C.B.I.,BANK SECURITIES & FRAUD CELL Vs. RAMESH GELLI & OR
PREVENTION OF CORRUPTION ACT, 1988
Section 30 - Repeal and saving
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Crl.), 1077-1081 of 2013, Judgment Date: Feb 04, 2016
While there can be no manner of doubt that in the Objects and Reasons
stated for enactment of the Prevention of Corruption Act, 1988 it has been
made more than clear that the Act, inter alia, envisages widening of the
scope of the definition of public servant, nevertheless, the mere
performance of public duties by the holder of any office cannot bring the
incumbent within the meaning of the expression ‘public servant’ as
contained in Section 2(c) of the PC Act. The broad definition of ‘public
duty’ contained in Section 2(b) would be capable of encompassing any duty
attached to any office inasmuch as in the contemporary scenario there is
hardly any office whose duties cannot, in the last resort, be traced to
having a bearing on public interest or the interest of the community at
large. Such a wide understanding of the definition of public servant may
have the effect of obliterating all distinctions between the holder of a
private office or a public office which, in my considered view, ought to be
maintained. Therefore, according to me, it would be more reasonable to
understand the expression “public servant” by reference to the office and
the duties performed in connection therewith to be of a public character.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS. 1077-1081 OF 2013
Central Bureau of Investigation,
Bank Securities & Fraud Cell .....Appellant
Versus
Ramesh Gelli and Others ...Respondents
WITH
WRIT PETITION (CRL.) NO. 167 OF 2015
Ramesh Gelli ...Writ Petitioner
Versus
Central Bureau of Investigation through
Superintendent of Police, BS & FC & Anr. ...Respondents
J U D G M E N T
PER RANJAN GOGOI, J.
1. I have had the privilege of going through the judgment of my learned
brother Prafulla C. Pant, J. Though I am in full agreement with the
conclusions reached by my learned brother, I would like to give my own
reasons for the same.
2. The question arising has to be answered firstly within the four
corners of the definition of “public servant” as contained in Section 2(c)
of the Prevention of Corruption Act, 1988 (hereinafter referred to as ‘the
PC Act’), particularly, those contained in Section 2(c)(viii), which is
extracted below.
2. “Definitions.-In this Act, unless the context otherwise requires,-
(c) “Public Servant” means,-
(i) xxxx xxxxx
(ii) xxxx xxxxx
(iii) xxxx xxxxx
(iv) xxxx xxxxx
(v) xxxx xxxxx
(vi) xxxx xxxxx
(vii) xxxx xxxxx
(viii) any person who holds an office by virtue of which he is authorized
or required to perform any public duty;”
(ix) xxxx xxxxx
(x) xxxx xxxxx
(xi) xxxx xxxxx
(xii) xxxx xxxxx”
3. While understanding the true purport and effect of the aforesaid
provision of the PC Act, the meaning of the expression “office” appearing
therein as well as “public duty” which is defined by Section 2(b) has also
to be understood.
4. A reference to Section 2(b) of the PC Act which defines “public duty”
may at this stage be appropriate to be made.
“2.(b) “public duty” means a duty in discharge of which the State, the
public or the community at large has an interest.”
Explanation.- In this clause “State” includes a corporation established by
or under a Central, Provincial or State Act, or an authority or a body
owned or controlled or aided by the Government or a Government company as
defined in Section 617 of the Companies Act, 1956 (1 of 1956);”
5. The definition of public duty in Section 2(b) of the PC Act, indeed,
is wide. Discharge of duties in which the State, the public or the
community at large has an interest has been brought within the ambit of the
expression ‘public duty’. Performance of such public duty by a person who
is holding an office which requires or authorize him to perform such duty
is the sine qua non of the definition of the public servant contained in
Section 2(c)(viii) of the PC Act. The expressions ‘office’ and ‘public
duty’ appearing in the relevant part of the PC Act would therefore require
a close understanding.
6. In P.V. Narasimha Rao Vs. State (CBI/SPE)[1] the meaning of the
expression ‘office’ appearing in the relevant provision of the PC Act has
been understood as “a position or place to which certain duties are
attached specially one of a more or less public character.” Following the
views expressed by Lord Atkin in McMillan Vs. Guest[2], this Court had
approved the meaning of the expression ‘office’ to be referable to a
position which has existence independent of the person who fills up the
same and which is required to be filled up in succession by successive
holders.
7. While there can be no manner of doubt that in the Objects and Reasons
stated for enactment of the Prevention of Corruption Act, 1988 it has been
made more than clear that the Act, inter alia, envisages widening of the
scope of the definition of public servant, nevertheless, the mere
performance of public duties by the holder of any office cannot bring the
incumbent within the meaning of the expression ‘public servant’ as
contained in Section 2(c) of the PC Act. The broad definition of ‘public
duty’ contained in Section 2(b) would be capable of encompassing any duty
attached to any office inasmuch as in the contemporary scenario there is
hardly any office whose duties cannot, in the last resort, be traced to
having a bearing on public interest or the interest of the community at
large. Such a wide understanding of the definition of public servant may
have the effect of obliterating all distinctions between the holder of a
private office or a public office which, in my considered view, ought to be
maintained. Therefore, according to me, it would be more reasonable to
understand the expression “public servant” by reference to the office and
the duties performed in connection therewith to be of a public character.
8. Coming to the next limb of the case, namely, the applicability of the
provisions of Section 46A of the Banking Regulation Act, 1949 (hereinafter
referred to as the ‘BR Act’) what is to be found is that a chairman
appointed on a whole time basis, managing director, director, auditor,
liquidator, manager and any other employee of a banking company is deemed
to be a public servant for the purposes of Chapter IX of the Indian Penal
Code. Section 46A, was amended by Act 20 of 1994 to bring within its fold
a larger category of functionaries of a banking company. Earlier, only the
chairman, director and auditor had come within the purview of the aforesaid
Section 46A.
9. Sections 161 to 165A contained in Chapter IX of the Indian Penal Code
have been repealed by Section 31 of the Prevention of Corruption Act, 1947
and the said offences have been engrafted in Sections 7, 8, 9, 10, 11 and
12 of the Prevention of Corruption Act, 1988. Section 166(as originally
enacted), Section 167 (with amendment), Sections 168, 169, 170 and 171 (as
originally enacted) continue to remain in Chapter IX of the Indian Penal
Code even after enactment of the Prevention of Corruption Act, 1988.
10. By virtue of Section 46A of the BR Act office bearers/employees of a
Banking Company (including a Private Banking Company) were “public
servants” for the purposes of Chapter IX of the I.P.C. with the enactment
of the PC Act the offences under Section 161 to 165A included in Chapter IX
of Code came to be deleted from the said Chapter IX and engrafted under
Sections 7 to 12 of the PC Act. With the deletion of the aforesaid
provisions from Chapter IX of the I.P.C. and inclusion of the same in the
PC Act there ought to have been a corresponding insertion in Section 46A of
the BR Act with regard to the deeming provision therein being continued in
respect of officials of a Banking Company insofar as the offences under
Sections 7 to 12 of the PC Act are concerned. However, the same was not
done. The Court need not speculate the reasons therefor, though, perhaps
one possible reason could be the wide expanse of the definition of “public
servant” as made by Section 2(c) of the PC Act. Be that as it may, in a
situation where the legislative intent behind the enactment of the PC Act
was, inter alia, to expand the definition of “public servant”, the omission
to incorporate the relevant provisions of the PC Act in Section 46A of the
BR Act after deletion of Sections 161 to 165A of the I.P.C. from Chapter IX
can be construed to be a wholly unintended legislative omission which the
Court can fill up by a process of interpretation. Though the rule of casus
omissus i.e. “what has not been provided for in the statute cannot be
supplied by the Courts” is a strict rule of interpretation there are
certain well known exceptions thereto. The following opinion of Lord
Denning in Seaford Court Estates Ltd. Vs. Asher[3] noticed and approved by
this Court may be taken note of.
“The English language is not an instrument of mathematical precision. Our
literature would be much the poorer if it were ....He (The Judge) must set
to work in the constructive task of finding the intention of Parliament,
and he must do this not only from the language of the statute, but also
from a consideration of the social conditions which gave rise to it, and of
the mischief which it was passed to remedy, and then he must supplement the
written word so as to give “force and life” to the intention of the
legislature.....A judge should ask himself the question, how, if the makers
of the Act had themselves come across this ruck in the texture of it, they
would have straightened it out? He must then do as they would have done. A
judge must not alter the material of which the Act is woven, but he can and
should iron out the creases.”
In Magor & St. Mellons Rural District Council Vs. Newport Corporation[4]
the learned judge restated the above principles in a somewhat different
form to the following effect :
“We sit here to find out the intention of Parliament and of ministers and
carry it out, and we do this better by filling in the gaps and making sense
of the enactment than by opening it up to destructive analysis.”
