Case: Brijlal S/O Sadasukh Modani Vs. The State of Maharashtra Through The Secretary To The Government of Maharashtra &amp; Others

are sufficient proof to arrive at conclusion that the functioning of the Bank is regulated and controlled by the Reserve Bank of India. We do not accept the proposition advanced by the learned A.P.P. It is settled position that general regulations under an Act, like the Companies Act or Cooperative Societies Act, would not render the activities of a company or a society as subject to control of the State. Whatever control exercised by the Government or its authorities under the provisions of the Act are meant to ensure proper functioning of the society. The Government or in this case the Reserve Bank of India or any other statutory authorities have no role to play in day-to-day functioning of the societies / banks much less exercise control over the recruitment of the staff, its service conditions etc. Considering the provisions of the different enactments more particularly the provisions of the Banking Regulation Act 1949, we are of the view that the Reserve Bank of India or the Government or its authorises do not exercise any direct, deep and pervasive control over the functioning of the Bank.24) In Apex Co-op. Bank v. M.S. Co-op. Bank Ltd., (AIR 2004 SC 141 ) the Apex Court in para 15 observed that:"The power to regulate, supersede, order moratorium, amalgamation or winding are extricable only be in respect of a cooperative bank. Such power cannot be exercised in respect of any co-operative society which is not a co-operative bank. Far from supporting the case now sought to be made but, this shows that it is only a cooperative bank which can be licensed and then controlled by RBI."25) The learned Additional Public Prosecutor appearing for the State has placed reliance on the case of Govt. of Andhra Pradesh v. P. Venku Reddy (2002 AIR SCW 3895) 3895). In the facts of the said case, there was no dispute that the respondent accused was in service of aCo-operative Central Bank which is an authority or body controlled and aided by the government. In the light of the said facts, it was observed in paragraphs 12 and 13 thus:"12. In construing definition of public servant in Clause (c) of S.2 of the 1988 Act, the Court is required to adopt a purposive approach as would give effect to the intention of legislature. In that view Statement of Objects and Reasons contained in the Bill leading to the passing of the Act can be taken of assistance of. It gives the background in which the legislation was enacted. The present Act, with much wider definition of public servant, was brought in force to purify public administration. When the legislature has used such 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 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 Madhya Pradesh v. Shri Ram Singh (AIR 2000 SC 575).13. As a matter of fact, we find that the point arising before us on the definition of public servant that it does include employee of a banking co-operative society which is controlled or aided by the government is clearly covered against the respondent/accused by the judgment in the case of State of Maharashtra & Anr. v. Prabhakarrao & Anr. 2002 (1) JT (Suppl.1) (SC) 5. The ratio of the judgment in the case of P. Venku Reddy (cited supra) does not apply to the facts of the case as the present Bank does not receive aid from the State or Central Government nor it is controlled by the Government or a Government company.26) The learned APP further submitted that the petitioner could raise all these issues before the authority in response to the notice issued. The petition is premature and the petitioner is not entitled to challenge the notice in exercise of writ jurisdiction of this Court.27) We find that in the present case the petitioner has questioned the jurisdiction of respondent No.3 to issue notice for enquiring about the property of the petitioner in exercise of powers conferred under the provisions of the Prevention of Corruption Act. There is no dispute on this point. This is not a case where the police machinery while exercising powers under the Code of Criminal Procedure in connection with a penal offence has initiated some proceedings against the petitioner. We are of the opinion that the petition would be maintainable in the facts of the case and the issues raised therein. Respondent No.3 has put forth his stand by way of affidavits-in-reply. Therefore it would not be reasonable and proper now to relegate the petitioner to alternative forum by asking him to appear before respondent No.3 and agitate the same issues.28) We are, therefore, of the opinion that the petitioner who discharged his duties as General Manger 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 Cooperative 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 authorises. 