Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 1077-1081 OF 2013

Central Bureau of Investigation,

Bank Securities & Fraud Cell .....Appellant

Versus

Ramesh Gelli and Others ...Respondents

WITH

WRIT PETITION (CRL.) NO. 167 OF 2015

Ramesh Gelli ...Writ Petitioner

Versus

Central Bureau of Investigation through

Superintendent of Police, BS & FC & Anr. ...Respondents

J U D G M E N T

PER RANJAN GOGOI, J.

1.I have had the privilege of going through the judgment of

my learned brother Prafulla C. Pant, J. Though I am in full

agreement with the conclusions reached by my learned

brother, I would like to give my own reasons for the same.

1

Page 2 2.The question arising has to be answered firstly within the

four corners of the definition of “public servant” as contained

in Section 2(c) of the Prevention of Corruption Act, 1988

(hereinafter referred to as ‘the PC Act’), particularly, those

contained in Section 2(c)(viii), which is extracted below.

2. “Definitions.-In this Act, unless the context otherwise

requires,-

(c) “Public Servant” means,-

(i) xxxxxxxxx

(ii) xxxxxxxxx

(iii) xxxxxxxxx

(iv) xxxxxxxxx

(v) xxxxxxxxx

(vi) xxxxxxxxx

(vii) xxxxxxxxx

(viii) any person who holds an office by virtue of which he

is authorized or required to perform any public duty;”

(ix) xxxxxxxxx

(x) xxxxxxxxx

(xi) xxxxxxxxx

(xii) xxxxxxxxx”

3.While understanding the true purport and effect of the

aforesaid provision of the PC Act, the meaning of the

2

Page 3 expression “office” appearing therein as well as “public duty”

which is defined by Section 2(b) has also to be understood.

4.A reference to Section 2(b) of the PC Act which defines

“public duty” may at this stage be appropriate to be made.

“2.(b) “public duty” means a duty in discharge of which

the State, the public or the community at large has an

interest.”

Explanation.- In this clause “State” includes a

corporation established by or under a Central, Provincial

or State Act, or an authority or a body owned or controlled

or aided by the Government or a Government company as

defined in Section 617 of the Companies Act, 1956 (1 of

1956);”

5.The definition of public duty in Section 2(b) of the PC Act,

indeed, is wide. Discharge of duties in which the State, the

public or the community at large has an interest has been

brought within the ambit of the expression ‘public duty’.

Performance of such public duty by a person who is holding

an office which requires or authorize him to perform such duty

is the sine qua non of the definition of the public servant

contained in Section 2(c)(viii) of the PC Act. The expressions

‘office’ and ‘public duty’ appearing in the relevant part of the

PC Act would therefore require a close understanding.

3

Page 4 6.In P.V. Narasimha Rao Vs. State (CBI/SPE)

1

the

meaning of the expression ‘office’ appearing in the relevant

provision of the PC Act has been understood as “a position or

place to which certain duties are attached specially one of a

more or less public character.” Following the views expressed

by Lord Atkin in McMillan Vs. Guest

2

, this Court had

approved the meaning of the expression ‘office’ to be referable

to a position which has existence independent of the person

who fills up the same and which is required to be filled up in

succession by successive holders.

7.While there can be no manner of doubt that in the

Objects and Reasons stated for enactment of the Prevention of

Corruption Act, 1988 it has been made more than clear that

the Act, inter alia, envisages widening of the scope of the

definition of public servant, nevertheless, the mere

performance of public duties by the holder of any office cannot

bring the incumbent within the meaning of the expression

‘public servant’ as contained in Section 2(c) of the PC Act. The

1

(1998) 4 SCC 626

2

(1942) AC 561

4

Page 5 broad definition of ‘public duty’ contained in Section 2(b)

would be capable of encompassing any duty attached to any

office inasmuch as in the contemporary scenario there is

hardly any office whose duties cannot, in the last resort, be

traced to having a bearing on public interest or the interest of

the community at large. Such a wide understanding of the

definition of public servant may have the effect of obliterating

all distinctions between the holder of a private office or a

public office which, in my considered view, ought to be

maintained. Therefore, according to me, it would be more

reasonable to understand the expression “public servant” by

reference to the office and the duties performed in connection

therewith to be of a public character.

8.Coming to the next limb of the case, namely, the

applicability of the provisions of Section 46A of the Banking

Regulation Act, 1949 (hereinafter referred to as the ‘BR Act’)

what is to be found is that a chairman appointed on a whole

time basis, managing director, director, auditor, liquidator,

manager and any other employee of a banking company is

deemed to be a public servant for the purposes of Chapter IX

5

Page 6 of the Indian Penal Code. Section 46A, was amended by Act

20 of 1994 to bring within its fold a larger category of

functionaries of a banking company. Earlier, only the

chairman, director and auditor had come within the purview

of the aforesaid Section 46A.

