ORDER
S.C. Pandey, J.
1. This criminal revision under Section 397 read with Section 401 of the Code of Criminal Procedure is directed against the order dated 3-3-97 passed by the Special Judge (CBI), Jabalpur in Special Case No. 61/96.
2. The applicant is aggrieved by framing of charges under Section 5(1)(d) read with Section 5(2) of Prevention of Corruption Act, 1947 (henceforth 'the Act of 1947'). He is also being prosecuted for the aforesaid offences with the aid of Section 120B of IPC. There are other charges framed under the provisions of Indian Penal Code read with Section 120B of IPC. This Court is not concerned with the charges framed against the applicant under the provisions of Penal Code and Section 120B thereof so far as it is applicable to those offences. The revision is confined to framing of charges under Section 5(1)(d) read with Sections (2) of the Act and the allegations of conspiracy under Section 120B of IPC so far as it relates to those charges.
3. It has been argued on behalf of the applicant that the applicant was an agent of the Life Insurance Corporation of India (for short 'the Corporation') and, therefore, he could not be a 'public servant' within the meaning of Section 2 of the Act of 1947 which defines a public servant as per Section 21 of the Indian Penal Code.
4. Shri R.S. Patel, learned Standing Counsel for the CBI has opposed this argument asserting that the applicant is a public servant within the meaning of Section 21 of the Indian Penal Code.
5. The precise question for consideration is if the applicant can be held to be a public servant within the meaning of Section 21 of the Penal Code and consequently under Section 2 of the Act of 1947. It is not in dispute that the applicant was a LIC agent when he is alleged to have committed the aforesaid offence under the Act and had conspired with others to do so. It is further not disputed before me that the applicant was not a member of the staff of LIC, therefore, his status has to be determined in accordance with the provisions of the Life Insurance Corporation Act and the Regulations framed by the LIC regarding the conditions of employment of agents. The aforesaid has to be read in the light of relevant provisions of Section 21 of the Penal Code which defines a public servant. Relevant provisions of the definition of 'public servant' are as follows:--
21. 'Public Servant,-- The words 'public servant' denote a person falling under any of the descriptions hereinafter following, namely:-
*** *** *** *** ***
Twelfth-- Every person.-
(a) in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government;
(b) in the service or pay of a local authority, a corporation established by or under a Central, Provincial or State Act or a Government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956).'
6. It would be clear from the aforesaid that the case of the applicant would be covered by sub-section 12 (b) of Section 21 of the Penal Code. He is alleged to have served under the LIC which would be a corporation withinthe meaning of the above sub-section. Life Insurance Corporation of India is established under the Life Insurance Corporation Act, 1956, therefore, it is a corporation within the meaning of sub-section 12 (b) of Section 21 of the Penal Code. If the applicant be in the service or pay of LIC, then he shall be deemed to be a public servant. However, it may be noticed at the outset that sub-section 12 (a) of Section 21 of the Penal Code is differently worded for defining a public servant in relation to a Government than in relation to a local authority or a Corporation established by the Central, Provincial or State Act. So far as clause (a) of sub-section 12 of Section 21 of IPC is concerned, any person who is payee of the Government or is remunerated by fees or commission for the purpose of performance of any public duty by the Government is covered; whereas as per clause (b) of that sub-section the person concerned should be in service or pay of local authority, corporation established by or under a Central Provincial or State Act or a Government Company. The different words used in clauses (a) and (b) of sub-section 12 of Section 21 of the Penal Code are very significant. The definition in clause (a) is wider than which is given in clause (b). The legislature has deliberately omitted the words 'remunerated by fees or commission for the performance of any public duty in case of a local authority, corporation or Govt. Company'. In clause (b), consequently, a person who is a public servant in relation to a corporation, local authority or Govt. company must either be in service or in pay of those bodies. If he is remunerated by fees or commission by the aforesaid bodies, he shall not be deemed to be a public servant. The words 'in service or pay' in clause (b) relate to contract of service. The use of the words 'in pay of relate to service contract. The aforesaid words are to be interpreted in the context they have been put in. It may be predicated as rule of construction that a word is judged by company it keeps. That apart the words 'in pay of ordinarily are used for denoting contract of service. This appears to be natural meaning of these words and are often used in ordinary English as a phrase to show that particular person is in service of another person. In view of this matter, this Court must examine the status of the applicant in relation to the Life Insurance Corporation Act, 1956. The applicant is undoubtedly an agent and, therefore, he cannot be said to be a member of the staff of the LIC. In the Act, the agent has not been defined. However, the LIC was created in the year 1956 by nationalisation of the business of private corporations or companies which existed prior to 18(h June, 1956. At that time certain persons were working as agents and certain other persons were members of the staff of those bodies which were taken over by the State under the Act. Section 11 of the LIC Act, 1956 provided for absorption of an employee of a private corporation or company called insurers in that section on the same terms and conditions as he was working when the Act of 1956 came into force. This provision referred to the whole time employees. Section 12 of the LIC Act, 1956 provided that the Chief Agents of the insurer in certain cases were to be absorbed as employees of the LIC as per conditions of that provisions. These provisions relate to the whole time salaried agents of the insurer. Chapter 5 of the Actrelates to management of the LIC. There are Managing Directors, Zonal Managers to be appointed. Section 23 entitles the LIC to appoint members of its staff for running its business. After 1956, the LIC was given right of carrying on the