1 mst IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.2400 OF 2008 WITH CRIMINAL WRIT PETITION NO.2401 OF 2008 WITH CRIMINAL WRIT PETITION NO.2402 OF 2008 WITH CRIMINAL WRIT PETITION NO.2403 OF 2008 WITH CRIMINAL REVISION APPLICATION NO.131 OF 2007 Sridhar Subasri ..Petitioner (in all the writ petitions) versus CBI (BS & FC Mumbai) and another ..Respondents (in all the writ petitions) WITH CRIMINAL REVISION APPLICATION NO.131 OF 2007 Central Bureau of Investigation ..Appellant versus Shri.Ramesh Gelli and others. ..Respondents R.M.Tiwari for petitioner in Cri.writ petitions. Raja Thakare for CBI (respondent no.1 - in the writ petitions and for the applicant in Cri.Revision Application) S.R.Borulkar, Public Prosecutor for the State. A.H.H.Ponda along with Apoorv V. Singh for respondent no.1 in Criminal Revision Application No.131 of 2007. CORAM : A.S.OKA, J. DATE : 13th July 2009 2 JUDGEMENT :- 1. The submissions of the learned counsel appearing for the parties were heard on the earlier date and the judgment was reserved. With a view to appreciate the submissions made by the learned counsel for the parties, it will be necessary to refer to the facts of the case in brief. 2. Criminal Revision Application No.131 of 2007 has been filed by Central Bureau of Investigation (CBI) for taking an exception to the order dated 5th February 2007 passed by the learned Special Judge under the Prevention of Corruption Act, 1988 (hereinafter referred to as "the said Act of 1988"). The CBI had filed charge sheet alleging various offences against the respondents in the said criminal revision application. It must be stated here that the investigation was commenced on the basis of a written complaint lodged by the Chief Intelligence Officer of Oriental Bank of Commerce. It must be also stated here that the complaint filed by the Chief Intelligence Officer relates to the transactions of the year 1994. The transactions relate to the Global Trust Bank Limited which was a banking corporation under the Banking Regulation Act, 1949. It was a banking company registered under the Companies Act, 1956. It appears that on 14th August, 2004 there was amalgamation of the Global Trust Bank Limited (hereinafter referred to as "the said bank") with the Oriental Bank of Commerce which is a public sector bank. The allegations in the complaint were against the officers of the said bank as well as other private persons. The accused nos.1 and 2 were the officers of the said 3 bank. Charge sheet was filed by the CBI against them for the Indian Penal Code (IPC) offences as well as offences under section 13(2) read with section 13(1)(d) of the said Act of 1988. When the charge sheet came up before the Special Judge, by order dated 5th February 2007, the learned Special Judge declined to take cognizance of the offences under the said Act of 1988 as against accused nos.1 and 2, on the ground that the officers of the said bank were not public servants within the meaning of said Act of 1988. Rule was issued in this criminal revision application. There are three writ petitions being Criminal Writ Petition Nos.2400/2009, 2401/2009 and 2402/2009 which are tagged along with the said criminal revision application. The said petitions have been filed by the same petitioner who was one of the Directors of the said bank. A charge sheet was filed against the petitioner before the learned Special Judge under the said Act of 1988 by the CBI.. In the charge sheet the petitioner was charged with IPC offences as well as offences under section 13(2) read with section 13(1)(d) of the said Act of 1988. The charges against the petitioner admittedly relate to the transactions effected prior to the date on which the said bank amalgamated with Oriental Bank of Commerce. The prayer in these petitions is for quashing the order of learned Special Judge of taking cognizance of the offences under the said Act of 1988. 3. Common issue arises for consideration in these petitions. The said issue is "whether the officers and directors of the Global Trust Bank Limited can be said to be Public Servants within the meaning of clause (c) of Section 2 of the said Act of 1988?" 4 4. It must be clarified here that the offences alleged have allegedly took place prior to 14th August 2004 i.e. prior to the day on which the said bank amalgamated with Oriental Bank of Commerce which is a public sector bank. Therefore, the question which is considered in these petitions is of applicability of section 2(c) of the said Act of 1988 to the officers of the Global Trust Bank Limited as it stood prior to 14th August 2004 as the situation has undergone a change thereafter as a result of amalgamation of the said bank with a public sector bank. 5. Mr.Thakre, learned counsel appearing for the CBI has made detailed submissions. He has invited my attention to Section 46(A) of the Banking Regulation Act, 1949 (hereinafter referred to as "the said Act") and submitted that the Chairman working on full time basis, Director, Manager and an Employee of a banking company shall be deemed to be public servants. He pointed out that though the said provision states that the said officers shall be deemed to be public servants for the purposes of Chapter-IX of the Indian Penal Code, he pointed out that the said chapter includes the offences under sections 161 to 165-A of the Indian Penal Code which are pari materia with the offence under the said Act of 1988. 