9.Sections 161 to 165A contained in Chapter IX of the

Indian Penal Code have been repealed by Section 31 of the

Prevention of Corruption Act, 1947 and the said offences have

been engrafted in Sections 7, 8, 9, 10, 11 and 12 of the

Prevention of Corruption Act, 1988. Section 166(as originally

enacted), Section 167 (with amendment), Sections 168, 169,

170 and 171 (as originally enacted) continue to remain in

Chapter IX of the Indian Penal Code even after enactment of

the Prevention of Corruption Act, 1988.

10. By virtue of Section 46A of the BR Act office

bearers/employees of a Banking Company (including a Private

Banking Company) were “public servants” for the purposes of

Chapter IX of the I.P.C. with the enactment of the PC Act the

offences under Section 161 to 165A included in Chapter IX of

Code came to be deleted from the said Chapter IX and

6

Page 7 engrafted under Sections 7 to 12 of the PC Act. With the

deletion of the aforesaid provisions from Chapter IX of the

I.P.C. and inclusion of the same in the PC Act there ought to

have been a corresponding insertion in Section 46A of the BR

Act with regard to the deeming provision therein being

continued in respect of officials of a Banking Company insofar

as the offences under Sections 7 to 12 of the PC Act are

concerned. However, the same was not done. The Court need

not speculate the reasons therefor, though, perhaps one

possible reason could be the wide expanse of the definition of

“public servant” as made by Section 2(c) of the PC Act. Be that

as it may, in a situation where the legislative intent behind the

enactment of the PC Act was, inter alia, to expand the

definition of “public servant”, the omission to incorporate the

relevant provisions of the PC Act in Section 46A of the BR Act

after deletion of Sections 161 to 165A of the I.P.C. from

Chapter IX can be construed to be a wholly unintended

legislative omission which the Court can fill up by a process of

interpretation. Though the rule of casus omissus i.e. “what

has not been provided for in the statute cannot be supplied by

the Courts” is a strict rule of interpretation there are certain

7

Page 8 well known exceptions thereto. The following opinion of Lord

Denning in Seaford Court Estates Ltd. Vs. Ashe r

3

noticed

and approved by this Court may be taken note of.

“The English language is not an instrument of

mathematical precision. Our literature would be

much the poorer if it were ....He (The Judge) must

set to work in the constructive task of finding the

intention of Parliament, and he must do this not

only from the language of the statute, but also

from a consideration of the social conditions

which gave rise to it, and of the mischief which it

was passed to remedy, and then he must

supplement the written word so as to give “force

and life” to the intention of the legislature.....A

judge should ask himself the question, how, if

the makers of the Act had themselves come

across this ruck in the texture of it, they would

have straightened it out? He must then do as

they would have done. A judge must not alter the

material of which the Act is woven, but he can

and should iron out the creases.”

In Magor & St. Mellons Rural District Council Vs.

Newport Corporation

4

the learned judge restated the above

principles in a somewhat different form to the following effect :

“We sit here to find out the intention of

Parliament and of ministers and carry it out,

and we do this better by filling in the gaps and

making sense of the enactment than by opening

it up to destructive analysis.”

3

(1949) 2AllER 155 at page 164

4

(1950)2AllER 1226

8

Page 9 11.Though the above observations of Lord Denning had

invited sharp criticism in his own country we find reference to

the same and implicit approval thereof in the judicial quest to

define the expression “industry” in Bangalore Water Supply

& Sewerage Board Vs. A Rajappa and Others

5

. Paragraphs

147 and 148 of the opinion of Chief Justice M.H. Beg in

Bangalore Water Supply & Sewerage Board (supra), which

are quoted below, would clearly indicate the acceptance of this

Court referred to earlier.

“147. My learned Brother has relied on what

was considered in England a somewhat

unorthodox method of construction in Seaford

Court Estates Ltd. v. Asher [(1949 2 ALL ER 155,

164], where Lord Denning, L.J., said :

When a defect appears a Judge cannot

simply fold his hands and blame the

draftsman. He must set to work on the

constructive task of finding the intention of

Parliament — and then he must

supplement the written words so as to

give ‘force and life’ to the intention of

legislature. A Judge should ask himself

the question how, if the makers of the Act

had themselves come across this ruck in

the texture of it, they would have

straightened it out? He must then do as

they would have done. A Judge must not

alter the material of which the Act is

5

(1978) 2 SCC 213

9

Page 10 woven, but he can and should iron out the

creases.

When this case went up to the House of Lords it

appears that the Law Lords disapproved of the

bold effort of Lord Denning to make ambiguous

legislation more comprehensible. Lord Simonds

found it to be “a naked usurpation of the

legislative function under the thin disguise of

interpretation”. Lord Morton (with whom Lord

Goddard entirely agreed) observed: “These

heroics are out of place” and Lord Tucker said

“Your Lordships would be acting in a legislative

rather than a judicial capacity if the view put

forward by Denning, L.J., were to prevail.”