11. Though the above observations of Lord Denning had invited sharp
criticism in his own country we find reference to the same and implicit
approval thereof in the judicial quest to define the expression “industry”
in Bangalore Water Supply & Sewerage Board Vs. A Rajappa and Others[5].
Paragraphs 147 and 148 of the opinion of Chief Justice M.H. Beg in
Bangalore Water Supply & Sewerage Board (supra), which are quoted below,
would clearly indicate the acceptance of this Court referred to earlier.
“147. My learned Brother has relied on what was considered in England a
somewhat unorthodox method of construction in Seaford Court Estates Ltd. v.
Asher [(1949 2 ALL ER 155, 164], where Lord Denning, L.J., said :
When a defect appears a Judge cannot simply fold his hands and blame the
draftsman. He must set to work on the constructive task of finding the
intention of Parliament — and then he must supplement the written words so
as to give ‘force and life’ to the intention of legislature. A Judge should
ask himself the question how, if the makers of the Act had themselves come
across this ruck in the texture of it, they would have straightened it out?
He must then do as they would have done. A Judge must not alter the
material of which the Act is woven, but he can and should iron out the
creases.
When this case went up to the House of Lords it appears that the Law Lords
disapproved of the bold effort of Lord Denning to make ambiguous
legislation more comprehensible. Lord Simonds found it to be “a naked
usurpation of the legislative function under the thin disguise of
interpretation”. Lord Morton (with whom Lord Goddard entirely agreed)
observed: “These heroics are out of place” and Lord Tucker said “Your
Lordships would be acting in a legislative rather than a judicial capacity
if the view put forward by Denning, L.J., were to prevail.”
148. Perhaps, with the passage of time, what may be described as the
extension of a method resembling the “arm-chair rule” in the construction
of wills. Judges can more frankly step into the shoes of the legislature
where an enactment leaves its own intentions in much too nebulous or
uncertain a state. In M. Pentiah v. Muddala Veeramallappa [(1961) 2 SCR
295], Sarkar, J., approved of the reasoning, set out above, adopted by Lord
Denning. And, I must say that, in a case where the definition of “industry”
is left in the state in which we find it, the situation perhaps calls for
some judicial heroics to cope with the difficulties raised. (Underlining
is mine)
12. There are other judicial precedents for the view that I have
preferred to take and reach the same eventual conclusion that my learned
brother Prafulla C. Pant, J. has reached. I would like to refer to only one
of them specifically, namely, the decision of a Constitution Bench of this
Court in Dadi Jagannadham Vs. Jammulu Ramulu and others[6].
Order XXI Rule 89 read with Rule 92(2) of the CPC provided for filing
of an application to set aside a sale. Such an application was required to
be made after deposit of the amounts specified within 30 days from the date
of the sale. While the said provision did not undergo any amendment,
Article 127 of the Limitation Act, 1963 providing a time limit of 30 days
for filing of the application to set aside the sale was amended and the
time was extended from 30 days to 60 days. Taking note of the objects and
reasons for the amendment of the Limitation Act, namely, that the period
needed to be enlarged from 30 to 60 days as the period of 30 days was
considered to be too short, a Constitution Bench of this Court in Dadi
Jagannadham (supra) harmonised the situation by understanding Order XXI
rule 89 to be casting an obligation on the Court to set aside the sale if
the application for setting aside along with deposit is made within 30
days. However, if such an application along with the deposit is made after
30 days but before the period of 60 days as contemplated by Article 127 of
the Limitation Act, 1963, (as amended) the Court would still have the
discretion to set aside the same. The period of 30 days in Order 21 Rule
89/92(2) CPC referred to hereinabove was subsequently (by Act 22 of 2002)
amended to 60 days also.
13. Turing to the case in hand there can be no dispute that before
enactment of the PC Act, Section 46A of the BR Act had the effect of
treating the concerned employees/office bearers of a Banking Company as
public servants for the purposes of Chapter IX of the IPC by virtue of the
deeming provision contained therein. The enactment of the PC Act with the
clear intent to widen the definition of ‘public servant’ cannot be allowed
to have the opposite effect by expressing judicial helplessness to rectify
or fill up what is a clear omission in Section 46A of the BR Act. The
omission to continue to extend the deeming provisions in Section 46A of the
BR Act to the offences under Sections 7 to 12 of the PC Act must be
understood to be clearly unintended and hence capable of admitting a
judicial exercise to fill up the same. The unequivocal legislative intent
to widen the definition of “public servant” by enacting the PC Act cannot
be allowed to be defeated by interpreting and understanding the omission in
Section 46A of the BR Act to be incapable of being filled up by the court.
14. In the above view of the matter, I also arrive at the same conclusion
as my learned Brother Prafulla C. Pant, J. has reached, namely, that the
accused respondents are public servants for the purpose of the PC Act by
virtue of the provisions of Section 46A of the Banking Regulation Act, 1949
and the prosecutions launched against the accused respondents are
maintainable in law. Consequently, the criminal appeals filed by the
C.B.I. are allowed and Writ Petition (Criminal) No. 167 of 2015 is
dismissed.
........................................J.
[RANJAN GOGOI]
NEW DELHI
FEBRUARY 23, 2016
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS. 1077-1081 OF 2013
Central Bureau of Investigation,
Bank Securities & Fraud Cell … Appellant
Versus
Ramesh Gelli and others …Respondents
WITH
WRIT PETITION (CRL.) NO. 167 OF 2015
Ramesh Gelli … Writ Petitioner
Versus
Central Bureau of Investigation through
Superintendent of Police, BS & FC & Anr. …Respondents
J U D G M E N T
Prafulla C. Pant, J.
Appellant Central Bureau of Investigation (C.B.I) has challenged the
judgment and order dated 13.07.2009, passed by the High Court of Judicature
at Bombay whereby Criminal Revision Application No. 131 of 2007 (filed by
CBI) has been dismissed, and Criminal Writ Petition Nos. 2400, 2401, 2402
and 2403 of 2008, filed by the accused/respondent are allowed in part, and
upheld the order dated 05.02.2007 passed by the trial court i.e. Special
Judge/Additional Sessions Judge, Mumbai. The courts below have held that
cognizance cannot be taken against the accused namely Ramesh Gelli Chairman
and Managing Director, and Sridhar Subasri, Executive Director of Global
Trust Bank, on the ground that they are not public servants.
Writ Petition (Criminal) No. 167 of 2015 has been filed before this Court
by accused Ramesh Gelli praying quashing of charge sheet filed by CBI in
connection with FIR No. RC BD.1/ 2005/E/0003 dated 31.03.2005 relating to
offences punishable under Section 120B read with Sections 420, 467, 468,
471 of Indian Penal Code (IPC) and offence punishable under Section 13(2)
read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 (for
short “the P.C. Act, 1988”), pending before Special Judge, CBI, Patiala
House Courts, New Delhi.
Briefly stated prosecution case is that the Global Trust Bank (hereinafter
referred as “GTB”) was incorporated on 29.10.1993 as banking company under
Companies Act, 1956. Said Bank was issued licence dated 06.09.1994 under
Banking Regulation Act, 1949 by Reserve Bank of India (for short “RBI”).
Ramesh Gelli (writ petitioner before this Court) was Chairman and Managing
Director, and Sridhar Subasri (writ petitioner before the High Court) was
Executive Director of the Bank. The two were also promoters of GTB. For
raising their contribution to the capital, the two accused (Ramesh Gelli
and Sridhar Subasri) obtained loans from various individuals and companies,
including M/s. Beautiful Group of Companies of accused Rajesh Mehta and
Vijay Mehta, and M/s. Trinity Technomics Services Pvt. Ltd., of which
accused Vijay Mehta and his employees were directors. M/s. Beautiful Group
of Companies opened their first account in the name of Beautiful Diamonds
Ltd. with G.T.B. in the year 1994-95. Investigation revealed that various
credit facilities were allowed to said company by Ramesh Gelli and Sridhar
Subasri, and they fraudulently instructed the branch heads, without
following norms for sanctioning the credit facilities. The duo (Ramesh
Gelli and Sridhar Subasri), abusing their official positions, sanctioned
higher credit limits to M/s. Beautiful Diamonds Ltd. against regulations.
According to CBI, the investigation further revealed that in pursuance to
the alleged conspiracy of the accused the funds of GTB were diverted, and
release of Rs.5.00 crores was made in the name of M/s. Beautiful Realtors
Ltd. on the request of Directors of M/s. Beautiful Diamonds Ltd. Said
amount was further transferred to already overdrawn account of M/s.