6. He pointed out that under the Prevention of Corruption Act, 1947 (hereinafter referred to as "the said Act of 1947"), the definition of public servant was the same as the one in section 21 of the Indian Penal Code. His submission is that a perusal of section 2(c) of the said Act of 1988 5 shows that under the said Act of 1988, the definition of public servant has been expanded and the words "public servant" have not been given restricted meaning as in the said Act of 1947. He submitted that in the present case Clause-viii of section 2(c) of the said Act will be squarely applicable as in the present case the accused were holding an office with the said bank by virtue of which they were required or authorized to perform a public duty. He has also invited my attention to various other provisions of the said Act of 1949. He has placed reliance on the decision of the Delhi High Court in the case of L.K.Advani Vs. CBI (1997- Cri.L.J.-2559) which has been upheld by the Apex Court. He invited my attention to the observations made by the Delhi High Court in paragraph nos.29, 31 and 39 of the said decision. He thereafter relied upon the decision of the Apex Court in the case of P.V.Narsimha Rao Vs. CBI (AIR-1998-SC-2120). He submitted that the decision of the Apex Court in the case of State of Maharashtra Vs. Laljit Rajshi Shah ([2000]2- SCC-699) will not help the accused. He pointed out that the said decision holds that the Chairman and members of the Managing Committee of a co-operative housing society under the Maharashtra Co- operative Societies Act, 1960 are not public servants considering the provisions of the said Act of 1947. He submitted that the definition of the "public servant" in the said Act of 1988 is very wide. He invited my attention to the decision of Brijlal Sadasukh Modani Vs. State (2008-All M.R. {Cri}-733) which holds that the General Manager of a co-operative bank is not a public servant. He submitted that the said decision is not a binding precedent as it does not consider section 2(c) of the said Act of 6 1988 and in particular clause (viii) thereof as well as section 46-A of the said Act of 1949. He submitted that as the officers of the banking company which is governed by the said Act of 1949, the accused were authorized and required to perform a public duty of safeguarding the members of public who had invested money in the said bank. 7. The learned counsel appearing for the 1st respondent in Criminal Revision Application No.131 of 2007 has placed reliance on the decision of the Apex Court in the case of Federal Bank Limited Vs. Sagar Thomas and others (AIR-2003-SC-4325) and submitted that the said bank at the relevant time was a private bank which was not at all performing a public duty. He submitted that by no stretch of imagination it can be said that the officers of the said bank were empowered to perform any public duty. He admitted that the decision of the Division Bench of this Court in the case of Brijlal Sadasukh Modani (supra) has not considered the provisions of clause (viii) of section 2(c) of the said Act of 1988. Nevertheless, the Division Bench has extensively considered the decision in the case of Federal Bank Ltd. (supra) and has come to the conclusion that the bank was not performing any public duty. He submitted that considering the status of the said bank prior to its amalgamation, the view taken by the learned Special Judge is correct and no interference is called for. 8. Learned counsel for the petitioners in the Writ Petition Nos. 2400/2009 to 2403 of 2009 has made detailed submissions. He has also tendered written submissions on record. He has also placed reliance on 7 the decision of the Apex Court in the case of Federal Bank Limited (supra) and observations made therein. He has placed reliance on various other decisions including the decision of the Division Bench in the case of Brijlal Sadasukh Modani (supra). He placed reliance on a decision of this Court in the case of N.Vaghul Vs. State of Maharashtra (1986-Bank J.-634). He also invited my attention to the another decision of the Calcutta High Court in the case of Pavan Kumar Ruia Vs. State of Maharashtra (1998[2]-CLJ-310). 9. I have carefully considered the submissions. The learned counsel for the revision applicant in Criminal Revision Application No.131 of 2007 has placed reliance on clause (viii) of section 2(c) of the said Act of 1988. Clause (viii) reads thus:- "(viii) any person who holds an office by virtue of which he is authorised or required to perform any public duty; His submission is also based on section 46(A) of the said Act of 1949 which read thus : "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)] 8 10. At this stage a reference will have to be made to the decision of the Apex Court in the case of State of Maharashtra Vs. Lalit Rajshi Shah (supra). This was a case where the offences under the said Act of 1947 were alleged against the Chairperson and members of the Managing Committee of the co-operative society constituted under the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as "the said Act of 1960"). The issue before the Apex Court was whether the Chairperson and office bearers of a co-operative society registered under the said Act of 1960 can be held to be public servants who can be proceeded against for the offences under the said Act of 1947. The Apex Court referred to the provisions of said Act of 1947. The Apex Court also referred to the provisions of section 161 of the said Act of 1960 which incorporated the provision of section 21 of the Indian Penal Code in the said statute. The Apex Court observed that it is difficult to accept the contention