1. This is a petition, under Section 482 of the Code of Criminal Procedure (for brevity ‘the Code’), for having the order-dated 23.03.2010 passed by Special Judge (under the Prevention of Corruption Act, 1988) (hereinafter referred to as ‘PC Act’) at Bhopal in Special Case No.1/08 rejecting the applications made by the petitioner for discharge nullified and also for quashing of the charge sheet, so far as it relates to him.
2. In that case, cognizance of the offences punishable under Sections 120B of the IPC and 13(1)(d) read with 13(2) of the PC Act has been taken against the petitioner, a superannuated officer of Indian Administrative Service, and co-accused Narsingh Mandal and Prakash Chand Sethi who, at the relevant point of time, wererespectively Chairman and Deputy General Manager (Store and Purchase) of M.P. State Road Transport Corporation (hereinafter referred to as “the Corporation”).
3. Relevant allegations, as contained in the charge sheet, may be summarized as under - (i) During his tenure from 28.2.1995 to 26.4.1997, in contravention of the decision of the Head Quarter Tendering Committee, the petitioner, by abusing his position of the Managing Director of the Corporation, issued – (a) Order for procurement of 100 chassis manufactured by TELCO (Tata Engineering and Locomotive Co. Ltd.) for being converted into motorbuses. (b) Order for construction of the corresponding bus bodies by Automobile Corporation Goa Limited (for short “ACGL”) without inviting any tender for the work and despite the fact that the Corporation had its own workshops at Gwalior and Indore. (ii) However, ultimately, 28 bus-bodies were built by ACGL and the entire transaction resulted into a wrongful loss of a sum of Rs.35,24,000/- to the Corporation.
4. The first application for discharge was moved on the ground that no cognizance of the offence under Section 120B IPC could be taken in absence of sanction, under Section 197 of the Code, for prosecution of the petitioner as well as co-accused Narsingh Mandal in view of the fact that none of them was removable from corresponding offices save by or with the sanction of the respective M.Cr.C. No.5913/2010Government. However, even before the objection could be decided, the petitioner submitted another application for discharge on the premise that his prosecution was also violative of Rule 6(1)(c) of the All India Services (Death-cum-Retirement Benefits), Rules, 1958.
5. Learned Senior Counsel has strenuously contended that the order under challenge is not sustainable in view of the following undisputed facts - (i) The Corporation is a statutory body established under Section 3 of the Road Transport Corporations Act, 1950 (for brevity ‘the Act of 1950’) and by virtue of Section 14 thereof, power to appoint or to remove a Managing Director of the Corporation vests in the State Government. (ii) He stood superannuated from the service on 31.12.2007 whereas the charge sheet relating to the offences allegedly committed on or about 20.11.1995, was filed on 01.01.2008. According to him, sanction for prosecution of the petitioner in respect of the offence under Section 120-B of the IPC was necessary simply because while discharging functions as the Managing Director of the Corporation, he had acted as a public servant, defined in Section 21 of the IPC and removable from the post by the State Government only. He has further submitted that the prosecution was also barred by limitation as the period of four years prescribed by Rule 6 (ibid) had already expired before filing of the charge sheet. In response, learned Special Public Prosecutor has submitted that none of the contentions raised by the petitioner necessitates any interference with his legitimate prosecution. M.Cr.C. No.5913/2010
6. A bare perusal of the impugned order would show that the objection based on Rule 6(1)(c) was overruled in the light of decision of the Apex Court in State of Punjab v. Kailash Nath AIR 1989 SC 558 wherein it was explained - “Keeping in view the scope of Article 309 as also the purpose of Rule 2.2 the said rule can not be interpreted to be a rule placing an embargo on the prosecution of a Government servant on the expiry of a period of four years from the date of cause of action or event mentioned therein.” Moreover, no period of limitation is specified under the Code or the PC Act for taking cognizance of any offence falling under that Act. In this view of the matter, the rejection of second application containing objection based on Rule 6 was well-merited.