Beautiful Diamonds Ltd. In April, 2001, Directors of Beautiful Group of
Companies in pursuance of conspiracy with other accused submitted another
application for sanction of Rs.3.00 crores as diamond loan in the name of
M/s. Crystal Gems. Ramesh Gelli, Sridhar Subasri and other accused, who
were Directors of Beautiful Group of Companies, said to have caused total
wrongful loss of about Rs.41.00 crores to GTB. The accounts of Beautiful
Diamonds Ltd. and other companies, which availed funds from GTB, should
have been declared Non Performing Assets (NPA), but accused Ramesh Gelli
and Sridhar Subasri allegedly manipulated and showed the accounts of
Beautiful Realtors Ltd. and Crystal Gems as higher profit yielding
accounts. The scam did not come to the light till 2005.
On 14.08.2004 GTB merged/amalgamated with Oriental Bank of Commerce (for
brevity “OBC”). An FIR dated 31.03.2005 in respect of offences punishable
under Sections 420, 467, 468, 471 IPC and under Section 13(2) read with
Section 13(1)(d) of the P.C. Act of 1988 was registered by C.B.I on the
complaint made by the Chief Vigilance Officer, OBC, wherein the allegations
were made that Ramesh Gelli and others, including Directors of M/s. World
Tex Limited (for short “WTL”) entered into a criminal conspiracy to cheat
GTB causing wrongful loss to the tune of Rs.17.46 crores, and thereby
earned corresponding wrongful gain. After investigation, charge sheet was
filed in said matter before the Special Judge, CBI, Patiala House Courts,
New Delhi.
Another First Information Report No. RC.12(E)/2005/ CBI/BS & FC/Mumbai was
registered by C.B.I. on 09.08.2005 for offences punishable under Section
120B read with Sections 409 and 420 IPC, initially against two employees of
GTB and two private persons Rajesh Mehta and Prashant Mehta on the
complaint dated 26.07.2005 lodged by the Chief Vigilance Officer, OBC. It
is relevant to mention here that GTB was a private sector bank, before its
amalgamation in August 2004 with OBC, a public sector bank. In the FIR No.
RC 12E/2005/CBI/B.S & FC/Mumbai Dt. 09.08.2005, it was alleged that GTB
sanctioned and disbursed loans by throwing all prudent banking norms to
winds and thus created a large quantum of Non Performing Assets (NPA)
jeopardizing the interests of thousands of depositors, but painted a rosy
financial picture. These loan transactions came to the light during audit
after amalgamation of GTB with OBC, and it was noted that two accounts,
namely that of M/s. Beautiful Diamonds Ltd. and M/s. Crystal Gems were used
to siphon out funds of the Bank. After investigation, charge sheets were
filed in this matter before Special Judge, Mumbai in respect of offences
punishable under Section 120B read with Sections 409 and 420 IPC and under
Section 13(2) read with Section 13(1)(d) of the P.C. Act, 1988. However,
on 05.02.2007 the Special Judge, Mumbai declined to take cognizance of
offence punishable under Section 13(2) read with S.3(1)(d) P.C Act, 1988,
on the ground that accused No. 1 Ramesh Gelli and accused No. 2 Sridhar
Subasri were not public servants on the dates transactions said to have
taken place, i.e. before amalgamation, and the Special Judge directed that
the charge sheet may be returned for being submitted to appropriate
Metropolitan Magistrate for taking cognizance in respect of offences
punishable under IPC, i.e. for offence other than punishable under the P.C.
Act, 1988.
Since the High Court of Judicature at Bombay has upheld the order dated
05.02.2007 by the impugned order, the CBI has approached this Court through
Special Leave. Further, since W.P.(Crl.) No. 167/2015 filed by accused
Ramesh Gelli also involves similar question of law in the case at Delhi, as
such both the connected matters are being disposed of by this common order.
The common question of law involved in these criminal appeals and connected
writ petition, filed before us, is:
Whether the Chairman, Directors and Officers of Global Trust Bank Ltd. (a
private bank before its amalgamation with the Oriental Bank of Commerce),
can be said to be public servants for the purposes of their prosecution in
respect of offences punishable under Prevention of Corruption Act, 1988 or
not ?
It is admitted fact that GTB was a private sector bank operating under
banking licence dated 06.09.1994, issued by RBI under Banking Regulation
Act, 1949. It is also not disputed that on 14.08.2004 GTB
merged/amalgamated with OBC. The transactions of alleged fraud, cheating,
misappropriation and corruption relate to the period between 1994 to 2001,
i.e. prior to amalgamation with public sector bank (OBC). The dispute
relates as to whether the then Chairman-cum-Managing Director and Executive
Director of GTB come under definition of ‘public servant’ or not, for the
purposes of the P.C. Act, 1988.
It is vehemently argued by Shri Mohan Parasaran and Shri Sidharth Luthra,
senior advocates appearing for the accused that the accused are not public
servants, and cognizance cannot be taken against the writ petitioner Ramesh
Gelli and accused/respondent Sridhar Subasri, who were said to be the
Chairman-cum-Managing Director and Executive Director respectively of GTB
before its amalgamation. It is further argued that a person cannot be said
to have been performing a public duty unless he holds some public office,
and in this connection it is submitted that the accused did not hold any
public office during the period offences said to have been committed. It is
also contended that since Sections 161 to 165A in Chapter IX of IPC are
repealed by Section 31 of P.C. Act, 1988, Section 46A of Banking Regulation
Act, 1949 is of little help to the prosecution. Mr. Luthra, learned senior
counsel, further submitted that the relationship between the customer of a
bank, and the bank is that of a creditor and debtor, and the transactions
between the two are commercial in nature, as such, no public duty is
involved.
On the other hand, Shri Tushar Mehta, learned senior counsel for CBI argued
that accused Ramesh Gelli and Sridhar Subasri were public servants in view
of definition contained in Section 2(c) of P.C. Act, 1988. Our attention
is also drawn to Section 46A of Banking Regulation Act, 1949, which
provides that a whole time Chairman, Managing Director, or Director of a
banking company shall be deemed to be a public servant. It is also
contended that a banking company as defined under Section 5(b) read with
Section 35(A) of Banking Regulation Act, 1949 is nothing but extended arm
of Reserve Bank of India. In support of arguments advanced on behalf of
CBI, reliance is placed on the principle of law laid down by this Court in
Govt. of Andhra Pradesh and Others vs. P.Venku Reddy[7]. Lastly, it is
submitted that a private body discharging public duty or positive
obligation of public nature actually performs public function. In this
connection, reference was made to the observations made by this court in
paragraph 18, in Federal Bank Ltd. vs. Sagar Thomas and others[8].
We have considered the arguments and the counter arguments and also gone
through the relevant case laws on the issue.
Before further discussion it is just and proper to examine the object for
which the Prevention of Corruption Act, 1988 was enacted by the Parliament.
The Statement of Objects and Reasons of the Bill is reproduced below: -
“1. The bill is intended to make the existing anti-corruption laws
more effective by widening their coverage and by strengthening the
provisions.
2. The Prevention of Corruption Act, 1947, was amended in 1964
based on the recommendations of the Santhanan Committee. There are
provisions in Chapter IX of the Indian Penal Code to deal with public
servants and those who abet them by way of criminal misconduct. There are
also provisions in the Criminal Law Amendment Ordinance, 1944, to enable
attachment of ill-gotten wealth obtained through corrupt means, including
from transferees of such wealth. The bill seeks to incorporate all these
provisions with modifications so as to make the provisions more effective
in combating corruption among public servants.
3. The bill, inter alia, envisages widening the scope of the
definition of the expression ‘public servant’, incorporation of offences
under sections 161 to 165A of the Indian Penal Code, enhancement of
penalties provided for these offences and incorporation of a provision that
the order of the trial court upholding the grant of sanction for
prosecution would be final if it has not already been challenged and the
trial has commenced. In order to expedite the proceedings, provisions for
day-to-day trial of cases and prohibitory provisions with regard to grant
of stay and exercise of powers of revision or interlocutory orders have
also been included.
4. Since the provisions of section 161A are incorporated in the
proposed legislation with an enhanced punishment, it is not necessary to
retain those sections in the Indian Penal Code. Consequently, it is
proposed to delete those sections with the necessary saving provision.
5. The notes on clauses explain in detail the provisions of the
Bill.”
(Emphasis supplied)
From the Statement of Objects and Reasons of the P.C. Bill it is
clear that the Act was intended to make the anti corruption law more
effective by widening its coverage. It is also clear that the Bill was
introduced to widen the scope of the definition of ‘public servant’. Before
P.C. Act, 1988, it was the Prevention of Corruption Act, 1947 and Sections
161 to 165A in Chapter IX of IPC which were governing the field of law
relating to prevention of corruption. The Parliament repealed the
Prevention of Corruption Act, 1947 and also omitted Section 161 to 165A of
I.P.C as provided under Sections 30 and 31 of P.C. Act, 1988. Since a new
definition of ‘public servant’ is given under P.C. Act, 1988, it is not
necessary here to reproduce the definition of ‘public servant’ given in
Section 21 of IPC.
