Case: M. Gopalakrishnan Vs. State by Addl. S.P. CBI, B.S. &amp; F.C., Bangalore

3. Background facts in a nutshell are as follows:The respondent/complainant on credible information registered a case against the appellant and others for the alleged commission of offences punishable under Section 120B of the Indian Penal Code, 1860 (in short the ‘IPC) read with Section 420 IPC and Sections 11, 12, and 13(2) read with section 13(1)((d) of the Prevention of Corruption Act, 1988 (in short the ‘PC Act). On the basis of the First Information Report when investigation proceeded it disclosed the commission of the offences, as aforementioned, resulting in filing of a final report followed by taking cognizance of the case by the courtrespective stands of the parties before the High Court were asappellant filed a petition under Section 482 of the Code to quash the proceedings since in the absence of any sanction under Section 197(1) (a) of the Code, the cognizance taken by the Court is illegal and invalid since he is a public servant. It is the further case of the appellant that though he was the Chairman and Managing Director of the Company with over all control, the sanction of credit facility was not directly connected with him and in this view he should be absolved from all the charges. It was further submitted that there is no allegation that the appellant as public servant obtained pecuniary advantage while holding office as public servant and in this view the charges against him are untenable. On the above basis, it was claimed that proceedings against him should berespondent-State opposed the application contending that sanction to prosecute the appellant is not necessary under the facts and circumstances of the case and the same also could be decided even at the time of thehat accused M. Gopalakrishnan (A1) while functioning as the Executive Director and Chairman and Managing Director, Indian Bank connived to commit criminal misconduct by public servants by corrupt or illegal means or by abuse of their official position as public servants or they while holding office as public servants without any public interest obtained for themselves or for any other person any valuable thing or pecuniary advantage by recommending/sanctioning credit limits without proper appraisal, ignoring banking norms, RBI guidelines, exceeding delegated powers, violating board directions despite glaring adverse features in the conduct of the account, without ensuring proper end use of funds and safeguarding the interest of the Bank by A1 to A4 the public servants, viz. M. Gopalakrishnan (A1) and N. Kumaraswamy (A2) named above to accept or obtain for themselves or for their close relatives viz. A18 to A20 named above valuable thing without consideration from persons whom they knew to have been concerned in business transacted by them or having any connection with the official functions of themselves or from any person whom they knew to be interested in or related to the person so concerned and the accused R. Ramesh (A18), T.S. Jayakumar (A19) and Kala Kumaraswamy (A20) to abet the aforesaid offences of public servants obtaining valuable thing without consideration from persons concerned in business transaction by them by accepting Rs.15 lacs and Rs.5 lacs in demand drafts and an Ambassador Nova Car, respectively. Thus the accused A1 to A20 committed offence punishable under Sections 120B read with Section 420 IPC and Sections 11, 12, 13(2) read with Section 13(1)(d) of PC Act.Thus it is seen the capacity or the position of the appellant as that of public servant is an admitted position. In the ordinary course in order to take cognizance of a case against a public servant subject to certain other conditions as said in Section 197 of Code a sanction is a must as held by this Court in Mohd. Hadi Raja v. State of Bihar (AIR 1998 SC 1945 ). In the above decision it is observed asthe purpose of requirement of sanction under Section 197 of the Code the accused will be such public servant who cannot be removed from his office except by or with the sanction of the Government. Further, the accused will not only be a public servant of above description but the offence alleged to have been committed by such officer must have been committed while such public servant had been acting or purporting to act in the discharge of his official duties.As far as the second part is concerned in this petition we are not very much concerned since on that ground discharge or quashing of the proceedings was not urged. In this view, High Court held that though the appellant is described as a public servant it has to be seen whether he comes within the meaning of "such public servant who cannot be removed from his office except by or with the sanction of the Government".As revealed by the records the appellant was appointed as per the Notification dated 8.12.1988 as Managing Director of the Indian Bank from the date of his taking the charge to be the Chairman of the Board of Directors of the Indian Bank with effect from the same date. This notification says that the Central Government after consultation with the Reserve Bank of India had appointed the appellant. On this basis learned counsel for the appellant submitted that the appointment of the appellant as Managing Director-cum-the Chairman of the Board of Directors was only by the Central Government and the Central Government alone should have power to remove him from the service thereby taking the accused within the ambit of Section 197 of Code.

Court's reasoning:
Banking Regulation Act, 1949 shall prevail over the Scheme which was formulated under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. This Scheme cannot have the over riding effect against the Banking Regulation Act. In this view the appellant cannot claim that he is a public servant coming within the meaning of a ‘public servant not removable from his office, save by or with the sanction of the Government. In view of the specific provisions available for the removable of the Chairman under the Banking Regulation Act it is prima facie clear that the appellant will not come within the scope of Section 197 of Code. It was submitted by learned counsel for the respondent before the High Court the question of requirement of sanction for prosecution can be left open to be examined during the trial by giving an opportunity to the defence to prove the same.d counsel for the respondent relied on a decision of this Court in P.K. Pradhan v. State of Sikkim (2001 SCC (Crl.) 1234)wherein it is observed asof requirement of sanction for prosecution could be raised at any time after cognizance of the offence is taken, may be even at the time of conclusion of trial or afteris also observedclaim of the accused that the act alleged was done reasonably and not in pretended course of his official duty can be examined during the trial by giving an opportunity to the defence to prove it. In such cases, the question of sanction can be left open to be decided in the main judgment after conclusion of trial.On the basis of the above conclusions the claim of the accused that he should be discharged for want of sanction is not acceptable at present and the matter should be left open to be decided later on.The High Court held that the question whether the appellant is removable from service by the Reserve Bank or the Central Government is really an academic interest because it is yet to be established that the impugned acts were done by the appellant in position of his official duty.n Parkash Singh Badal v. State of Punjab (2007 (1) SCC 1 ) it was noted asoffence of cheating under Section 420 or for that matter offences relatable to Sections 467, 468, 471 and 120B can by no stretch of imagination by their very nature be regarded as having been committed by any public servant while acting or purporting to act in discharge of official duty. In such cases, official status only provides an opportunity for commission of the