148. Perhaps, with the passage of time, what

may be described as the extension of a method

resembling the “arm-chair rule” in the

construction of wills. Judges can more frankly

step into the shoes of the legislature where an

enactment leaves its own intentions in much too

nebulous or uncertain a state. In M. Pentiah v.

Muddala Veeramallappa [(1961) 2 SCR 295],

Sarkar, J., approved of the reasoning, set out

above, adopted by Lord Denning. And, I must say

that, in a case where the definition of “industry”

is left in the state in which we find it, the

situation perhaps calls for some judicial heroics to

cope with the difficulties raised. (Underlining is

mine)

12.There are other judicial precedents for the view that I

have preferred to take and reach the same eventual conclusion

that my learned brother Prafulla C. Pant, J. has reached. I

would like to refer to only one of them specifically, namely, the

10

Page 11 decision of a Constitution Bench of this Court in Dadi

Jagannadham Vs. Jammulu Ramulu and others

6

.

Order XXI Rule 89 read with Rule 92(2) of the CPC

provided for filing of an application to set aside a sale. Such an

application was required to be made after deposit of the

amounts specified within 30 days from the date of the sale.

While the said provision did not undergo any amendment,

Article 127 of the Limitation Act, 1963 providing a time limit of

30 days for filing of the application to set aside the sale was

amended and the time was extended from 30 days to 60 days.

Taking note of the objects and reasons for the amendment of

the Limitation Act, namely, that the period needed to be

enlarged from 30 to 60 days as the period of 30 days was

considered to be too short, a Constitution Bench of this Court

in Dadi Jagannadham (supra) harmonised the situation by

understanding Order XXI rule 89 to be casting an obligation

on the Court to set aside the sale if the application for setting

aside along with deposit is made within 30 days. However, if

such an application along with the deposit is made after 30

days but before the period of 60 days as contemplated by

6

(2001) 7 SCC 71

11

Page 12 Article 127 of the Limitation Act, 1963, (as amended) the

Court would still have the discretion to set aside the same.

The period of 30 days in Order 21 Rule 89/92(2) CPC referred

to hereinabove was subsequently (by Act 22 of 2002) amended

to 60 days also.

13.Turing to the case in hand there can be no dispute that

before enactment of the PC Act, Section 46A of the BR Act had

the effect of treating the concerned employees/office bearers of

a Banking Company as public servants for the purposes of

Chapter IX of the IPC by virtue of the deeming provision

contained therein. The enactment of the PC Act with the clear

intent to widen the definition of ‘public servant’ cannot be

allowed to have the opposite effect by expressing judicial

helplessness to rectify or fill up what is a clear omission in

Section 46A of the BR Act. The omission to continue to extend

the deeming provisions in Section 46A of the BR Act to the

offences under Sections 7 to 12 of the PC Act must be

understood to be clearly unintended and hence capable of

admitting a judicial exercise to fill up the same. The

unequivocal legislative intent to widen the definition of “public

12

Page 13 servant” by enacting the PC Act cannot be allowed to be

defeated by interpreting and understanding the omission in

Section 46A of the BR Act to be incapable of being filled up by

the court.

14.In the above view of the matter, I also arrive at the same

conclusion as my learned Brother Prafulla C. Pant, J. has

reached, namely, that the accused respondents are public

servants for the purpose of the PC Act by virtue of the

provisions of Section 46A of the Banking Regulation Act, 1949

and the prosecutions launched against the accused

respondents are maintainable in law. Consequently, the

criminal appeals filed by the C.B.I. are allowed and Writ

Petition (Criminal) No. 167 of 2015 is dismissed.

........................................J.

[RANJAN GOGOI ]

NEW DELHI

FEBRUARY 23, 2016

13

Page 14 IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 1077-1081 OF 2013

Central Bureau of Investigation,

Bank Securities & Fraud Cell … Appellant

Versus

Ramesh Gelli and others …Respondents

WITH

WRIT PETITION (CRL.) NO. 167 OF 2015

Ramesh Gelli … Writ Petitioner

Versus

Central Bureau of Investigation through

Superintendent of Police, BS & FC & Anr. …Respondents

J U D G M E N T

Prafulla C. Pant, J.

Appellant Central Bureau of Investigation (C.B.I)

has challenged the judgment and order dated

13.07.2009, passed by the High Court of Judicature at

1

Page 15 Bombay whereby Criminal Revision Application No. 131

of 2007 (filed by CBI) has been dismissed, and Criminal

Writ Petition Nos. 2400, 2401, 2402 and 2403 of 2008,

filed by the accused/respondent are allowed in part, and

upheld the order dated 05.02.2007 passed by the trial

court i.e. Special Judge/Additional Sessions Judge,

Mumbai. The courts below have held that cognizance

cannot be taken against the accused namely Ramesh

Gelli Chairman and Managing Director, and Sridhar

Subasri, Executive Director of Global Trust Bank, on the

ground that they are not public servants.