Section 2(c) of P.C. Act, 1988, which holds the field, defines ‘public
servant’ as under: -
“2.(c) "public servant" means-
any person in the service or pay of the Government or remunerated by the
Government by fees or commission for the performance of any public duty;
any person in the service or pay of a local authority ;
any person in the service or pay of a corporation established by or under a
Central, Provincial or State Act, or an authority or a body owned or
controlled or aided by the Government or a Government company as defined in
section 617 of the Companies Act, 1956;
any Judge, including any person empowered by law to discharge, whether by
himself or as a member of any body of persons, any adjudicatory functions;
any person authorised by a court of justice to perform any duty, in
connection with the administration of justice, including a liquidator,
receiver or commissioner appointed by such court;
any arbitrator or other person to whom any cause or matter has been
referred for decision or report by a court of justice or by a competent
public authority;
any person who holds an office by virtue of which he is empowered to
prepare, publish, maintain or revise an electoral roll or to conduct an
election or part of an election;
any person who holds an office by virtue of which he is authorised or
required to perform any public duty;
any person who is the president, secretary or other office-bearer of a
registered cooperative society engaged in agriculture, industry, trade or
banking, receiving or having received any financial aid from the Central
Government or a State Government or from any corporation established by or
under a Central, Provincial or State Act, or any authority or body owned or
controlled or aided by the Government or a Government company as defined in
section 617 of the Companies Act, 1956;
any person who is a chairman, member or employee of any Service Commission
or Board, by whatever name called, or a member of any selection committee
appointed by such Commission or Board for the conduct of any examination or
making any selection on behalf of such Commission or Board;
any person who is a Vice-Chancellor or member of any governing body,
professor, reader, lecturer or any other teacher or employee, by whatever
designation called, of any University and any person whose services have
been availed of by a University or any other public authority in connection
with holding or conducting examinations;
any person who is an office-bearer or an employee of an educational,
scientific, social, cultural or other institution, in whatever manner
established, receiving or having received any financial assistance from the
Central Government or any State Government, or local or other public
authority.
Explanation 1.-Persons falling under any of the above sub-clauses are
public servants, whether appointed by the Government or not.
Explanation 2.-Wherever the words "public servant" occur, they shall
be understood of every person who is in actual possession of the situation
of a public servant, whatever legal defect there may be in his right to
hold that situation.”
Above definition shows that under Clause (viii) contained in Section 2(c)
of P.C. Act, 1988 a person who holds an office by virtue of which he is
authorized or required to perform any public duty, is a public servant.
Now, for the purposes of the present case this court is required to examine
as to whether the chairman/managing director or executive director of a
private bank operating under licence issued by RBI under Banking Regulation
Act, 1949, held/holds an office and performed /performs public duty so as
to attract the definition of ‘public servant’ quoted above.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS. 1077-1081 OF 2013
Central Bureau of Investigation,
Bank Securities & Fraud Cell .....Appellant
Versus
Ramesh Gelli and Others ...Respondents
WITH
WRIT PETITION (CRL.) NO. 167 OF 2015
Ramesh Gelli ...Writ Petitioner
Versus
Central Bureau of Investigation through
Superintendent of Police, BS & FC & Anr. ...Respondents
J U D G M E N T
PER RANJAN GOGOI, J.
1. I have had the privilege of going through the judgment of my learned
brother Prafulla C. Pant, J. Though I am in full agreement with the
conclusions reached by my learned brother, I would like to give my own
reasons for the same.
2. The question arising has to be answered firstly within the four
corners of the definition of “public servant” as contained in Section 2(c)
of the Prevention of Corruption Act, 1988 (hereinafter referred to as ‘the
PC Act’), particularly, those contained in Section 2(c)(viii), which is
extracted below.
2. “Definitions.-In this Act, unless the context otherwise requires,-
(c) “Public Servant” means,-
(i) xxxx xxxxx
(ii) xxxx xxxxx
(iii) xxxx xxxxx
(iv) xxxx xxxxx
(v) xxxx xxxxx
(vi) xxxx xxxxx
(vii) xxxx xxxxx
(viii) any person who holds an office by virtue of which he is authorized
or required to perform any public duty;”
(ix) xxxx xxxxx
(x) xxxx xxxxx
(xi) xxxx xxxxx
(xii) xxxx xxxxx”
3. While understanding the true purport and effect of the aforesaid
provision of the PC Act, the meaning of the expression “office” appearing
therein as well as “public duty” which is defined by Section 2(b) has also
to be understood.
4. A reference to Section 2(b) of the PC Act which defines “public duty”
may at this stage be appropriate to be made.
“2.(b) “public duty” means a duty in discharge of which the State, the
public or the community at large has an interest.”
Explanation.- In this clause “State” includes a corporation established by
or under a Central, Provincial or State Act, or an authority or a body
owned or controlled or aided by the Government or a Government company as
defined in Section 617 of the Companies Act, 1956 (1 of 1956);”
5. The definition of public duty in Section 2(b) of the PC Act, indeed,
is wide. Discharge of duties in which the State, the public or the
community at large has an interest has been brought within the ambit of the
expression ‘public duty’. Performance of such public duty by a person who
is holding an office which requires or authorize him to perform such duty
is the sine qua non of the definition of the public servant contained in
Section 2(c)(viii) of the PC Act. The expressions ‘office’ and ‘public
duty’ appearing in the relevant part of the PC Act would therefore require
a close understanding.
6. In P.V. Narasimha Rao Vs. State (CBI/SPE)[1] the meaning of the
expression ‘office’ appearing in the relevant provision of the PC Act has
been understood as “a position or place to which certain duties are
attached specially one of a more or less public character.” Following the
views expressed by Lord Atkin in McMillan Vs. Guest[2], this Court had
approved the meaning of the expression ‘office’ to be referable to a
position which has existence independent of the person who fills up the
same and which is required to be filled up in succession by successive
holders.
7. While there can be no manner of doubt that in the Objects and Reasons
stated for enactment of the Prevention of Corruption Act, 1988 it has been
made more than clear that the Act, inter alia, envisages widening of the
scope of the definition of public servant, nevertheless, the mere
performance of public duties by the holder of any office cannot bring the
incumbent within the meaning of the expression ‘public servant’ as
contained in Section 2(c) of the PC Act. The broad definition of ‘public
duty’ contained in Section 2(b) would be capable of encompassing any duty
attached to any office inasmuch as in the contemporary scenario there is
hardly any office whose duties cannot, in the last resort, be traced to
having a bearing on public interest or the interest of the community at
large. Such a wide understanding of the definition of public servant may
have the effect of obliterating all distinctions between the holder of a
private office or a public office which, in my considered view, ought to be
maintained. Therefore, according to me, it would be more reasonable to
understand the expression “public servant” by reference to the office and
the duties performed in connection therewith to be of a public character.
8. Coming to the next limb of the case, namely, the applicability of the
provisions of Section 46A of the Banking Regulation Act, 1949 (hereinafter
referred to as the ‘BR Act’) what is to be found is that a chairman
appointed on a whole time basis, managing director, director, auditor,
liquidator, manager and any other employee of a banking company is deemed
to be a public servant for the purposes of Chapter IX of the Indian Penal
Code. Section 46A, was amended by Act 20 of 1994 to bring within its fold
a larger category of functionaries of a banking company. Earlier, only the
chairman, director and auditor had come within the purview of the aforesaid
Section 46A.
9. Sections 161 to 165A contained in Chapter IX of the Indian Penal Code
have been repealed by Section 31 of the Prevention of Corruption Act, 1947
and the said offences have been engrafted in Sections 7, 8, 9, 10, 11 and
12 of the Prevention of Corruption Act, 1988. Section 166(as originally
enacted), Section 167 (with amendment), Sections 168, 169, 170 and 171 (as
originally enacted) continue to remain in Chapter IX of the Indian Penal
Code even after enactment of the Prevention of Corruption Act, 1988.
