Public Servant; Tukaram Babulal Ninave Vs. State of Madhya Pradesh [06-06-2016]

Criminal P.C. 1973 – S. 482 & 197 – Public Servant – Prosecution of – Branch Manager of a nationalized Bank – Whether an officer of public sector Bank is entitled to the protection of Section 197 of the Cr.P.C.


HIGH COURT OF MADHYA PRADESH : AT JABALPUR

Present:- Hon’ble Shri Justice C.V. Sirpurkar

(06-06-2016)

M.Cr.C.No.2023/2012

Tukaram Ninave Vs. State of M.P.

Shri A.P. Wacha Sunder, counsel for the petitioner. Shri S.K. Kashyup, Special Public Prosecutor for the respodent/State.

ORDER

1. This Miscellaneous Criminal Case has been instituted on an application under

# Section 482 of the Code of Criminal Procedure

filed on behalf of the petitioner/accused Tukaram Ninave. It is directed against order dated 22.9.2011 passed by the 4th Additional Sessions Judge, Sagar in Session Trial no.65/2010, whereby the application under section 197 of Cr.P.C. filed by the accused was dismissed.

2. The case of the prosecution before the trial Court may be summarized as hereunder: Petitioner/accused Tukaram Ninave was Chief Manager of the Gujrati Bazar Branch of State Bank in Indore between June, 2001 to May, 2004. During aforesaid period, he conspired with his Deputy Manager Shrikant Mehta, Assistant Manager Ashok Maheshkar and Owners/Directors/Partners of 10 named tractor agencies of District Sagar. Under aforesaid criminal conspiracy, 142 farmers agriculturists were induced to obtain loans for purchase of tractors along with agricultural accessories/equipment like trolley, cultivator, plough, bony machine, leveler, thrasher etc., as per bills and quotations. Even before the loans were sanctioned, the Director of the Tractor Agencies got blank application forms for agricultural credits, short term and medium term loan applications, security acceptance letters, quotation bills, recovery forms of the bank, satisfaction letters, local inspection reports, forms no. II (10), mortgage deeds etc. signed by respective agriculturists. Thereafter, aforesaid blank papers were forged by making entries therein, behind the back of the agriculturists. Though, the agriculturists did not receive any agricultural equipment or accessories, yet additional amounts ranging between Rs.50,000/- to 1,28,000/- were entered into the loan accounts of aforesaid agriculturists. No spot inspections were carried out and forged local inspection reports were prepared on aforesaid blank papers and kept in the loan files. The agriculturists were taken into confidence and induced to affix their thumb impressions upon the documents and under the name of margin money, cash amounts and amounts from farmer credit cards were withdrawn and misappropriated. Thus, an amount of Rs. 5,06,32,103/- was transferred to the accounts of the Directors of the Tractor Agencies.

3. After the investigation, a charge-sheet under Sections 120- B, 409, 420, 467, 468, 471 of the I.P.C. was filed against officers of the Bank and Directors/partners of the tractor agencies.

4. The petitioner/accused Tukaram Ninave moved an application under Section 197 of the Cr.P.C. pleading absence of sanction for prosecution under Section 197 of the Code of Criminal Procedure. However, the application was dismissed by the trial Court on 22.9.2011. As many as 23 witnesses have already been examined during the trial.

5. The impugned order has been challenged on behalf of petitioner Tukaram Ninave mainly on the grounds that petitioner, being Branch Manager of a nationalized Bank, was public servant during the relevant period and no cognizance of any offence could have been taken against him save with the sanction of government as the offence alleged to have been committed by him was committed while he was acting or purporting to act in the discharge of his official duties. Another argument that has been advanced on behalf of the petitioner is that even on merits, the criminal proceedings are liable to be quashed as the documents filed along with charge-sheet do not disclose any case against the petitioner. Petitioner being the Branch Manager, acted as per rules. The loan amounts were disbursed on the basis of satisfaction letters which were deposited by the farmers in the tractor agencies; thus, the petitioner cannot be held responsible if the letters of satisfaction were forged. In support of his contentions learned counsel for the petitioner has invited attention of the Court to the judgments rendered by the supreme Court in the cases of