2.Writ Petition (Criminal) No. 167 of 2015 has been

filed before this Court by accused Ramesh Gelli praying

quashing of charge sheet filed by CBI in connection with

FIR No. RC BD.1/ 2005/E/0003 dated 31.03.2005

relating to offences punishable under Section 120B read

with Sections 420, 467, 468, 471 of Indian Penal Code

(IPC) and offence punishable under Section 13(2) read

with Section 13(1)(d) of the Prevention of Corruption Act,

2

Page 16 1988 (for short “the P.C. Act, 1988”), pending before

Special Judge, CBI, Patiala House Courts, New Delhi.

3.Briefly stated prosecution case is that the Global

Trust Bank (hereinafter referred as “GTB”) was

incorporated on 29.10.1993 as banking company under

Companies Act, 1956. Said Bank was issued licence

dated 06.09.1994 under Banking Regulation Act, 1949

by Reserve Bank of India (for short “RBI”). Ramesh Gelli

(writ petitioner before this Court) was Chairman and

Managing Director, and Sridhar Subasri (writ petitioner

before the High Court) was Executive Director of the

Bank. The two were also promoters of GTB. For raising

their contribution to the capital, the two accused

(Ramesh Gelli and Sridhar Subasri) obtained loans from

various individuals and companies, including M/s.

Beautiful Group of Companies of accused Rajesh Mehta

and Vijay Mehta, and M/s. Trinity Technomics Services

Pvt. Ltd., of which accused Vijay Mehta and his

employees were directors. M/s. Beautiful Group of

Companies opened their first account in the name of

3

Page 17 Beautiful Diamonds Ltd. with G.T.B. in the year 1994-95.

Investigation revealed that various credit facilities were

allowed to said company by Ramesh Gelli and Sridhar

Subasri, and they fraudulently instructed the branch

heads, without following norms for sanctioning the credit

facilities. The duo (Ramesh Gelli and Sridhar Subasri),

abusing their official positions, sanctioned higher credit

limits to M/s. Beautiful Diamonds Ltd. against

regulations. According to CBI, the investigation further

revealed that in pursuance to the alleged conspiracy of

the accused the funds of GTB were diverted, and release

of Rs.5.00 crores was made in the name of M/s.

Beautiful Realtors Ltd. on the request of Directors of

M/s. Beautiful Diamonds Ltd. Said amount was further

transferred to already overdrawn account of M/s.

Beautiful Diamonds Ltd. In April, 2001, Directors of

Beautiful Group of Companies in pursuance of

conspiracy with other accused submitted another

application for sanction of Rs.3.00 crores as diamond

loan in the name of M/s. Crystal Gems. Ramesh Gelli,

Sridhar Subasri and other accused, who were Directors

4

Page 18 of Beautiful Group of Companies, said to have caused

total wrongful loss of about Rs.41.00 crores to GTB. The

accounts of Beautiful Diamonds Ltd. and other

companies, which availed funds from GTB, should have

been declared Non Performing Assets (NPA), but accused

Ramesh Gelli and Sridhar Subasri allegedly manipulated

and showed the accounts of Beautiful Realtors Ltd. and

Crystal Gems as higher profit yielding accounts. The

scam did not come to the light till 2005.

4.On 14.08.2004 GTB merged/amalgamated with

Oriental Bank of Commerce (for brevity “OBC”). An FIR

dated 31.03.2005 in respect of offences punishable under

Sections 420, 467, 468, 471 IPC and under Section 13(2)

read with Section 13(1)(d) of the P.C. Act of 1988 was

registered by C.B.I on the complaint made by the Chief

Vigilance Officer, OBC, wherein the allegations were

made that Ramesh Gelli and others, including Directors

of M/s. World Tex Limited (for short “WTL”) entered into a

criminal conspiracy to cheat GTB causing wrongful loss

to the tune of Rs.17.46 crores, and thereby earned

5

Page 19 corresponding wrongful gain. After investigation, charge

sheet was filed in said matter before the Special Judge,

CBI, Patiala House Courts, New Delhi.

5.Another First Information Report No.

RC.12(E)/2005/ CBI/BS & FC/Mumbai was registered

by C.B.I. on 09.08.2005 for offences punishable under

Section 120B read with Sections 409 and 420 IPC,

initially against two employees of GTB and two private

persons Rajesh Mehta and Prashant Mehta on the

complaint dated 26.07.2005 lodged by the Chief Vigilance

Officer, OBC. It is relevant to mention here that GTB was

a private sector bank, before its amalgamation in August

2004 with OBC, a public sector bank. In the FIR No. RC

12E/2005/CBI/B.S & FC/Mumbai Dt. 09.08.2005, it

was alleged that GTB sanctioned and disbursed loans by

throwing all prudent banking norms to winds and thus

created a large quantum of Non Performing Assets (NPA)

jeopardizing the interests of thousands of depositors, but

painted a rosy financial picture. These loan transactions

came to the light during audit after amalgamation of GTB

6

Page 20 with OBC, and it was noted that two accounts, namely

that of M/s. Beautiful Diamonds Ltd. and M/s. Crystal

Gems were used to siphon out funds of the Bank. After

investigation, charge sheets were filed in this matter

before Special Judge, Mumbai in respect of offences

punishable under Section 120B read with Sections 409

and 420 IPC and under Section 13(2) read with Section

13(1)(d) of the P.C. Act, 1988. However, on 05.02.2007

the Special Judge, Mumbai declined to take cognizance of

offence punishable under Section 13(2) read with S.3(1)