10. By virtue of Section 46A of the BR Act office bearers/employees of a
Banking Company (including a Private Banking Company) were “public
servants” for the purposes of Chapter IX of the I.P.C. with the enactment
of the PC Act the offences under Section 161 to 165A included in Chapter IX
of Code came to be deleted from the said Chapter IX and engrafted under
Sections 7 to 12 of the PC Act. With the deletion of the aforesaid
provisions from Chapter IX of the I.P.C. and inclusion of the same in the
PC Act there ought to have been a corresponding insertion in Section 46A of
the BR Act with regard to the deeming provision therein being continued in
respect of officials of a Banking Company insofar as the offences under
Sections 7 to 12 of the PC Act are concerned. However, the same was not
done. The Court need not speculate the reasons therefor, though, perhaps
one possible reason could be the wide expanse of the definition of “public
servant” as made by Section 2(c) of the PC Act. Be that as it may, in a
situation where the legislative intent behind the enactment of the PC Act
was, inter alia, to expand the definition of “public servant”, the omission
to incorporate the relevant provisions of the PC Act in Section 46A of the
BR Act after deletion of Sections 161 to 165A of the I.P.C. from Chapter IX
can be construed to be a wholly unintended legislative omission which the
Court can fill up by a process of interpretation. Though the rule of casus
omissus i.e. “what has not been provided for in the statute cannot be
supplied by the Courts” is a strict rule of interpretation there are
certain well known exceptions thereto. The following opinion of Lord
Denning in Seaford Court Estates Ltd. Vs. Asher[3] noticed and approved by
this Court may be taken note of.
“The English language is not an instrument of mathematical precision. Our
literature would be much the poorer if it were ....He (The Judge) must set
to work in the constructive task of finding the intention of Parliament,
and he must do this not only from the language of the statute, but also
from a consideration of the social conditions which gave rise to it, and of
the mischief which it was passed to remedy, and then he must supplement the
written word so as to give “force and life” to the intention of the
legislature.....A judge should ask himself the question, how, if the makers
of the Act had themselves come across this ruck in the texture of it, they
would have straightened it out? He must then do as they would have done. A
judge must not alter the material of which the Act is woven, but he can and
should iron out the creases.”
In Magor & St. Mellons Rural District Council Vs. Newport Corporation[4]
the learned judge restated the above principles in a somewhat different
form to the following effect :
“We sit here to find out the intention of Parliament and of ministers and
carry it out, and we do this better by filling in the gaps and making sense
of the enactment than by opening it up to destructive analysis.”
11. Though the above observations of Lord Denning had invited sharp
criticism in his own country we find reference to the same and implicit
approval thereof in the judicial quest to define the expression “industry”
in Bangalore Water Supply & Sewerage Board Vs. A Rajappa and Others[5].
Paragraphs 147 and 148 of the opinion of Chief Justice M.H. Beg in
Bangalore Water Supply & Sewerage Board (supra), which are quoted below,
would clearly indicate the acceptance of this Court referred to earlier.
“147. My learned Brother has relied on what was considered in England a
somewhat unorthodox method of construction in Seaford Court Estates Ltd. v.
Asher [(1949 2 ALL ER 155, 164], where Lord Denning, L.J., said :
When a defect appears a Judge cannot simply fold his hands and blame the
draftsman. He must set to work on the constructive task of finding the
intention of Parliament — and then he must supplement the written words so
as to give ‘force and life’ to the intention of legislature. A Judge should
ask himself the question how, if the makers of the Act had themselves come
across this ruck in the texture of it, they would have straightened it out?
He must then do as they would have done. A Judge must not alter the
material of which the Act is woven, but he can and should iron out the
creases.
When this case went up to the House of Lords it appears that the Law Lords
disapproved of the bold effort of Lord Denning to make ambiguous
legislation more comprehensible. Lord Simonds found it to be “a naked
usurpation of the legislative function under the thin disguise of
interpretation”. Lord Morton (with whom Lord Goddard entirely agreed)
observed: “These heroics are out of place” and Lord Tucker said “Your
Lordships would be acting in a legislative rather than a judicial capacity
if the view put forward by Denning, L.J., were to prevail.”
148. Perhaps, with the passage of time, what may be described as the
extension of a method resembling the “arm-chair rule” in the construction
of wills. Judges can more frankly step into the shoes of the legislature
where an enactment leaves its own intentions in much too nebulous or
uncertain a state. In M. Pentiah v. Muddala Veeramallappa [(1961) 2 SCR
295], Sarkar, J., approved of the reasoning, set out above, adopted by Lord
Denning. And, I must say that, in a case where the definition of “industry”
is left in the state in which we find it, the situation perhaps calls for
some judicial heroics to cope with the difficulties raised. (Underlining
is mine)
12. There are other judicial precedents for the view that I have
preferred to take and reach the same eventual conclusion that my learned
brother Prafulla C. Pant, J. has reached. I would like to refer to only one
of them specifically, namely, the decision of a Constitution Bench of this
Court in Dadi Jagannadham Vs. Jammulu Ramulu and others[6].
Order XXI Rule 89 read with Rule 92(2) of the CPC provided for filing
of an application to set aside a sale. Such an application was required to
be made after deposit of the amounts specified within 30 days from the date
of the sale. While the said provision did not undergo any amendment,
Article 127 of the Limitation Act, 1963 providing a time limit of 30 days
for filing of the application to set aside the sale was amended and the
time was extended from 30 days to 60 days. Taking note of the objects and
reasons for the amendment of the Limitation Act, namely, that the period
needed to be enlarged from 30 to 60 days as the period of 30 days was
considered to be too short, a Constitution Bench of this Court in Dadi
Jagannadham (supra) harmonised the situation by understanding Order XXI
rule 89 to be casting an obligation on the Court to set aside the sale if
the application for setting aside along with deposit is made within 30
days. However, if such an application along with the deposit is made after
30 days but before the period of 60 days as contemplated by Article 127 of
the Limitation Act, 1963, (as amended) the Court would still have the
discretion to set aside the same. The period of 30 days in Order 21 Rule
89/92(2) CPC referred to hereinabove was subsequently (by Act 22 of 2002)
amended to 60 days also.
13. Turing to the case in hand there can be no dispute that before
enactment of the PC Act, Section 46A of the BR Act had the effect of
treating the concerned employees/office bearers of a Banking Company as
public servants for the purposes of Chapter IX of the IPC by virtue of the
deeming provision contained therein. The enactment of the PC Act with the
clear intent to widen the definition of ‘public servant’ cannot be allowed
to have the opposite effect by expressing judicial helplessness to rectify
or fill up what is a clear omission in Section 46A of the BR Act. The
omission to continue to extend the deeming provisions in Section 46A of the
BR Act to the offences under Sections 7 to 12 of the PC Act must be
understood to be clearly unintended and hence capable of admitting a
judicial exercise to fill up the same. The unequivocal legislative intent
to widen the definition of “public servant” by enacting the PC Act cannot
be allowed to be defeated by interpreting and understanding the omission in
Section 46A of the BR Act to be incapable of being filled up by the court.
14. In the above view of the matter, I also arrive at the same conclusion
as my learned Brother Prafulla C. Pant, J. has reached, namely, that the
accused respondents are public servants for the purpose of the PC Act by
virtue of the provisions of Section 46A of the Banking Regulation Act, 1949
and the prosecutions launched against the accused respondents are
maintainable in law. Consequently, the criminal appeals filed by the
C.B.I. are allowed and Writ Petition (Criminal) No. 167 of 2015 is
dismissed.
........................................J.
[RANJAN GOGOI]
NEW DELHI
FEBRUARY 23, 2016
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS. 1077-1081 OF 2013
Central Bureau of Investigation,
Bank Securities & Fraud Cell … Appellant
Versus
Ramesh Gelli and others …Respondents
WITH
WRIT PETITION (CRL.) NO. 167 OF 2015
Ramesh Gelli … Writ Petitioner
Versus
Central Bureau of Investigation through
Superintendent of Police, BS & FC & Anr. …Respondents
J U D G M E N T
Prafulla C. Pant, J.
Appellant Central Bureau of Investigation (C.B.I) has challenged the
judgment and order dated 13.07.2009, passed by the High Court of Judicature
at Bombay whereby Criminal Revision Application No. 131 of 2007 (filed by
CBI) has been dismissed, and Criminal Writ Petition Nos. 2400, 2401, 2402
and 2403 of 2008, filed by the accused/respondent are allowed in part, and
upheld the order dated 05.02.2007 passed by the trial court i.e. Special
Judge/Additional Sessions Judge, Mumbai. The courts below have held that
cognizance cannot be taken against the accused namely Ramesh Gelli Chairman
and Managing Director, and Sridhar Subasri, Executive Director of Global
Trust Bank, on the ground that they are not public servants.
Writ Petition (Criminal) No. 167 of 2015 has been filed before this Court
by accused Ramesh Gelli praying quashing of charge sheet filed by CBI in
connection with FIR No. RC BD.1/ 2005/E/0003 dated 31.03.2005 relating to
offences punishable under Section 120B read with Sections 420, 467, 468,
471 of Indian Penal Code (IPC) and offence punishable under Section 13(2)
read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 (for
short “the P.C. Act, 1988”), pending before Special Judge, CBI, Patiala
House Courts, New Delhi.
