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)”
24. 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
25Section 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IPC have been repealed by the P.C. Act, 1988, relevance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.
The Court held that all officials of a private bank operating under the license issued by the Reserve Bank of India would be defined as public servants under the Prevention of Corruption Act, a law meant to prosecute government employees caught indulging in a corrupt practice. Further, bank employees, whether private or government, discharge a public duty in which the state, the public or the community at large has an interest and as such performance of such public duty by a person who is holding an office which requires or authorise 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 Court further held that the Banking Regulation Act (BR), 1949, cannot be left meaningless and requires harmonious construction.
The said judgment is significant as vide the said judgment the Supreme Court of India has expanded the scope of the Prevention of Corruption Act, 1988 by bringing all private bank employees under the ambit of the anti-graft law, which, was so far been only applied against corrupt government officials.
REPORTABLEIN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS. 1077-1081 OF 2013
Central Bureau of Investigation, Bank Securities & Fraud Cell
Vs Ramesh Gelli
Dated;February 23, 2016.
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.
12. 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
2expression “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.
36. 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. Guest2
, 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)
1
(1998) 4 SCC 626
2
(1942) AC 561
4would 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
520 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
6deletion 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
7Denning 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 Corporation4
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
3
(1949) 2AllER 155 at page 164
4
(1950)2AllER 1226
8the same and implicit approval thereof in the judicial quest to
define the expression “industry” in Bangalore Water Supply
& Sewerage Board Vs. A Rajappa and Others5
. 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
5
(1978) 2 SCC 213
9bold 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 others6
.
6
(2001) 7 SCC 71
10Order 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
11to 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
12Section 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
13IN 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
1Bombay 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.
2. 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,
21988 (for short “the P.C. Act, 1988”), pending before
Special Judge, CBI, Patiala House Courts, New Delhi.
3. 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
3Beautiful 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
4of 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.
4. 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
5corresponding wrongful gain. After investigation, charge
sheet was filed in said matter before the Special Judge,
CBI, Patiala House Courts, New Delhi.
5. 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
6with 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.
76. 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.
7. 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 ?
8. 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
8alleged 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.
9. 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
9contended 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.
10. 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
10Reserve 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 Reddy7
.
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 others8
.
11. We have considered the arguments and the counter
arguments and also gone through the relevant case laws
on the issue.
12. 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: -
7
(2002) 7 SCC 631)
8
(2003) 10 SCC 733
11“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
12Indian 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.
1313. Section 2(c) of P.C. Act, 1988, which holds the field,
defines ‘public servant’ as under: -
“2.(c) "public servant" means-
(i) 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;
(ii) any person in the service or pay of a
local authority ;
(iii) 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;
(iv) 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;
(v) 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;
14(vi) 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;
(vii) 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;
(viii) any person who holds an office by
virtue of which he is authorised or
required to perform any public duty;
(ix) 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;
(x) 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
15such Commission or Board for the
conduct of any examination or
making any selection on behalf of
such Commission or Board;
(xi) 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;
(xii) 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
16there may be in his right to hold that
situation.”
14. 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.
15. 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”.
16. But, what is most relevant for the purpose of this
case is Section 46A of Banking Regulation Act, 1949,
which reads as under: -
17“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)
17. 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.
18. 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
18public 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.
19. In a recent case of State of Maharashtra & ors. v.
Brijlal Sadasukh Modani9
, 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…….”
9
2015 SCC Online SC 1403
1920. 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.”
10 (1998) 4 SCC 626
2021. 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
others11, 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.
22. In Manish Trivedi v. State of Rajasthan12, which
pertains to a case registered against a councillor under
Prevention of Corruption Act, 1988, this Court, while
11 (1996) 1 SCC 95
12 (2014) 14 SCC 420
21interpreting 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
22inevitable 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
23it 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.”
24(Emphasis supplied)
23. 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)”
24. 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
25Section 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.
25. 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
26servant”. 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.
26. 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
27IPC, 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.
27. 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
28CBI, 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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