(d) P.C Act, 1988, on the ground that accused No. 1

Ramesh Gelli and accused No. 2 Sridhar Subasri were

not public servants on the dates transactions said to

have taken place, i.e. before amalgamation, and the

Special Judge directed that the charge sheet may be

returned for being submitted to appropriate Metropolitan

Magistrate for taking cognizance in respect of offences

punishable under IPC, i.e. for offence other than

punishable under the P.C. Act, 1988.

7

Page 21 6.Since the High Court of Judicature at Bombay has

upheld the order dated 05.02.2007 by the impugned

order, the CBI has approached this Court through

Special Leave. Further, since W.P.(Crl.) No. 167/2015

filed by accused Ramesh Gelli also involves similar

question of law in the case at Delhi, as such both the

connected matters are being disposed of by this common

order.

7.The common question of law involved in these

criminal appeals and connected writ petition, filed before

us, is:

Whether the Chairman, Directors and Officers of

Global Trust Bank Ltd. (a private bank before its

amalgamation with the Oriental Bank of

Commerce), can be said to be public servants for

the purposes of their prosecution in respect of

offences punishable under Prevention of Corruption

Act, 1988 or not ?

8.It is admitted fact that GTB was a private sector

bank operating under banking licence dated 06.09.1994,

issued by RBI under Banking Regulation Act, 1949. It is

also not disputed that on 14.08.2004 GTB

merged/amalgamated with OBC. The transactions of

8

Page 22 alleged fraud, cheating, misappropriation and corruption

relate to the period between 1994 to 2001, i.e. prior to

amalgamation with public sector bank (OBC). The

dispute relates as to whether the then

Chairman-cum-Managing Director and Executive

Director of GTB come under definition of ‘public servant’

or not, for the purposes of the P.C. Act, 1988.

9.It is vehemently argued by Shri Mohan Parasaran

and Shri Sidharth Luthra, senior advocates appearing for

the accused that the accused are not public servants,

and cognizance cannot be taken against the writ

petitioner Ramesh Gelli and accused/respondent Sridhar

Subasri, who were said to be the

Chairman-cum-Managing Director and Executive

Director respectively of GTB before its amalgamation. It is

further argued that a person cannot be said to have been

performing a public duty unless he holds some public

office, and in this connection it is submitted that the

accused did not hold any public office during the period

offences said to have been committed. It is also

9

Page 23 contended that since Sections 161 to 165A in Chapter IX

of IPC are repealed by Section 31 of P.C. Act, 1988,

Section 46A of Banking Regulation Act, 1949 is of little

help to the prosecution. Mr. Luthra, learned senior

counsel, further submitted that the relationship between

the customer of a bank, and the bank is that of a creditor

and debtor, and the transactions between the two are

commercial in nature, as such, no public duty is

involved.

10.On the other hand, Shri Tushar Mehta, learned

senior counsel for CBI argued that accused Ramesh Gelli

and Sridhar Subasri were public servants in view of

definition contained in Section 2(c) of P.C. Act, 1988.

Our attention is also drawn to Section 46A of Banking

Regulation Act, 1949, which provides that a whole time

Chairman, Managing Director, or Director of a banking

company shall be deemed to be a public servant. It is

also contended that a banking company as defined under

Section 5(b) read with Section 35(A) of Banking

Regulation Act, 1949 is nothing but extended arm of

10

Page 24 Reserve Bank of India. In support of arguments

advanced on behalf of CBI, reliance is placed on the

principle of law laid down by this Court in Govt. of

Andhra Pradesh and Others vs. P.Venku Reddy

7

.

Lastly, it is submitted that a private body discharging

public duty or positive obligation of public nature

actually performs public function. In this connection,

reference was made to the observations made by this

court in paragraph 18, in Federal Bank Ltd. vs. Sagar

Thomas and others

8

.

11.We have considered the arguments and the counter

arguments and also gone through the relevant case laws

on the issue.

12.Before further discussion it is just and proper to

examine the object for which the Prevention of

Corruption Act, 1988 was enacted by the Parliament.

The Statement of Objects and Reasons of the Bill is

reproduced below: -

7

(2002) 7 SCC 631)

8

(2003) 10 SCC 733

11

Page 25 “1.The bill is intended to make the

existing anti-corruption laws more effective by

widening their coverage and by strengthening

the provisions.