Briefly stated prosecution case is that the Global Trust Bank (hereinafter
referred as “GTB”) was incorporated on 29.10.1993 as banking company under
Companies Act, 1956. Said Bank was issued licence dated 06.09.1994 under
Banking Regulation Act, 1949 by Reserve Bank of India (for short “RBI”).
Ramesh Gelli (writ petitioner before this Court) was Chairman and Managing
Director, and Sridhar Subasri (writ petitioner before the High Court) was
Executive Director of the Bank. The two were also promoters of GTB. For
raising their contribution to the capital, the two accused (Ramesh Gelli
and Sridhar Subasri) obtained loans from various individuals and companies,
including M/s. Beautiful Group of Companies of accused Rajesh Mehta and
Vijay Mehta, and M/s. Trinity Technomics Services Pvt. Ltd., of which
accused Vijay Mehta and his employees were directors. M/s. Beautiful Group
of Companies opened their first account in the name of Beautiful Diamonds
Ltd. with G.T.B. in the year 1994-95. Investigation revealed that various
credit facilities were allowed to said company by Ramesh Gelli and Sridhar
Subasri, and they fraudulently instructed the branch heads, without
following norms for sanctioning the credit facilities. The duo (Ramesh
Gelli and Sridhar Subasri), abusing their official positions, sanctioned
higher credit limits to M/s. Beautiful Diamonds Ltd. against regulations.
According to CBI, the investigation further revealed that in pursuance to
the alleged conspiracy of the accused the funds of GTB were diverted, and
release of Rs.5.00 crores was made in the name of M/s. Beautiful Realtors
Ltd. on the request of Directors of M/s. Beautiful Diamonds Ltd. Said
amount was further transferred to already overdrawn account of M/s.
Beautiful Diamonds Ltd. In April, 2001, Directors of Beautiful Group of
Companies in pursuance of conspiracy with other accused submitted another
application for sanction of Rs.3.00 crores as diamond loan in the name of
M/s. Crystal Gems. Ramesh Gelli, Sridhar Subasri and other accused, who
were Directors of Beautiful Group of Companies, said to have caused total
wrongful loss of about Rs.41.00 crores to GTB. The accounts of Beautiful
Diamonds Ltd. and other companies, which availed funds from GTB, should
have been declared Non Performing Assets (NPA), but accused Ramesh Gelli
and Sridhar Subasri allegedly manipulated and showed the accounts of
Beautiful Realtors Ltd. and Crystal Gems as higher profit yielding
accounts. The scam did not come to the light till 2005.
On 14.08.2004 GTB merged/amalgamated with Oriental Bank of Commerce (for
brevity “OBC”). An FIR dated 31.03.2005 in respect of offences punishable
under Sections 420, 467, 468, 471 IPC and under Section 13(2) read with
Section 13(1)(d) of the P.C. Act of 1988 was registered by C.B.I on the
complaint made by the Chief Vigilance Officer, OBC, wherein the allegations
were made that Ramesh Gelli and others, including Directors of M/s. World
Tex Limited (for short “WTL”) entered into a criminal conspiracy to cheat
GTB causing wrongful loss to the tune of Rs.17.46 crores, and thereby
earned corresponding wrongful gain. After investigation, charge sheet was
filed in said matter before the Special Judge, CBI, Patiala House Courts,
New Delhi.
Another First Information Report No. RC.12(E)/2005/ CBI/BS & FC/Mumbai was
registered by C.B.I. on 09.08.2005 for offences punishable under Section
120B read with Sections 409 and 420 IPC, initially against two employees of
GTB and two private persons Rajesh Mehta and Prashant Mehta on the
complaint dated 26.07.2005 lodged by the Chief Vigilance Officer, OBC. It
is relevant to mention here that GTB was a private sector bank, before its
amalgamation in August 2004 with OBC, a public sector bank. In the FIR No.
RC 12E/2005/CBI/B.S & FC/Mumbai Dt. 09.08.2005, it was alleged that GTB
sanctioned and disbursed loans by throwing all prudent banking norms to
winds and thus created a large quantum of Non Performing Assets (NPA)
jeopardizing the interests of thousands of depositors, but painted a rosy
financial picture. These loan transactions came to the light during audit
after amalgamation of GTB with OBC, and it was noted that two accounts,
namely that of M/s. Beautiful Diamonds Ltd. and M/s. Crystal Gems were used
to siphon out funds of the Bank. After investigation, charge sheets were
filed in this matter before Special Judge, Mumbai in respect of offences
punishable under Section 120B read with Sections 409 and 420 IPC and under
Section 13(2) read with Section 13(1)(d) of the P.C. Act, 1988. However,
on 05.02.2007 the Special Judge, Mumbai declined to take cognizance of
offence punishable under Section 13(2) read with S.3(1)(d) P.C Act, 1988,
on the ground that accused No. 1 Ramesh Gelli and accused No. 2 Sridhar
Subasri were not public servants on the dates transactions said to have
taken place, i.e. before amalgamation, and the Special Judge directed that
the charge sheet may be returned for being submitted to appropriate
Metropolitan Magistrate for taking cognizance in respect of offences
punishable under IPC, i.e. for offence other than punishable under the P.C.
Act, 1988.
Since the High Court of Judicature at Bombay has upheld the order dated
05.02.2007 by the impugned order, the CBI has approached this Court through
Special Leave. Further, since W.P.(Crl.) No. 167/2015 filed by accused
Ramesh Gelli also involves similar question of law in the case at Delhi, as
such both the connected matters are being disposed of by this common order.
The common question of law involved in these criminal appeals and connected
writ petition, filed before us, is:
Whether the Chairman, Directors and Officers of Global Trust Bank Ltd. (a
private bank before its amalgamation with the Oriental Bank of Commerce),
can be said to be public servants for the purposes of their prosecution in
respect of offences punishable under Prevention of Corruption Act, 1988 or
not ?
It is admitted fact that GTB was a private sector bank operating under
banking licence dated 06.09.1994, issued by RBI under Banking Regulation
Act, 1949. It is also not disputed that on 14.08.2004 GTB
merged/amalgamated with OBC. The transactions of alleged fraud, cheating,
misappropriation and corruption relate to the period between 1994 to 2001,
i.e. prior to amalgamation with public sector bank (OBC). The dispute
relates as to whether the then Chairman-cum-Managing Director and Executive
Director of GTB come under definition of ‘public servant’ or not, for the
purposes of the P.C. Act, 1988.
It is vehemently argued by Shri Mohan Parasaran and Shri Sidharth Luthra,
senior advocates appearing for the accused that the accused are not public
servants, and cognizance cannot be taken against the writ petitioner Ramesh
Gelli and accused/respondent Sridhar Subasri, who were said to be the
Chairman-cum-Managing Director and Executive Director respectively of GTB
before its amalgamation. It is further argued that a person cannot be said
to have been performing a public duty unless he holds some public office,
and in this connection it is submitted that the accused did not hold any
public office during the period offences said to have been committed. It is
also contended that since Sections 161 to 165A in Chapter IX of IPC are
repealed by Section 31 of P.C. Act, 1988, Section 46A of Banking Regulation
Act, 1949 is of little help to the prosecution. Mr. Luthra, learned senior
counsel, further submitted that the relationship between the customer of a
bank, and the bank is that of a creditor and debtor, and the transactions
between the two are commercial in nature, as such, no public duty is
involved.
On the other hand, Shri Tushar Mehta, learned senior counsel for CBI argued
that accused Ramesh Gelli and Sridhar Subasri were public servants in view
of definition contained in Section 2(c) of P.C. Act, 1988. Our attention
is also drawn to Section 46A of Banking Regulation Act, 1949, which
provides that a whole time Chairman, Managing Director, or Director of a
banking company shall be deemed to be a public servant. It is also
contended that a banking company as defined under Section 5(b) read with
Section 35(A) of Banking Regulation Act, 1949 is nothing but extended arm
of Reserve Bank of India. In support of arguments advanced on behalf of
CBI, reliance is placed on the principle of law laid down by this Court in
Govt. of Andhra Pradesh and Others vs. P.Venku Reddy[7]. Lastly, it is
submitted that a private body discharging public duty or positive
obligation of public nature actually performs public function. In this
connection, reference was made to the observations made by this court in
paragraph 18, in Federal Bank Ltd. vs. Sagar Thomas and others[8].
We have considered the arguments and the counter arguments and also gone
through the relevant case laws on the issue.
Before further discussion it is just and proper to examine the object for
which the Prevention of Corruption Act, 1988 was enacted by the Parliament.
The Statement of Objects and Reasons of the Bill is reproduced below: -
“1. The bill is intended to make the existing anti-corruption laws
more effective by widening their coverage and by strengthening the
provisions.
