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Briefly explain and critically evaluate the concept of “victims' compensation” in India in the light of statutory provisions and judicial decisions.

Updated On: Jul 13, 2026
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Solution and Explanation

The basic split in the law:
Indian law gives a victim compensation through two separate routes that do not depend on each other. One route runs through the criminal trial itself, Section 357 of the CrPC, where the court pays the victim out of the fine collected from the convict. The other route runs through the state directly, Section 357A, where a government-funded scheme pays the victim regardless of whether the accused is caught, convicted, or has any money at all.

Why the second route had to exist:
A scheme tied only to the offender's fine fails whenever there is no conviction, no fine, or no ability to pay, which describes a large share of criminal cases. Section 357A was added by the 2008 amendment precisely to stop victims from being left with nothing in those situations, and Section 357B later added that this state compensation is on top of, not instead of, any fine-based compensation for rape and acid attack cases.

Special categories that could not wait for trial to end:
Some victims cannot wait years for a case to conclude before getting help. The POCSO Act requires Special Courts to award interim compensation to child victims for urgent needs, separate from the final compensation decided later. The Motor Vehicles Act does something similar through no-fault liability under Section 140, paying a fixed amount without the claimant having to prove anyone was at fault. The Domestic Violence Act gives a magistrate power to order monetary relief for medical costs and lost earnings while the case is still going on.

What the courts added on top of the statute:
Even before these provisions existed in this much detail, the Supreme Court had already treated compensation as a constitutional remedy for custodial and state-caused harm, calling it a public law duty distinct from an ordinary damages claim. That judicial groundwork is why Parliament could later build a full statutory scheme on top of it rather than starting from nothing.
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An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”) in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had personally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group in which CPM held a controlling interest (about 2% of the issued share capital of Tata Sons). Seven out of the nine directors of Tata Sons voted for CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to vote as he was an interested director. Mistry challenged his removal, accusing the board of mismanagement and of oppressing minority shareholders. however, the National Company Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in National Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court. CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order reinstating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships in the holding company as well as three group companies, with a preliminary observation that the first impression of the order was “not good” and that the tribunal ‘could’ not have given consequential relief that had not been sought in the first place. Ultimately, the Supreme Court decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that “whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’ under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed that “unless the removal of a person as a chairman of a company is oppressive or mismanaged or done in a prejudicial manner damaging the interests of the company, its members or the public at large, the NCLT cannot interfere with the removal of a person as a Chairman of a Company in a petition under Section 241 of the Companies Act, 2013.” This case highlighted the point that “an executive chairman does not have sovereign authority over the company. In corporate democracy, decision making always remains with the Board as long as they enjoy the pleasure of the shareholders. Likewise, an executive chairman will continue as long as he/she enjoys the pleasure of the Board. An assumption by the executive chairman that he/she would have a free hand in running the affairs of the company is incongruous to corporate governance and corporate democracy. The Tribunal held that the concept of ‘free hand rule’ is antithesis to collective responsibility and collective decision making”.
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[Extract from the judgment of the Supreme Court in Shree Sidhbali Steels Limited v. State of Uttar Pradesh, (2011) 3 SCC 193, decided on January 20, 2011, hereafter ‘Shree Sidhbali Steels’].
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