2.The Prevention of Corruption Act,

1947, was amended in 1964 based on the

recommendations of the Santhanan

Committee. There are provisions in Chapter IX

of the Indian Penal Code to deal with public

servants and those who abet them by way of

criminal misconduct. There are also

provisions in the Criminal Law Amendment

Ordinance, 1944, to enable attachment of

ill-gotten wealth obtained through corrupt

means, including from transferees of such

wealth. The bill seeks to incorporate all these

provisions with modifications so as to make

the provisions more effective in combating

corruption among public servants.

3.The bill, inter alia, envisages

widening the scope of the definition of the

expression ‘public servant’, incorporation of

offences under sections 161 to 165A of the

Indian Penal Code, enhancement of penalties

provided for these offences and incorporation

of a provision that the order of the trial court

upholding the grant of sanction for

prosecution would be final if it has not already

been challenged and the trial has commenced.

In order to expedite the proceedings,

provisions for day-to-day trial of cases and

prohibitory provisions with regard to grant of

stay and exercise of powers of revision or

interlocutory orders have also been included.

4.Since the provisions of section 161A

are incorporated in the proposed legislation

with an enhanced punishment, it is not

necessary to retain those sections in the

12

Page 26 Indian Penal Code. Consequently, it is

proposed to delete those sections with the

necessary saving provision.

5.The notes on clauses explain in

detail the provisions of the Bill.”

(Emphasis supplied)

From the Statement of Objects and Reasons of the

P.C. Bill it is clear that the Act was intended to make the

anti corruption law more effective by widening its

coverage. It is also clear that the Bill was introduced to

widen the scope of the definition of ‘public servant’.

Before P.C. Act, 1988, it was the Prevention of Corruption

Act, 1947 and Sections 161 to 165A in Chapter IX of IPC

which were governing the field of law relating to

prevention of corruption. The Parliament repealed the

Prevention of Corruption Act, 1947 and also omitted

Section 161 to 165A of I.P.C as provided under Sections

30 and 31 of P.C. Act, 1988. Since a new definition of

‘public servant’ is given under P.C. Act, 1988, it is not

necessary here to reproduce the definition of ‘public

servant’ given in Section 21 of IPC.

13

Page 27 13.Section 2(c) of P.C. Act, 1988, which holds the field,

defines ‘public servant’ as under: -

“2.(c) "public servant" means-

(i)any person in the service or pay of

the Government or remunerated by

the Government by fees or

commission for the performance of

any public duty;

(ii)any person in the service or pay of a

local authority ;

(iii)any person in the service or pay of a

corporation established by or under

a Central, Provincial or State Act, or

an authority or a body owned or

controlled or aided by the

Government or a Government

company as defined in section 617

of the Companies Act, 1956;

(iv)any Judge, including any person

empowered by law to discharge,

whether by himself or as a member

of any body of persons, any

adjudicatory functions;

(v)any person authorised by a court of

justice to perform any duty, in

connection with the administration

of justice, including a liquidator,

receiver or commissioner appointed

by such court;

14

Page 28 (vi)any arbitrator or other person to

whom any cause or matter has been

referred for decision or report by a

court of justice or by a competent

public authority;

(vii)any person who holds an office by

virtue of which he is empowered to

prepare, publish, maintain or revise

an electoral roll or to conduct an

election or part of an election;

(viii)any person who holds an office by

virtue of which he is authorised or

required to perform any public duty;

(ix)any person who is the president,

secretary or other office-bearer of a

registered cooperative society

engaged in agriculture, industry,

trade or banking, receiving or

having received any financial aid

from the Central Government or a

State Government or from any

corporation established by or under

a Central, Provincial or State Act, or

any authority or body owned or

controlled or aided by the

Government or a Government

company as defined in section 617

of the Companies Act, 1956;

(x)any person who is a chairman,

member or employee of any Service

Commission or Board, by whatever

name called, or a member of any

selection committee appointed by

15

Page 29 such Commission or Board for the

conduct of any examination or

making any selection on behalf of

such Commission or Board;

(xi)any person who is a Vice-Chancellor

or member of any governing body,

professor, reader, lecturer or any

other teacher or employee, by

whatever designation called, of any

University and any person whose

services have been availed of by a

University or any other public

authority in connection with holding

or conducting examinations;

(xii)any person who is an office-bearer

or an employee of an educational,

scientific, social, cultural or other

institution, in whatever manner

established, receiving or having

received any financial assistance

from the Central Government or any

State Government, or local or other

public authority.

Explanation 1.-Persons falling under

any of the above sub-clauses are public

servants, whether appointed by the

Government or not.

Explanation 2.-Wherever the words

"public servant" occur, they shall be

understood of every person who is in

actual possession of the situation of a

public servant, whatever legal defect

16

Page 30 there may be in his right to hold that

situation.”

14.Above definition shows that under Clause (viii)

contained in Section 2(c) of P.C. Act, 1988 a person who

holds an office by virtue of which he is authorized or

required to perform any public duty, is a public servant.