7. Adverting to the other part of the order in question, it may be seen that the plea regarding lack of sanction under Section 197(1) of the Code was rejected for the following reasons by placing reliance on the precedents mentioned in the corresponding brackets - (i) The petitioner was not a public servant (V. P. Sheth v. State of M.P. 2000 CRI.L.J. 1767). (ii) Even if it is assumed that the petitioner was a public servant, sanction under Section 197(1) of the Code was not necessary, as, applying the test laid down in (State of Orissa v. Ganesh Chandra Jew, (2004) 8 SCC 40), the acts complained of were not directly concerned with his official duties (Harihar Prasad v. State of Bihar (1972) 3 SCC 89). M.Cr.C. No.5913/2010
8. Learned Senior Counsel has pointed out that view taken by a Single Bench of this Court in V.P. Sheth’s case (supra) was ultimately interfered with by the Supreme Court in V.P. Sheth v. State of M.P. (2004) 13 SCC 767 and the trial Judge was directed to decide, in the light of facts and circumstances of the case, the question of necessity of sanction under Section 197(1) of the Code for prosecution of the appellant who, at the relevant point of time, was holding office of the Managing Director of M.P. Leather Development Corporation, a Corporation established under a State Act. However, a close analysis of the decisions would reveal that the view of learned single Judge that the accused in that case could not be said to be an employee of the Central Government or State Government for the purpose of protection under Section 197, Cr.P.C. was based on the Supreme Court’s pronouncement in Mohd. Hadi Raja v. State of Bihar AIR 1998 SC 1945, declaring that the protection by way of sanction under Section 197 of the Code 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. In that case, learned Single Judge had quoted the following excerpts from Hadi Raja’s case (supra) - "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. 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. If the legislature had intended to include officers of instrumentality or agency for bringing such officers M.Cr.C. No.5913/2010under the protective umbrella of Section 197, Cr.P.C. it would have done so expressly. 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 conform to the permissible limit of interpretation of a statute by a Court of law but will amount to legislation by Court." But, the aforesaid view taken in Hadi Raja’s case was neither noticed nor expressly dissented from by the Apex Court in V.P. Sheth’s case (supra). As such, decision in V.P. Sheth v. State of M.P. (2004) 13 SCC 767 cannot be treated as authority for the proposition that sanction for prosecution under Section 197 of the Code would be required for Managing Director of every statutory Corporation under the control of the State Government.
9. In Hadi Raja’s case, decision of a three-Judge Bench of the Court rendered in S.S. Dhanoa v. Municipal Corporation, Delhi AIR 1981 SC 1395 was followed. In that case, services of the appellant, a member of Indian Administrative Service, were placed at the disposal of Co-operative Stores Ltd., a Society registered under the Bombay Co-operative Societies Act. He was prosecuted under Section 7 of the Prevention of Food Adulteration Act, 1954. Rejecting the contention that he was entitled to protection under S.197 of the Code, the Supreme Court made the following observations:- “The incumbents of supervisory and other key posts including that of the General Manager cannot be appointed or removed without the prior approval of the Central Government. The whole purpose of clause 6 of the Agreement in the matter of appointment of General Manager and other incumbents holding key posts is to safeguard the interests of the Central Government. Legally speaking, the Super Bazaars are owned and managed by the Society and not by the Central M.Cr.C. No.5913/2010Government and, therefore, the appellant was not employed in connection with the affairs of the Union within the meaning of Section 197 of the Code of Criminal Procedure, 1973."
10. In the case of Hadi Raja, it was further explained - ”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 Art. 12 has been treated at par with the government department but in all its facets, public undertaking has not been equated with the department run directly by the government. 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 an 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 S. 197, Cr. P.C. Therefore, the protection by way of sanction under S. 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 Art. 12 of the Constitution on account of deep and pervasive control of the government.”
11. Learned Senior Counsel, making reference to paragraph 25 of Hadi Raza’s case, still contended that the protection of Section 197 of the Code has been afforded to the petitioner by virtue of Section 43 of the Act of 1950 that reads as under:- 43. Directors, officers and other employees of a Corporation to be public servants.—All Directors of a Corporation, and all officers and other employees of a Corporation, whether appointed by the State Government or the Corporation, shall be deemed, when acting or M.Cr.C. No.5913/2010purporting to act in pursuance of any of the provisions of this Act or of any other law, to be public servants within the meaning of Section 21 of the Indian Penal Code (45 of 1860). Attention has also been invited to the following facts - (i) The corporation had been established under Section 3 of the Road Transport Corporations Act, 1950 so that (a) advantages can be offered to the public, trade and industry by development of road transport (b) there could be co-ordination of different forms of road transport and (c) facilities for road transport could be extended and improved by an efficient and economical system of road transport service. (ii) The Act permits the State Government to delegate these functions to a Road Transport Corporation established by it. (iii) The provisions of Sections 3, 5, 8, 34, 35, 36, 37 and 38 clearly show that the State Government has absolute control over the Corporation. But, the petitioner, while hatching or entering into a criminal conspiracy, could not be said to be acting or purporting to act in pursuance of any of the provisions of the Act or any other law.