# M. Kochu Dewassy Vs State of Kerala, (1979) 2 SCC 117

# State through CBI Vs. K.K. Anand, (1985) 4 SCC 320

# UOI Vs. Ashok Kumar Mitra, (1995) 2 SCC 768

# State through CBI Vs. B.L. Verma, (1997) 10 SCC 772

# State of Karnataka Vs. M. Devendrappa, (2002) 3 SCC 89

# Pradeep Kumar Biswas Vs. Indian Institute of Chemical Biology, (2002) 5 SCC 111

# State of H.P. Vs. M.P. Gupta, (2004) 2 SCC 349

# S.K. Zutshi Vs Bimal Bebnath (2004) 8 SCC 31

# State of Orissa Vs Ganesh Chandra, AIR 2004 SC 2179

# Zandu Pharmacutical Works Ltd. Vs. Mohd. Sharaful Haque, (2005) 1 SCC 122

# Omprakash Vs. State of Jharkhand, (2012) 12 SCC 72

and

# Rishipal Singh Vs State of UP, (2014) 7 SCC 215

6. Learned panel lawyer for the respondent/State on the other hand has supported the impugned order.

7. The Court shall first consider whether the bar as engrafted in Section 197 of the Cr.P.C., shall be applicable to the petitioner, who at the relevant time was, admittedly, Branch Manager of a public sector Bank. In this regard, learned counsel for the petitioner has invited attention of the Court to the judgments rendered by the Supreme Court in the cases of

# M.K. Kochu Devassy Vs. State of Kerala (1979) 2 SCC 117

# Union of India and Another Vs. Ashok Kumar Mitra (1995) 2 SCC768

and

# Pradeep Kumar Biswas Vs. Indian Institute of Chemical Biology and others (2002) 5 SCC 111

8. The relevant part of section 197 of Cr.P.C. reads as hereunder:

# 197. Prosecution of Judges and public servants.

(1) When any person who is or was a Judge or Magistrate or a public servant not removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction [save as otherwise provided in the Lokpal and Lokayuktas Act, 2013]

(a) in the case of person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government;

(b) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of a State, of the State Government:

(Emphasis supplied)

9. In the case of M.K. Kochu Devassy (supra) the Supreme Court has held that a member of executive committee or servant of cooperative society is a public servant; therefore, a Special Judge under Criminal Law Amendment Act (46 of 1952) has jurisdiction to try his case for offences punishable under Prevention of Corruption Act, 1947.

10. In the case of Pradeep Kumar Biswas (supra) a 7 Judge Bench of Supreme Court has held that Council of Scientific and Industrial research, is a State within the meaning of Art. 12 of the Constitution of India.

11. Another authority which has been relied upon by the learned counsel for the petitioner is State through

# C.B.I. Vs. K.K. Anand (1985) 4 SCC 319

wherein the Supreme Court has held that employees of L.I.C. or G.I.C. are public servants and can; therefore, be prosecuted under Section 5 (2) of J.K. Prevention of Corruption Act.

12. Thus, it may be noted that none of the aforesaid decisions touch the point as to whether an officer of public sector Bank is entitled to the protection of Section 197 of the Cr.P.C. As such not address the question which is relevant for our purposes.

13. It is true that Supreme Court in the case of Ashok Kumar Mitra (supra) has held that employees of a corporation owned and controlled by the Central Bank and established by a Central Act are public servants. A nationalized bank is a corporation which is owned by the central government and established by a Central Act; hence, employees of a nationalized bank are public servants.

14. However, direct judgments on the point are available. The Supreme Court in the case of

# Mohammad Hadi Raja Vs. State of Bihar AIR 1998 SC 1945

has held as follows:

21. Although the instrumentality or agency with a corporate veil, for all intents and purposes may be held to be a third arm of the government and such instrumentality discharges the duties and functions which the State intends to do as indicated in Ajay Hasia’s case (supra), such instrumentality or agency is none the less juridical person having a separate legal entity. Therefore, such instrumentality must be held to have an independent status distinct from the State and cannot be treated as a government department for all purposes. Therefore, even if an officer of such instrumentality or agency takes or receives, keeps or expands any property or executes any contract, such acts even though in ultimate analysis may be held to have been done in the interest of the State, such action cannot be construed, as of rule, an action of the government by its employees or by an authority empowered by the government. It may be indicated here that it is not necessary that persons falling under any of the descriptions given in various clauses under Section 21 of, I.P.C. need to be appointed by the government. If such person falls under any of the descriptions as contained in various clauses of Section 21 of the Indian Penal Code, such person must be held to be a public servant. Explanation I of Section 21 indicates that persons falling under any of the above descriptions are public servants whether appointed by the government or not. Explanation 2 indicates that 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. Sub clause (b) of clause twelve of Section 21 expressly makes the officers of local authority and corporation established by or under a Central, Provincial or State Act or a government owned company as defined in Section 617 of the Companies Act, 1956, public servants. But protection under Section 197, Cr. P.C. is not available to a public servant unless other conditions indicated in that Section are fulfilled.

22. It is to be noted that though through the contrivance or mechanism of corporate structure, some of the public undertakings are performing the functions which are intended to be performed by the State, ex facie, such instrumentality or agency being a juridical person has are independent status and the action taken by them, however, important the same may be in the interest of the State cannot be held to be an action taken by or on behalf of the government as such within the meaning of Section 197, Cr. P.C.

23. For the purpose of enforcing the fundamental rights, the public undertakings which, on account of deep and pervasive control, can be held to be a State within the meaning of Article 12has been treated at par with the government departments but in all its facets, public undertaking has not been equated with the department run directly by the government. It was on this account that the Surgeon appointed in Hindustan Steel Works Ltd. has not been equated with the government servant for the purpose of applicability of Article 311 of the Constitution. In Praga Tool’s case, (AIR 1969 SC 1306), (supra), even though Praga Tools was held to be an instrumentality or agency of the State, it has been indicated by this Court that Praga tools Corporation had a separate legal existence and being a juridical person cannot be held to be a government concern run by or under the authority of the government. Similar view was taken by the Patna High Court in Sindhri Fertilizer’s case, (AIR 1957 Patna 10), (supra) by indicating that even though the said concern was completely owned by the President of India who could also issue directions and the Directors were to be appointed by the President of India, in the eye of law, the company was a separate legal entity and had a separate legal existence. Such decision of Patna High Court has been approved by this Court. In Dhanoa’s case, (AIR 1981 SC 1395) (supra), an IAS officer, when on deputation to a public undertaking having deep and pervasive control of the State, was not held to be a government officer entitled to protection under Section 197 of the Code of Criminal Procedure, even though such officer did not cease to be a government servant and had a lien in government service while on deputation. The protection which a government department was entitled to has also not been given to the Hindustan Steel Works Ltd. in K. Jaymohan’s case, (1997 AIR SCW 2577) (supra).

24. The importance of the public undertaking should not be minimised. The government’s concern for the smooth functioning of such instrumentality or agency can be well appreciated but on the plain language of Section 197 of the Code of Criminal Procedure, the protection by way of sanction is not available to the officers of the public undertaking because being a juridical person and a distinct legal entity such instrumentality stands on a different footing than the government departments.

25. It is also to be indicated here that in 1973, the concept of instrumentality or agency of State was quite distinct. The interest of the State in such instrumentality or agency was well known. Even then, the legislature, in its wisdom, did not think it necessary to expressly include the officers of such instrumentality or the government company for affording protection by way of sanction under Section 197, Cr. P.C.

26. It will be appropriate to notice that whenever there was felt need to include other functionaries within the definition of public servant, they have been declared to be ‘public servants’ under several special and local acts. If the legislature had intended to include officers of instrumentality or agency for bringing such officers under the protective umbrella of Section 197, Cr. P.C., it would have done so expressly.

27. Therefore, it will not be just and proper to bring such persons within the ambit of Section 197 by liberally construing the provisions of Section 197. Such exercise of liberal construction will not be confined to the permissible limit of interpretation of a statute by a Court of law but will amount to legislation by Court.

28. Therefore, in our considered opinion, the protection by way of sanction under Section 197 of the Code of Criminal Procedure is not applicable to the officers of Government Companies or the public undertakings even when such public undertakings are ‘State’ within the meaning of Article 12 of the Constitution on account of deep and pervasive control of the government. The appeals are disposed of accordingly.