Now, for the purposes of the present case this court is

required to examine as to whether the

chairman/managing director or executive director of a

private bank operating under licence issued by RBI

under Banking Regulation Act, 1949, held/holds an

office and performed /performs public duty so as to

attract the definition of ‘public servant’ quoted above.

15.Section 2(b) of P.C. Act, 1988 defines ‘public duty’

as under:

“public duty” means a duty in the discharge of

which the State, the public or the community

at large has an interest”.

16.But, what is most relevant for the purpose of this

case is Section 46A of Banking Regulation Act, 1949,

which reads as under: -

17

Page 31 “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).”

(Emphasis supplied)

17.Section 46A was inserted in Banking Regulation

Act, 1949 by Act No. 95/56 with effect from 14.01.1957.

The expression “every chairman who is appointed on a

whole time basis, managing director, director, auditor”

was substituted by Act No. 20/94 with effect from

31.01.1994 in place of “every chairman, director,

auditor”. As such managing director of a banking

company is also deemed to be a public servant. In the

present case transactions in question relate to the period

subsequent to 31.01.1994.

18. In Federal Bank Ltd. v. Sagar Thomas and

others (supra) this Court has held that a private

company carrying banking business as a scheduled bank

cannot be termed as a company carrying any statutory or

18

Page 32 public duty. However, in said case the Court was

examining as to whether writ can be issued under Article

226 of the Constitution of India against a scheduled bank

or not. There was no issue before the Court relating to

deeming fiction contained in Section 46A of Banking

Regulation Act, 1949 in respect of a chairman/managing

director or director of a banking company against whom

a crime relating to anti-corruption was registered.

19.In a recent case of State of Maharashtra & ors. v.

Brijlal Sadasukh Modani

9

, this Court has observed as

under: -

“21.As we notice, the High Court has really

been swayed by the concept of Article 12 of the

Constitution, the provisions contained in the

1949 Act and in a mercurial manner taking

note of the fact that the multi-state society is

not controlled or aided by the Government has

arrived at the conclusion. In our considered

opinion, even any grant or any aid at the time

of establishment of the society or in any

construction or in any structural concept or

any aspect would be an aid. We are inclined to

think so as the term ‘aid’ has not been defined.

A sprinkle of aid to the society will also bring

an employee within the definition of ‘public

servant’. The concept in entirety has to be

observed in the backdrop of corruption…….”

9

2015 SCC Online SC 1403

19

Page 33 20.In P.V. Narasimha Rao vs. State (CBI/SPE)

10

, this

Court has explained the word “office” in following

manner: -

“61.……..The word “office” is normally

understood to mean “a position to which

certain duties are attached, especially a place

of trust, authority or service under constituted

authority”. (See: Oxford Shorter English

Dictionary, 3rd Edn., p. 1362.) In McMillan v.

Guest (1942 AC 561) Lord Wright has said:

“The word ‘office’ is of indefinite content.

Its various meanings cover four columns

of the New English Dictionary, but I take

as the most relevant for purposes of this

case the following:

‘A position or place to which certain

duties are attached, especially one

of a more or less public character.’ ”

In the same case Lord Atkin gave the following

meaning:

“… an office or employment which was

subsisting, permanent, substantive

position, which had an existence

independent of the person who filled it,

which went on and was filled in

succession by successive holders.”

In Statesman (P) Ltd. v. H.R. Deb (AIR 1968 SC

1495) and Mahadeo v. Shantibhai [(1969) 2

SCR 422] this Court has adopted the meaning

given by Lord Wright when it said:

“An office means no more than a position

to which certain duties are attached.”

10

(1998) 4 SCC 626

20

Page 34 21.Attention of this court is drawn on behalf of the

accused to the case of Housing Board of Haryana v.

Haryana Housing Board Employees’ Union and

others

11

, wherein this Court has held that when

particular words pertaining to a class of genus are

followed by general words, the latter, namely, the general

words are construed as limited to the things of the same

kind as those specified, and this is known as the rule of

ejusdem generis reflecting an attempt to reconcile

incompatibility between the specified and general words.

This case is of little help to the accused in the present

case as managing director and director are specifically

mentioned in Section 46A of Banking Regulation Act,

1949.

22.In Manish Trivedi v. State of Rajasthan

12

, which

pertains to a case registered against a councillor under

Prevention of Corruption Act, 1988, this Court, while

11

(1996) 1 SCC 95

12

(2014) 14 SCC 420

21

Page 35 interpreting the word “public servant”, made following

observations: -

“14. Section 87 of the Rajasthan

Municipalities Act, 1959 makes every Member

to be public servant within the meaning of

Section 21 of the Penal Code, 1860 and the

same reads as follows:

“87. Members, etc. to be deemed

public servants.—(1) Every member,

officer or servant, and every lessee of the

levy of any municipal tax, and every

servant or other employee of any such

lessee shall be deemed to be a public

servant within the meaning of Section 21

of the Penal Code, 1860 (Central Act 45 of

1860).

