Criminal Law Reforms : Introducing The 'Penalty Unit' & The 'Standard Scale'
One happy development in the legal field during the Covid-19 lockdown was the formation of a five-member Committee for Reforms in Criminal Law ("Committee") as reported here. The Committee is to "recommend reforms in the criminal law of the country in a principled, effective and efficient manner that ensures the safety and security of the individual, the community and the nation;...
One happy development in the legal field during the Covid-19 lockdown was the formation of a five-member Committee for Reforms in Criminal Law ("Committee") as reported here. The Committee is to "recommend reforms in the criminal law of the country in a principled, effective and efficient manner that ensures the safety and security of the individual, the community and the nation; and which prioritises the constitutional values of justice, dignity, and the inherent worth of the individual." This was long overdue, and given the recent overhaul of our commercial laws, one will hope that our antiquated criminal legislation will also receive substantial attention.
In this short article, I introduce a simple, yet highly effective legislative device that several countries have adopted for prescribing fines / monetary penalties in criminal statutes. In Australia, this device is called the "Penalty Unit" and in the United Kingdom, this device is called the "Standard Scale". I suggest that the Committee would do well to explore the adoption of such legislative device in India too. This device will make it extremely simple for Parliament to update the monetary penalties prescribed by it for all offences on an ongoing basis.
The Indian Penal Code, 1897 (the "IPC") and several special criminal laws contain provisions prescribing punishments of fine only, imprisonment or fine, and imprisonment and fine. In many of these prescriptions, the quantum of fine is contained expressly in the statute in monetary rupee terms, and these fines are not indexed to inflation. Since the fines are not indexed to inflation, their deterrent effect becomes lesser with each passing year, due to inflationary effects. As a result, with the substantial passage of time, the fines begin to have no deterrent effect at all. In the cases of offences punishable only with fine, people will no longer fear penal consequences if the fine becomes insignificant. In the case of offences which are punishable with fine and/or imprisonment, since the fine becomes too low, judges tend to impose stricter sentences of imprisonment than what they otherwise may have, if they had the option of imposing more stringent fines. This anomaly was noted by Justice R.V. Raveendran titled in a recent article he wrote "Some Anomalies In Law and Justice" accessible here. He lists four the following four adverse consequences that flow from a failure to periodically revise the quantum of fines prescribed in our criminal statutes or to index the fine to inflation:
"(a) Encourages crime as fine has ceased to be an adequate punishment for an offence or a deterrent against future offences.
(b) Makes a mockery of the law in question.
(c) Compels courts to impose the punishment of imprisonment instead of imposing the absurdly low fine, leading to overcrowding of prisons.
(d) Depletes a valuable source of funds to the State, which would have been available for effectively compensating the victims and meeting the increasing cost of maintaining courts."
Fortunately, there is an easy way out of this. That easy way is through the adoption of a legislative device known as "penalty unit" in Australia or a device called the "Standard Scale" as used in the United Kingdom. In Australia, federal and state criminal legislation prescribe the fines for offences in "penalty units" instead of Australian dollars. For instance, Section 11.5 of Australia's Criminal Code Act, 1995 prescribes that the offence of conspiracy shall be punishable with "imprisonment for more than 12 months, or by a fine of 200 penalty units or more". Similarly, Section 73.1 prescribes that the offence of "people smuggling" shall be punishable with "imprisonment for 10 years or 1,000 penalty units, or both." Many other criminal legislations in Australia prescribe the fines in such "penalty units".
The term "penalty unit" itself is defined in Section 4AA of the Australia's Crimes Act, 1914. I extract Sections 4AA(1), (1A) and (3) and (4) as follows:
"4AA Penalty units
(1) In a law of the Commonwealth or a Territory Ordinance, unless the contrary intention appears:
penalty unit means the amount of $210 (subject to indexation under subsection (3)).
(1A) If the amount of a penalty unit is indexed under subsection (3), the Minister must, by notifiable instrument, publish the amount of a penalty unit. However, a failure by the Minister to do so does not invalidate the indexation.
…
(3) On 1 July 2020 and each third 1 July following that day (an indexation day), the dollar amount mentioned in subsection (1) is replaced by the amount worked out using the following formula:
| Indexation factor for the indexation day | X | Dollar amount immediately before the indexation day" |
The "indexation factor" is then pegged to a relevant consumer price index to adequately reflect inflation. Such a legislative device has two immediate efficiencies. Firstly, it ensures that all fines are pegged to inflation. Secondly, in case one feels that fines prescribed across the board for all criminal offences require updating, then by simply amending the definition of "penalty unit" the prescribed fines across all statutes are revised appropriately. At the same time, it also retains the flexibility of changing specific fines for particular offences by amending that specific provision and changing the number of penalty units prescribed as punishment.
In the United Kingdom, a "Standard Scale of Fines" is provided for summary offences and contained in Section 37 of the Criminal Justice Act, 1982. That section states as follows:
37. The standard scale of fines for summary offences.
(1) There shall be a standard scale of fines for summary offences, which shall be known as "the standard scale".
(2) The standard scale is shown below—
| Level on the Scale | Amount of Fine |
| 1 | £200 |
| 2 | £500 |
| 3 | £1,000 |
| 4 | £2,500 |
| 5 | £5,000 |
Other statutes then define penalties by reference to the standard scale. This method allows the standard scale to be revised from time to time, instead of updating the fine for each individual offence. This allows benefits and efficiencies similar to what is afforded by the "penalty unit" in Australia, but does not carry the indexation to inflation benefits of the Australian "Penalty Unit".
Given that the mandate given to the Committee for Reforms in Criminal Law appears to be a wide one, this is perhaps one change that they would like to consider implementing. It would be a quiet, but important change to bring about. In my view, the Australian model of "penalty unit" seems the more flexible and effective device compared to the United Kingdom's "Standard Scale".
(The author is an Advocate on Record, Supreme Court. He may be reached at contact@gouthams.com. He tweets at @gousgame)