life insurance business by itself and no other agency was permitted to do so. Section 43-2A of the LIC Act, 1956 retains the effect of Section 42 of the Insurance Act of 1938 vis-a-vis the LIC and provinces that an agent shall have same relation as holder of license as he had with the Controller under the Act of 1956. Section 42 of the Insurance Act, 1938 clearly defines the position of an agent vis-a-vis the controller or an officer as he existed prior to passing of the LIC Act, 1956. It appears from that section that prior to passing of the LIC Act, 1956, the private corporations or companies had given a licence to the insurance agents for performing their duties. The initial licence was issued for a period of three years and it was renewable subject to conditions mentioned in Section 43. It is, thus, apparent that when the Act, 1956 came into force, the position of agent was that of a licence holder vis-a-vis the company or the corporation which were taken over by the Act and the same position remained after the LIC Act, 1956 was passed. Section 48(2)(cc) of the LIC Act, 1956 gives power to frame rules regarding the terms and conditions of service of the employees and agents of the Corporation including those who become employees and agents of the Corporation on the appointed day under the Act. Section 48(2)(cc) itself makes a distinction between the employees and the agents and prescribes making of different rules for employees and agents. It is, thus, apparent that the conditions of employment of agents have to be seen from the rules framed by the LIC. Both the learned counsel agreed that the Life Insurance Corporation of India (Agents) Regulations, 1972 governs the conditions of service of agents. The applicant was not an absorbed agent within the meaning of Clause 3 (a) of the regulations. He would be an agent within the meaning of Clause 3 (b), that is to say, a person who has been appointed under the regulation. Now the status of an agent has to be seen from the provisions of regulation No. 4. He works for soliciting or procuring life insurance business for the Corporation. The main function of an agent appears to be to provide and procure life insurance business for LIC. He has to procure minimum business prescribed by the regulation for a particular period. He is also required to contact the policy holders for conserving the business of the Corporation. Regulation No. 9 prescribes the minimum business which an agent is required to secure for the Corporation. The agent, gets commission under regulation No. 10 for rendering the above service. It is apparent from regulation No. 10 that he gets commission for the business supplied by him and he is also entitled to get bonus commission. It is also true that he also gets gratuity and certain term insurance benefits. Regulation No. 13 relates to termination of agency. The agency can be terminated if he fails to bring business as required by regulation No. 9 in an agency year. There are other provisions in the regulation for termination of agency. The most important is regulation No. 17 which authorises the Corporation to terminate the agency by giving one month's notice in writing by the competent authority.Similarly the agent is also authorised to terminate the agency by giving one month's notice. It is true that certain other conditions are there. When an agency is terminated, the agent has also right of an appeal to the prescribed authority as per regulation No. 20 and has also a right to send a memorial after the appeal has already been dismissed. This is only a birds eye view of conditions under which an agent of LIC works.
7. It is apparent that the applicant is not paid as a regular employee. He is paid commission commensurate with the business obtained by him during the period of agency. His tenure is also not secure. If he does not give the business to the LIC by insuring the minimum numbers prescribed by the regulation, his agency is liable to be terminated. That apart for any other reason, one month's notice is enough for termination of agency of an agent. Therefore, it is to be seen whether the applicant can be said to be in service or pay of the LIC within the meaning of Clause 21 (b) of the Penal Code.
8. This Court is of the view that the conditions of service of agents are governed by statutory contract made under the LIC Act, 1956. These statutory contracts are aforesaid regulations which have been quoted above. The position of an agent is not that of a person who is in service or pay of LIC. He gets commission in proportion to the business he supplies to the LIC. This is not a contract of service. In true sense of the term, his tenure is not certain; his payment is not assured. He does not possess the security of a regular employee in service. Therefore, he cannot be said to be in service of the Corporation. The payment that he receives from the LIC is the part of the services rendered by himself. He is in fact paid for the work he has done; the business he had procured for the Corporation, and that amount is paid because the LIC gets profit out of the insurances made by the agents. In fact, he shares part of profit by way of commission. Therefore, he cannot be said to be in pay of the LIC as a regular employee. His position is akin to a person who is employed for doing job-work. In view of difference of language employed in clauses (a) and (b) of sub-section 12 of Section 21 of Penal Code, it can be safely held that agent is not in service or pay of the LIC. He is remunerated by fee or commission for doing his duties. He is, thus, not a public servant within the meaning of sub-section 12 (b) of Section 21 of the Penal Code.
9. This Court comes to the conclusion that the applicant cannot be deemed to be a 'public servant' within the meaning of Section 2 of the Act of 1947 read with Section 21 of the Indian Penal Code and, therefore, charges under the Prevention of Corruption Act cannot be framed against him. Therefore, the charges framed against the applicant under Section 5(1)(d) read with Section 5(2) of the Act of 1947 and the offence of conspiracy under Section 120B of IPC for committing the offences under the Act of 1947 are liable to be set aside. Accordingly, this revision is allowed and it is directed that the learned Special Judge shall delete the charges under Section 5(1)(d) read with Section 5(2) of the Act of 1947 and also the charge under Section 120Bof IPC which relates to the offence under the Act of 1947. The learned Trial Judge is directed to proceed in accordance with law after omitting these charges or reframing them, if need be. Accordingly, this revision is allowed with the observations aforesaid.
10. Criminal Revision allowed.