remedy has proved a godsend to many and has provided a substantial shot in the arm in the role of the Courts as protectors of human rights. The failings of the common law of torts are now redressed to a good extent. The judicial initiative is a welcome step, but it is only a guiding star in the long struggle of Rudul Shah’s and Sahelis who grope under the reign of terror of a politicized bureaucracy or bureaucratized politicians and other leviathans collectively manifested in the monster known as the State. The trend is thus clearly a step in the right discretion. But it must also be noted that it has been observed in only a small minority of cases. The judiciary must use the provision of compensation to grant relief in appropriate cases. The lawyers engaged in such matter may also, contribute by including in their pleadings, a prayer for compensation. To sum up, this area promises to be an interesting one for future research.


Please enter your comment!
Please enter your name here