In view of the aforesaid authoritative pronouncement, it is absolutely clear that though the petitioner may be a public servant within the meaning of Section 21 of the I.P.C. but he is not entitled to the protection of Section 197 of the Cr.P.C.

15. So far as the facts of the case are concerned, with regard to the scope of interference in exercise of powers reserved to the High Court by Section 482 of the Cr.P.C., learned counsel for the petitioner has invited attention of the Court to several authorities like

# State of Karnataka Vs. M. Devendrappa (2002) 3 SCC 89

# Zandu Pharmaceutical Works Ltd. Vs. Mohd. Sharful Haque and another (2005) 1 S.C.C. 122

and

# Rishipal Singh Vs. State of Uttar Pradesh and another (2014) 7 SCC 2015 etc

16. It may be noted here that in the case at hand, the prosecution has come up with the specific case that the petitioner and his fellow officer in the Bank entered into a conspiracy with the tractor agencies to defraud the agriculturists by taking their signatures on blank papers/forms and by forging those documents behind their back. In aforesaid manner, they withheld the agricultural equipment which were in the nature of accessories of the tractors and misappropriated the amount. The price of aforesaid equipment was thereafter added to the loan accounts of the agriculturists. The Bank officers deliberately omitted to discharge their duties by conducting local inspection and verifying as to whether or not the agricultural implements were delivered to the agriculturists along with the tractors. Without conducting verification as aforesaid before disbursing the loan amount, they blindly believed the satisfaction letters submitted by the agencies. This modus operandi was repeated in as many as 142 cases, which would prima facie lead a prudent men to conclude that bank officers either hatched the conspiracy or were, at any rate, handing glove with the tractor agencies.

17. Thus, it is not a case where the allegations constituted an offence but there is no legal evidence or evidence adduced clearly or manifestly fails to prove the charge. This is a case where there is legal evidence which, on appreciation, may or may not support the accusations. When exercising jurisdiction under Section 482 of the Code, the High Court would not ordinarily embark upon an enquiry whether the evidence in question is reliable or not or whether on reasonable appreciation of it accusation would not be sustained. This is the function of the trial Judge. (Please see

# R.P. Kapur Vs. State of Punjab, AIR 1960 SC 866

18. In any case, the Supreme Court has held in the case of

# State of Himachal Pradesh Vs. M.P. Gupta (2004) 2 SCC 349

that:

21. That apart, the contention of the respondent that for offences under Sections 406 and 409read with Section 120-B IPC sanction under Section 197 of the Code is a condition precedent for launching the prosecution is equally fallacious. This Court has stated the legal position in Shreekantiah Ramayya Munipalli case and also Amrik Singh case2 that it is not every offence committed by a public servant which requires sanction for prosecution under Section 197 of the Code, nor even every act done by him while he is actually engaged in the performance of his official duties. Following the above legal position it was held in Harihar Prasad v. State of Bihar as follows: (SCC p. 115, para 66)

As far as the offence of criminal conspiracy punishable underSection 120-B, read with Section 409 of the Indian Penal Code is concerned and also Section 5(2)of the Prevention of Corruption Act are concerned, they cannot be said to be of the nature mentioned in Section 197 of the Code of Criminal Procedure. To put it shortly, it is no part of the duty of a public servant, while discharging his official duties, to enter into a criminal conspiracy or to indulge in criminal misconduct. Want of sanction under Section 197 of the Code of Criminal Procedure is, therefore, no bar.

22. Above views are reiterated in State of Kerala v. V. Padmanabhan Nair. Both Amrik Singh and Shreekantiah were noted in that case. Sections 467, 468 and 471 IPC relate to forgery of valuable security, Will etc; forgery for the purpose of cheating and using as genuine a forged document respectively. It is no part of the duty of a public servant while discharging his official duties to commit forgery of the type covered by the aforesaid offences. Want of sanction under Section 197 of the Code is, therefore, no bar.

19. In aforesaid view of the matter, this is clearly not a case where interference by the High Court under Section 482 of the Cr.P.C. is warranted.

20. Consequently, this miscellaneous criminal case deserves to be and is accordingly dismissed.

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