of the State of Maharashtra that by virtue of the deeming definition under Section 161 of the said Act of 1960 by reference to section 21 of the Indian Penal Code, the persons who were defined as officers under the said Act of 1960 could be prosecuted for the offences under the Indian Penal Code. The Apex Court held that as the said Act of 1960 was a completely self- contained statute with its own provisions and has created specific offences quite different from the offences of Indian Penal Code, by virtue of section 161 of the said Act of 1960, the officers of a co-operative society cannot be prosecuted by treating them as public servants within 9 meaning of section 21 of the Indian Penal Code. As far as this decision is concerned, the same may not be helpful in resolving the controversy before this Court either way. 11. Strong reliance has been placed by the counsel for the accused on the decision of Division Bench of this Court in the case of Brijlal Sadasukh Modani (supra). In the said case, the accused had discharged his duties as a General Manager of Osmanabad Janata Sahakari Bank Limited. He was sought to be prosecuted for the offences under the said Act of 1988. He was served with the notice issued by the Deputy Superintendent of Police of Anti Corruption Bureau ("ACB" for short) calling upon him to furnish details of the property acquired by him. The petitioner replied to the said notice by contending that he cannot be treated as a public servant. Thereafter the petitioner was called to attend an enquiry by the ACB and, therefore, the petitioner approached the Division Bench of this Court. It was pointed out by the prosecution that initially the said Osmanabad Janata Sahakari Bank Limited was registered under the said Act of 1960. Thereafter it obtained registration as a Multi State Co- operative Bank under the Multi State Co-operative Societies Act, 1984. The said Act of 1984 was repealed by Multi State Co-operative Societies Act, 2002. Reliance was placed by the prosecution before the Division Bench on the provisions of section 36 of the said Act of 1949. By placing reliance on section 36, it was contended that the provisions of the said Act of 1949 are applicable in relation to co-operative societies and reference to banking company under the said Act of 1949 shall be considered as a reference to a co-operative bank. Reliance was placed on section 46-A 10 of the said Act of 1949 by contending that the General Manager of the said Osmanabad Janata Sahakari Bank Limited was a public servant. It was pointed out that apart from the provisions of the said Act of 1949, even under the said Act of 2002, the Central Government had powers to issue directions to the said Osmanabad Janata Sahakari Bank Ltd.. Thereafter the Division Bench proceeded to consider the question whether the General Manager of the said bank was a public servant. After considering the decision of the Apex Court in the case of State of Maharashtra Vs. Lalit Rajshi Shah (supra) as well as Federal Bank Ltd. (supra), the Division Bench came to the conclusion which is recorded in paragraph no.28 of the said decision which reads as under :- "28. We are, therefore, of the opinion that the petitioner who discharged his duties as General manager could not be termed as a public servant as defined in the Prevention of Corruption Act, 1988. Under the provisions of the Banking Regulation Act, 1949 the Central Government or any authority of the Government, the Reserve Bank of India exercise regulatory control over the Bank which is registered under the multi-State Co-operative Societies Act. The said control exercised by these authorities would not be termed as deep and pervasive one. The day to day activities, the internal management are not at all governed and controlled by the Government or its authorities. The Bank is not aided one or funded in any manner by the Government or its authorities. The service conditions of its employees are not regulated by the State or the Central Government or its authorities. Respondent no.3 is, therefore, not competent to initiate action under the provisions of the Prevention of Corruption Act against the petitioner. The impugned notices issued to the petitioner by the respondent no.3 are without jurisdiction and null and void. The notices are required to be quashed and set aside." (emphasis added) 11 Thus, the Division Bench considered the provisions of the said Act of 1949 which empower the Central Government or Reserve Bank of India to exercise regulatory control over the private sector banks. The Division Bench observed that the said control exercised by the Central Government or Reserve Bank of India would not be termed as a pervasive one and the day to day activities as well as the internal management of the private banks are not at all governed and controlled by the Central Government or the Reserve Bank of India. The Division Bench observed that such banks are not aided or funded by the Government or by its authorities. 