12. Further, the legal fiction contemplated in Section 43 (supra) cannot be extended for a purpose, other than for which it is created (See. N.K. Sharma v. Abhimanyu, (2005) 13 SCC 213. In that case, a State Government officer on deputation as Managing Director of State Co-operative Land Development Bank raised the M.Cr.C. No.5913/2010objection as to want of sanction while contending that he had continued to remain as a Government employee under Rule 2(d) of Haryana Civil Service (Punishment and Appeal) Rules that reads :- 2.(d) ‘government employee’ means any person appointed to any civil service or post in connection with the affairs of the State of Haryana: Explanation.—A government employee whose services are placed at the disposal of a company, corporation or organisation or a local authority or university by the Government shall, for the purpose of these Rules be deemed to be a government employee serving under the Government notwithstanding that his salary is drawn from sources other than the Consolidated Fund of the State;”. Nevertheless, the Court, on a conspectus of earlier decisions including those rendered in the cases of S.S. Dhanoa and Hadi Raja, proceeded to reject the plea. The relevant observations may be reproduced as under - “Indisputably the underlying object in enacting Section 197 CrPC is to protect a public servant from a frivolous prosecution. The said provision, however, although may not be construed too narrowly, as was held in Shreekantiah Ramayya Munipalli v. State of Bombay AIR 1955 SC 287 whereupon the learned counsel for the appellant placed reliance, cannot be interpreted liberally so as to bring within its purview other officers who are not so protected. Section 197 of the Code of Criminal Procedure, inter alia, protects the public servants. “Public servant” has been defined in Section 21 IPC, clause 12 whereof is as under: “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, M.Cr.C. No.5913/2010Provincial or State Act or a government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956).” Admittedly, the salary of the appellant is not paid by the Government. He at the relevant time was not in the service of the State. Prosecution against an officer of a government company or a public undertaking would not require any sanction under Section 197 CrPC.”
13. It will also be appropriate at this stage to refer to the provisions of Section 197(1) of the Code - Section 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- (a) 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 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)
14. Clause Twelfth in Section 21 of the IPC was brought into existence by the Criminal Law (Amendment) Act (2 of 1958). Thereafter, in pursuance of the recommendations made by a Committee headed by Shri K. Santhanam, the present clause Twelfth was substituted for the previous one by way of AntiCorruption Laws (Amendment) Act, 1964 (40 of 1964). In order to appreciate the change made and its effect, the un-amended clause ‘Twelfth’ may be reproduced thus - M.Cr.C. No.5913/2010“Twelfth: Every officer in the service or pay of a local authority or of a corporation engaged in any trade or industry which is established by a Central, Provincial or State Act or of a Government Company as defined in Section 617 of the Companies Act, 1956.” However, it is not possible to hold that at the relevant point of time, the petitioner, as Managing Director of the Corporation, was employed in connection with the affairs of the Central or State Government within the meaning of Section 197 of the Code in view of the fact that by virtue of Section 5 of the Act of 1950, the general superintendence, direction and management of the affairs and business of a Corporation vested in a Board of Directors that consisted of a Chairman and such other Directors as State Government thought fit to appoint and the Board, with the assistance of its committees and Managing Director, could exercise all such powers and do all such acts and things as might be exercised or done by the Corporation. In other words, the petitioner, at the time of commission of the alleged offence of criminal conspiracy, was employed in connection with the affairs of the Corporation, that was a juridical person having a distinct legal entity. In such a situation, sanction of the State Government for prosecution of the petitioner for the offence was not at all necessary. His objection regarding want of sanction was, therefore, rightly rejected by learned trial Judge.
15. This apart, the contention that for the offence under Section 120B of the IPC, sanction under Section 197 of the Code is a condition precedent for launching the prosecution is equally misconceived in view of the well settled position of law on the subject as re-affirmed in Harihar Prasad’s case (supra) in the following terms - M.Cr.C. No.5913/2010"As far as the offence of criminal conspiracy punishable under Section 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."
16. For these reasons, firstly the petitioner cannot be treated as public servant within the meaning of Section 197 of the Code read with Section 21 of the IPC and secondly, even if a contrary view is taken, he would not be entitled to get the proceedings quashed for want of sanction as he has been charged with the offence under Section 120-B of the IPC that can, by no stretch of imagination, be regarded as having been committed by acting or purporting to act in discharge of official duty (See. Parkash Singh Badal v. State of Punjab (2007) 1 SCC 1).
17. Thus, viewed from any angle, no interference with the impugned order would be called for under the inherent powers.
18. The petition, accordingly, stands dismissed. Petition dismissed.