2. The Prevention of Corruption Act, 1947, was amended in 1964
based on the recommendations of the Santhanan Committee. There are
provisions in Chapter IX of the Indian Penal Code to deal with public
servants and those who abet them by way of criminal misconduct. There are
also provisions in the Criminal Law Amendment Ordinance, 1944, to enable
attachment of ill-gotten wealth obtained through corrupt means, including
from transferees of such wealth. The bill seeks to incorporate all these
provisions with modifications so as to make the provisions more effective
in combating corruption among public servants.
3. The bill, inter alia, envisages widening the scope of the
definition of the expression ‘public servant’, incorporation of offences
under sections 161 to 165A of the Indian Penal Code, enhancement of
penalties provided for these offences and incorporation of a provision that
the order of the trial court upholding the grant of sanction for
prosecution would be final if it has not already been challenged and the
trial has commenced. In order to expedite the proceedings, provisions for
day-to-day trial of cases and prohibitory provisions with regard to grant
of stay and exercise of powers of revision or interlocutory orders have
also been included.
4. Since the provisions of section 161A are incorporated in the
proposed legislation with an enhanced punishment, it is not necessary to
retain those sections in the Indian Penal Code. Consequently, it is
proposed to delete those sections with the necessary saving provision.
5. The notes on clauses explain in detail the provisions of the
Bill.”
(Emphasis supplied)
From the Statement of Objects and Reasons of the P.C. Bill it is
clear that the Act was intended to make the anti corruption law more
effective by widening its coverage. It is also clear that the Bill was
introduced to widen the scope of the definition of ‘public servant’. Before
P.C. Act, 1988, it was the Prevention of Corruption Act, 1947 and Sections
161 to 165A in Chapter IX of IPC which were governing the field of law
relating to prevention of corruption. The Parliament repealed the
Prevention of Corruption Act, 1947 and also omitted Section 161 to 165A of
I.P.C as provided under Sections 30 and 31 of P.C. Act, 1988. Since a new
definition of ‘public servant’ is given under P.C. Act, 1988, it is not
necessary here to reproduce the definition of ‘public servant’ given in
Section 21 of IPC.
Section 2(c) of P.C. Act, 1988, which holds the field, defines ‘public
servant’ as under: -
“2.(c) "public servant" means-
any person in the service or pay of the Government or remunerated by the
Government by fees or commission for the performance of any public duty;
any person in the service or pay of a local authority ;
any person in the service or pay of a corporation established by or under a
Central, Provincial or State Act, or an authority or a body owned or
controlled or aided by the Government or a Government company as defined in
section 617 of the Companies Act, 1956;
any Judge, including any person empowered by law to discharge, whether by
himself or as a member of any body of persons, any adjudicatory functions;
any person authorised by a court of justice to perform any duty, in
connection with the administration of justice, including a liquidator,
receiver or commissioner appointed by such court;
any arbitrator or other person to whom any cause or matter has been
referred for decision or report by a court of justice or by a competent
public authority;
any person who holds an office by virtue of which he is empowered to
prepare, publish, maintain or revise an electoral roll or to conduct an
election or part of an election;
any person who holds an office by virtue of which he is authorised or
required to perform any public duty;
any person who is the president, secretary or other office-bearer of a
registered cooperative society engaged in agriculture, industry, trade or
banking, receiving or having received any financial aid from the Central
Government or a State Government or from any corporation established by or
under a Central, Provincial or State Act, or any authority or body owned or
controlled or aided by the Government or a Government company as defined in
section 617 of the Companies Act, 1956;
any person who is a chairman, member or employee of any Service Commission
or Board, by whatever name called, or a member of any selection committee
appointed by such Commission or Board for the conduct of any examination or
making any selection on behalf of such Commission or Board;
any person who is a Vice-Chancellor or member of any governing body,
professor, reader, lecturer or any other teacher or employee, by whatever
designation called, of any University and any person whose services have
been availed of by a University or any other public authority in connection
with holding or conducting examinations;
any person who is an office-bearer or an employee of an educational,
scientific, social, cultural or other institution, in whatever manner
established, receiving or having received any financial assistance from the
Central Government or any State Government, or local or other public
authority.
Explanation 1.-Persons falling under any of the above sub-clauses are
public servants, whether appointed by the Government or not.
Explanation 2.-Wherever the words "public servant" occur, they shall
be understood of every person who is in actual possession of the situation
of a public servant, whatever legal defect there may be in his right to
hold that situation.”
Above definition shows that under Clause (viii) contained in Section 2(c)
of P.C. Act, 1988 a person who holds an office by virtue of which he is
authorized or required to perform any public duty, is a public servant.
Now, for the purposes of the present case this court is required to examine
as to whether the chairman/managing director or executive director of a
private bank operating under licence issued by RBI under Banking Regulation
Act, 1949, held/holds an office and performed /performs public duty so as
to attract the definition of ‘public servant’ quoted above.
Section 2(b) of P.C. Act, 1988 defines ‘public duty’ as under:
“public duty” means a duty in the discharge of which the State,
the public or the community at large has an interest”.
But, what is most relevant for the purpose of this case is Section 46A of
Banking Regulation Act, 1949, which reads as under: -
“46A. Chairman, director etc., to be public servants for the purposes of
Chapter IX of the Indian Penal Code. – Every chairman who is appointed on a
whole-time basis, managing director, director, auditor, liquidator, manager
and any other employee of a banking company shall be deemed to be a public
servant for the purposes of Chapter IX of the Indian Penal Code (45 of
1860).”
(Emphasis supplied)
Section 46A was inserted in Banking Regulation Act, 1949 by Act No. 95/56
with effect from 14.01.1957. The expression “every chairman who is
appointed on a whole time basis, managing director, director, auditor” was
substituted by Act No. 20/94 with effect from 31.01.1994 in place of “every
chairman, director, auditor”. As such managing director of a banking
company is also deemed to be a public servant. In the present case
transactions in question relate to the period subsequent to 31.01.1994.
In Federal Bank Ltd. v. Sagar Thomas and others (supra) this Court has
held that a private company carrying banking business as a scheduled bank
cannot be termed as a company carrying any statutory or public duty.
However, in said case the Court was examining as to whether writ can be
issued under Article 226 of the Constitution of India against a scheduled
bank or not. There was no issue before the Court relating to deeming
fiction contained in Section 46A of Banking Regulation Act, 1949 in respect
of a chairman/managing director or director of a banking company against
whom a crime relating to anti-corruption was registered.
In a recent case of State of Maharashtra & ors. v. Brijlal Sadasukh
Modani[9], this Court has observed as under: -
“21. As we notice, the High Court has really been swayed by the concept of
Article 12 of the Constitution, the provisions contained in the 1949 Act
and in a mercurial manner taking note of the fact that the multi-state
society is not controlled or aided by the Government has arrived at the
conclusion. In our considered opinion, even any grant or any aid at the
time of establishment of the society or in any construction or in any
structural concept or any aspect would be an aid. We are inclined to think
so as the term ‘aid’ has not been defined. A sprinkle of aid to the
society will also bring an employee within the definition of ‘public
servant’. The concept in entirety has to be observed in the backdrop of
corruption…….”
In P.V. Narasimha Rao vs. State (CBI/SPE)[10], this Court has explained the
word “office” in following manner: -
“61. ……..The word “office” is normally understood to mean “a position to
which certain duties are attached, especially a place of trust, authority
or service under constituted authority”. (See: Oxford Shorter English
Dictionary, 3rd Edn., p. 1362.) In McMillan v. Guest (1942 AC 561) Lord
Wright has said:
“The word ‘office’ is of indefinite content. Its various meanings cover
four columns of the New English Dictionary, but I take as the most relevant
for purposes of this case the following:
‘A position or place to which certain duties are attached, especially one
of a more or less public character.’ ”
In the same case Lord Atkin gave the following meaning:
“… an office or employment which was subsisting, permanent, substantive
position, which had an existence independent of the person who filled it,
which went on and was filled in succession by successive holders.”
In Statesman (P) Ltd. v. H.R. Deb (AIR 1968 SC 1495) and Mahadeo v.
Shantibhai [(1969) 2 SCR 422] this Court has adopted the meaning given by
Lord Wright when it said:
“An office means no more than a position to which certain duties are
attached.”
Attention of this court is drawn on behalf of the accused to the case of
Housing Board of Haryana v. Haryana Housing Board Employees’ Union and
others[11], wherein this Court has held that when particular words
pertaining to a class of genus are followed by general words, the latter,
namely, the general words are construed as limited to the things of the
same kind as those specified, and this is known as the rule of ejusdem
generis reflecting an attempt to reconcile incompatibility between the
specified and general words. This case is of little help to the accused in
the present case as managing director and director are specifically
mentioned in Section 46A of Banking Regulation Act, 1949.