12. Reliance was placed by the learned counsel for the accused on the decision of the Federal Bank Limited (supra). The submission of the learned counsel for the CBI was that the said decision will have no application as what was considered by the Apex Court in the said decision was the question whether a writ petition under Article 226 of the Constitution of India is maintainable against a private company carrying on business as a scheduled bank. In paragraph no.4 of the said decision the Apex Court observed thus :- "4. The question thus, which falls for consideration is as to whether the appellant-Bank is a private body or falls within the definition of the State or local or other authorities under the control of the Government. A body or organization which is an instrumentality or agency of the State or a company owned and controlled by the State are all included in the 12 expression "the State". If it is found that the petitioner falls within the later category, there would be no hurdle in holding that such a body or organization would undoubtedly be amenable to the writ jurisdiction under Art.226 of the Constitution of India. On the other hand, if it is found that the appellant is a private body in that event it may have to be examined whether a writ petition would be maintainable or not and the extent to which such powers can be exercised." (emphasis added) While considering the aforesaid question the Apex Court considered issue whether the Federal Bank Limited which was a private sector bank was discharging a public duty or whether there was an obligation of public nature which the said private sector bank was required to perform. The Apex Court also considered the provisions of the said Act of 1949 which gave control to the Central Government as well as to the Reserve Bank of India. The Apex also Court referred to section 46-A of the said Act of 1949. In paragraph no.25 of the said decision the Apex Court held thus :- "25. A company registered under the Companies Act for the purposes of carrying on any trade or business is a private enterprise to earn livelihood and to make profits out of such activities. Banking is also a kind of profession and a commercial activity, the primary motive behind it can well be said to earn returns and profits. Since time immemorial, such activities have been carried on by individuals generally. It is a private affair of the company though case of nationalized banks stands on a different footing. There may, well be companies, in which majority of the share capital may be contributed out of the State funds and in that view of the matter there maybe more participation or dominant participation of the State in managing the affairs of the company. But in the present case we are concerned with a banking company which has its own resources to raise its funds without any contribution or shareholding by the State. It has its own Board of Directors elected by its shareholders. It works like any other private company in the banking 13 business having no monopoly status at all. Any company carrying on banking business with a capital of five lacs will become a scheduled bank. All the same, banking activity as a whole carried on by various banks undoubtedly has an impact and effect on the economy of the country in general. Money of the shareholders and the depositors is with such companies, carrying on banking activity. The banks finance the borrowers on any given rate of interest at a particular time. They advance loans as against securities. Therefore, it is obviously necessary to have regulatory check over such activities in the interest of the company itself, the shareholders, the depositors as well as to maintain the proper financial equilibrium of the national economy. The Banking companies have not been set up for the purposes of building economy of the State on the other hand such private companies have been voluntarily established for their own purposes and interest but their activities are kept under check so that their activities may not go wayward and harm the economy in general. A private banking company with all freedom that it has, has to act in a manner that it may not be in conflict with or against the fiscal policies of the State and for such purposes, guidelines are provided by the Reserve Bank so that a proper fiscal discipline, to conduce its affairs in carrying on its business, is maintained. So as to ensure adherence to such fiscal discipline, if need be, at times even the management of the company can be taken over. Nonetheless, as observed earlier, these are all regulatory measures to keep a check and provide guideline and not a participatory dominance or control over the affairs of the company. For other companies in general carrying on other business activities, may be manufacturing, other industries or any business, such checks are provided under the provisions of the Companies Act." (emphasis added) The Apex Court also considered its earlier decision in the case of Ajay Hasia Vs. Khalid Mujib Sehravardi (AIR-1981-SC-487). After considering the relevant provisions of Act of 1949 and especially the powers of Reserve Bank of India, in paragraph 32, the Apex Court held thus :- 14 "32. For the discussion held above, in our view, a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations or public nature casting positive obligation upon it. We don't find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor puts any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. Present is a case disciplinary action being taken against its employee by the appellant Bank. Respondent's service with the bank stands terminated. The action of the Bank was challenged by the respondent by filing a writ petition under Article 226 of the Constitution of India. The respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed." (emphasis added) 13. Coming back to the decision in the case of Brijlal Sadasukh Modani (supra), it must be noted here that the Division Bench has extensively considered the case of Federal Bank Ltd. (supra). It is true that there is no specific reference to