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 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]16) We have considered the provisions of the different enactments for ascertaining whether the State Government or Central Government or its authority control the functioning or the management of the Bank and even govern the service conditions of its employees. Section 2(c) of the Prevention of Corruption Act 1988 defines "public servant". We are concerned with clauses (iii) and (ix) of the said section. While considering the provisions contained in clause (iii) of Section 2(c) we find that the Bank was not established by or under a Central or State Act or by an authority or a body owned or controlled or aided by the State or Central Government. It is even not a Government company as defined in section 617 of the Companies Act, 1956. While considering the provisions of Section 2(c) (ix) we find that the Bank does not receive any financial aid from the Central or State Government. We had even enquired with the learned Additional Public Prosecutor, who was instructed by the officers, to place before this Court any evidence, in case it is there, to the effect that the Bank was provided with financial aid by the Government or its authority or Corporation established by the Government. The learned A.P.P. stated that there is no such evidence brought to his notice that the Bank was getting financial aid.17) The provisions of Sectionand 36 of the Banking Regulation Act 1949 were referred to by respondent No.3 to support contentions that the Reserve Bank of India has powers to issue directions which would amount to having control over the functioning of the Bank. Reference was also made to the provisions of Section 56 of the Act of 1949 which speak that the provisions of the Act of 1949 would apply to any cooperative society as they apply to banking companies subject to the modifications enumerated thereunder.18) We have perused theof the Bank registered as aCooperative Society. Bye law No.21 says that the final authority of the society shall vest in the General Body. The Board of the Bank would convene annual general meting for the purposes of taking decisions on various issues.No.55 refers to the service rules. The Bank shall have service rules for regulating the service conditions of its employees as formulated and amended by the Board from time to time. The Bank shall maintain a Contributory Provident Fund for the benefit of its employees in accordance with the provisions of Employees Provident Fund and Miscellaneous Provisions Act,The question, therefore, would be as to whether the provisions of the Banking Regulation Act which were introduced by the Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004 (24 of 2004) amending some of the provisions bringing into its sweep regulating control over societies which transact banking business, are attracted in the case in hand. Perusal of the Banking Regulation Act 1949 indicates that the Reserve Bank of India exercises regulatory control and power of supersession of Board of directions ofe bank, grant of licence to startcooperative bank, to lay down policy of grant of loan, recovery of loan amounts, implementation of Deposit Insurance and Credit Guarantee scheme under the Deposit Insurance and Credit Guarantee Corporation Act 1961, winding up of the bank etc. It needs to be considered as to whether these powers enumerated under the Banking Regulation Act 1949 to be exercised by the Reserve Bank of India operate as deep and pervasive control of the Bank so as to treat the persons working in the capacity of president, secretary or other office bearers like General Manager, Manager to be public servants for the purpose of application of the Prevention of Corruption Actis settled position that general regulations under an Act, like the Companies Act or Cooperative Societies Act, would not render the activities of a company or a society as subject to control of the State. Whatever control exercised by the Government or its authorities under the provisions of the Act are meant to ensure proper functioning of the society. The Government or in this case the Reserve Bank of India or any other statutory authorities have no role to play infunctioning of the societies / banks much less exercise control over the recruitment of the staff, its service conditions etc. Considering the provisions of the different enactments more particularly the provisions of the Banking Regulation Act 1949, we are of the view that the Reserve Bank of India or the Government or its authorises do not exercise any direct, deep and pervasive control over the functioning of theWe find that in the present case the petitioner has questioned the jurisdiction of respondent No.3 to issue notice for enquiring about the property of the petitioner in exercise of powers conferred under the provisions of the Prevention of Corruption Act. There is no dispute on this point. This is not a case where the police machinery while exercising powers under the Code of Criminal Procedure in connection with a penal offence has initiated some proceedings against the petitioner. We are of the opinion that the petition would be maintainable in the facts of the case and the issues raised therein. Respondent No.3 has put forth his stand by way ofTherefore it would not be reasonable and proper now to relegate the petitioner to alternative forum by asking him to appear before respondent No.3 and agitate the same issues.28) We are, therefore, of the opinion that the petitioner who discharged his duties as General Manger 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 theCooperative 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 authorises. 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 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.