In Manish Trivedi v. State of Rajasthan[12], which pertains to a case
registered against a councillor under Prevention of Corruption Act, 1988,
this Court, while interpreting the word “public servant”, made following
observations: -
“14. Section 87 of the Rajasthan Municipalities Act, 1959 makes every
Member to be public servant within the meaning of Section 21 of the Penal
Code, 1860 and the same reads as follows:
“87. Members, etc. to be deemed public servants.—(1) Every member, officer
or servant, and every lessee of the levy of any municipal tax, and every
servant or other employee of any such lessee shall be deemed to be a public
servant within the meaning of Section 21 of the Penal Code, 1860 (Central
Act 45 of 1860).
(2) The word ‘Government’ in the definition of ‘legal remuneration’ in
Section 161 of that Code shall, for the purposes of sub-section (1) of this
section, be deemed to include a Municipal Board.”
From a plain reading of the aforesaid provision it is evident that by the
aforesaid section the legislature has created a fiction that every Member
shall be deemed to be a public servant within the meaning of Section 21 of
the Penal Code. It is well settled that the legislature is competent to
create a legal fiction. A deeming provision is enacted for the purpose of
assuming the existence of a fact which does not really exist. When the
legislature creates a legal fiction, the court has to ascertain for what
purpose the fiction is created and after ascertaining this, to assume all
those facts and consequences which are incidental or inevitable corollaries
for giving effect to the fiction. In our opinion, the legislature, while
enacting Section 87 has, thus, created a legal fiction for the purpose of
assuming that the Members, otherwise, may not be public servants within the
meaning of Section 21 of the Penal Code but shall be assumed to be so in
view of the legal fiction so created. In view of the aforesaid, there is no
escape from the conclusion that the appellant is a public servant within
the meaning of Section 21 of the Penal Code.
xxx xxx xxx
16. Under the scheme of the Rajasthan Municipalities Act it is evident that
the appellant happens to be a Councillor and a Member of the Board. Further
in view of language of Section 87 of the Rajasthan Municipalities Act, he
is a public servant within the meaning of Section 21 of the Penal Code. Had
this been a case of prosecution under the Prevention of Corruption Act,
1947 then this would have been the end of the matter. Section 2 of this Act
defines “public servant” to mean public servant as defined under Section 21
of the Penal Code. However, under the Prevention of Corruption Act, 1988,
with which we are concerned in the present appeal, the term “public
servant” has been defined under Section 2(c) thereof. In our opinion,
prosecution under this Act can take place only of such persons, who come
within the definition of public servant therein. The definition of “public
servant” under the Prevention of Corruption Act, 1947 and Section 21 of the
Penal Code is of no consequence. The appellant is sought to be prosecuted
under the Prevention of Corruption Act, 1988 and, hence, to determine his
status it would be necessary to look into its interpretation under Section
2(c) thereof, read with the provisions of the Rajasthan Municipalities Act.
xxx xxx xxx
19. The present Act (the 1988 Act) envisages widening of the scope of the
definition of the expression “public servant”. It was brought in force to
purify public administration. The legislature has used a comprehensive
definition of “public servant” to achieve the purpose of punishing and
curbing corruption among public servants. Hence, it would be inappropriate
to limit the contents of the definition clause by a construction which
would be against the spirit of the statute. Bearing in mind this principle,
when we consider the case of the appellant, we have no doubt that he is a
public servant within the meaning of Section 2(c) of the Act. Clause (viii)
of Section 2(c) of the present Act makes any person, who holds an office by
virtue of which he is authorised or required to perform any public duty, to
be a public servant. The word “office” is of indefinite connotation and, in
the present context, it would mean a position or place to which certain
duties are attached and has an existence which is independent of the
persons who fill it. Councillors and Members of the Board are positions
which exist under the Rajasthan Municipalities Act. It is independent of
the person who fills it. They perform various duties which are in the field
of public duty. From the conspectus of what we have observed above, it is
evident that appellant is a public servant within Section 2(c)(viii) of the
Prevention of Corruption Act, 1988.”
(Emphasis supplied)
At the end it is relevant to mention that in the case of Govt. of A.P. and
others vs. Venku Reddy (supra), in which while interpreting word ‘public
servant’ this court has made following observations:
“12. In construing the definition of “public servant” in clause (c)
of Section 2 of the 1988 Act, the court is required to adopt a purposive
approach as would give effect to the intention of the legislature. In that
view the Statement of Objects and Reasons contained in the Bill leading to
the passing of the Act can be taken assistance of. It gives the background
in which the legislation was enacted. The present Act, with a much wider
definition of “public servant”, was brought in force to purify public
administration. When the legislature has used such a comprehensive
definition of “public servant” to achieve the purpose of punishing and
curbing growing corruption in government and semi-government departments,
it would be appropriate not to limit the contents of the definition clause
by construction which would be against the spirit of the statute. The
definition of “public servant”, therefore, deserves a wide construction.
(See State of M.P. v. Shri Ram Singh (2000) 5 SCC 88)”
In the light of law laid down by this court as above, it is clear that
object of enactment of P.C. Act, 1988, was to make the anti corruption law
more effective and widen its coverage. In view of definition of public
servant in Section 46A of Banking Regulation Act, 1949 as amended the
Managing Director and Executive Director of a Banking Company operating
under licence issued by Reserve Bank Of India, were already public
servants, as such they cannot be excluded from definition of ‘public
servant’. We are of the view that over the general definition of ‘public
servant’ given in Section 21 of IPC, it is the definition of ‘public
servant’ given in the P.C. Act, 1988, read with Section 46-A of Banking
Regulation Act, which holds the field for the purposes of offences under
the said Act. For banking business what cannot be forgotten is Section 46A
of Banking Regulation Act, 1949 and merely for the reason that Sections 161
to 165A of IPC have been repealed by the P.C. Act, 1988, relevance of
Section 46A of Banking Regulation Act, 1949, is not lost.
Be it noted that when Prevention of Corruption Act, 1988 came into force,
Section 46 of Banking Regulation Act, 1949 was already in place, and since
the scope of P.C. Act, 1988 was to widen the definition of “public
servant”. As such, merely for the reason that in 1994, while clarifying
the word “chairman”, legislature did not substitute words “for the purposes
of Prevention of Corruption Act, 1988” for the expression “for the
purposes of Chapter IX of the Indian Penal Code (45 of 1860)” in Section
46A of Banking Regulation Act, 1949, it cannot be said, that the
legislature had intention to make Section 46A inapplicable for the purposes
of P.C. Act, 1988, by which Sections 161 to 165A of IPC were omitted, and
the offences stood replaced by Sections 7 to 13 of P.C. Act, 1988.
A law which is not shown ultravires must be given proper meaning. Section
46-A of Banking Regulation Act, 1949, cannot be left meaningless and
requires harmonious construction. As such in our opinion, the Special
Judge (CBI) has erred in not taking cognizance of offence punishable under
Section 13(2) read with Section 13(1)(d) of P.C. Act, 1988. However, we
may make it clear that in the present case the accused cannot be said to be
public servant within the meaning of Section 21 IPC, as such offence
under Section 409 IPC may not get attracted, we leave it open for the trial
court to take cognizance of other offences punishable under Indian Penal
Code, if the same get attracted.
Therefore, having considered the submissions made before us, and after
going through the papers on record, and further keeping in mind the
Statement of Objects and Reasons of the Bill relating to Prevention of
Corruption Act, 1988 read with Section 46A of Banking Regulation Act, 1949,
we are of the opinion that the courts below have erred in law in holding
that accused Ramesh Gelli and Sridhar Subasri, who were Chairman/Managing
Director and Executive Director of GTB respectively, were not public
servants for the purposes of Prevention of Corruption Act, 1988. As such,
the orders impugned are liable to be set aside. Accordingly, without
expressing any opinion on final merits of the cases before the trial courts
in Mumbai and Delhi, Criminal Appeal Nos. 1077-1081 of 2013 filed by CBI,
are allowed, and Writ Petition (Crl.) No. 167 of 2015 stands dismissed.
……………………………..J.
[PRAFULLA C. PANT]
New Delhi;
February 23, 2016.
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[1] (1998) 4 SCC 626
[2] (1942) AC 561
[3] (1949) 2AllER 155 at page 164
[4] (1950)2AllER 1226
[5] (1978) 2 SCC 213
[6] (2001) 7 SCC 71
[7] (2002) 7 SCC 631)
[8] (2003) 10 SCC 733
[9] 2015 SCC Online SC 1403
[10] (1998) 4 SCC 626
[11] (1996) 1 SCC 95
[12] (2014) 14 SCC 420
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