(2) The word ‘Government’ in the

definition of ‘legal remuneration’ in

Section 161 of that Code shall, for the

purposes of sub-section (1) of this

section, be deemed to include a

Municipal Board.”

From a plain reading of the aforesaid provision

it is evident that by the aforesaid section the

legislature has created a fiction that every

Member shall be deemed to be a public servant

within the meaning of Section 21 of the Penal

Code. It is well settled that the legislature is

competent to create a legal fiction. A deeming

provision is enacted for the purpose of

assuming the existence of a fact which does

not really exist. When the legislature creates a

legal fiction, the court has to ascertain for

what purpose the fiction is created and after

ascertaining this, to assume all those facts and

consequences which are incidental or

22

Page 36 inevitable corollaries for giving effect to the

fiction. In our opinion, the legislature, while

enacting Section 87 has, thus, created a legal

fiction for the purpose of assuming that the

Members, otherwise, may not be public

servants within the meaning of Section 21 of

the Penal Code but shall be assumed to be so

in view of the legal fiction so created. In view of

the aforesaid, there is no escape from the

conclusion that the appellant is a public

servant within the meaning of Section 21 of

the Penal Code.

xxx xxx xxx

16. Under the scheme of the Rajasthan

Municipalities Act it is evident that the

appellant happens to be a Councillor and a

Member of the Board. Further in view of

language of Section 87 of the Rajasthan

Municipalities Act, he is a public servant

within the meaning of Section 21 of the Penal

Code. Had this been a case of prosecution

under the Prevention of Corruption Act, 1947

then this would have been the end of the

matter. Section 2 of this Act defines “public

servant” to mean public servant as defined

under Section 21 of the Penal Code. However,

under the Prevention of Corruption Act, 1988,

with which we are concerned in the present

appeal, the term “public servant” has been

defined under Section 2(c) thereof. In our

opinion, prosecution under this Act can take

place only of such persons, who come within

the definition of public servant therein. The

definition of “public servant” under the

Prevention of Corruption Act, 1947 and

Section 21 of the Penal Code is of no

consequence. The appellant is sought to be

prosecuted under the Prevention of Corruption

Act, 1988 and, hence, to determine his status

23

Page 37 it would be necessary to look into its

interpretation under Section 2( c ) thereof, read

with the provisions of the Rajasthan

Municipalities Act.

xxx xxx xxx

19. The present Act (the 1988 Act) envisages

widening of the scope of the definition of the

expression “public servant”. It was brought in

force to purify public administration. The

legislature has used a comprehensive

definition of “public servant” to achieve the

purpose of punishing and curbing corruption

among public servants. Hence, it would be

inappropriate to limit the contents of the

definition clause by a construction which

would be against the spirit of the statute.

Bearing in mind this principle, when we

consider the case of the appellant, we have no

doubt that he is a public servant within the

meaning of Section 2(c) of the Act. Clause (viii)

of Section 2(c) of the present Act makes any

person, who holds an office by virtue of which

he is authorised or required to perform any

public duty, to be a public servant. The word

“office” is of indefinite connotation and, in the

present context, it would mean a position or

place to which certain duties are attached and

has an existence which is independent of the

persons who fill it. Councillors and Members of

the Board are positions which exist under the

Rajasthan Municipalities Act. It is independent

of the person who fills it. They perform various

duties which are in the field of public duty.

From the conspectus of what we have observed

above, it is evident that appellant is a public

servant within Section 2( c)(viii) of the

Prevention of Corruption Act, 1988.”

24

Page 38 (Emphasis supplied)

23.At the end it is relevant to mention that in the case

of Govt. of A.P. and others vs. Venku Reddy (supra), in

which while interpreting word ‘public servant’ this court

has made following observations:

“12. In construing the definition of “public

servant” in clause (c) of Section 2 of the 1988 Act,

the court is required to adopt a purposive

approach as would give effect to the intention of

the legislature. In that view the Statement of

Objects and Reasons contained in the Bill leading

to the passing of the Act can be taken assistance

of. It gives the background in which the legislation

was enacted. The present Act, with a much wider

definition of “public servant”, was brought in force

to purify public administration. When the

legislature has used such a 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 the 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 M.P. v. Shri Ram Singh (2000) 5 SCC 88)”

24.In the light of law laid down by this court as above,

it is clear that object of enactment of P.C. Act, 1988, was

to make the anti corruption law more effective and widen

its coverage. In view of definition of public servant in

25

Page 39 Section 46A of Banking Regulation Act, 1949 as amended

the Managing Director and Executive Director of a

Banking Company operating under licence issued by

Reserve Bank Of India, were already public servants, as

such they cannot be excluded from definition of ‘public

servant’. We are of the view that over the general

definition of ‘public servant’ given in Section 21 of IPC, it

is the definition of ‘public servant’ given in the P.C. Act,

1988, read with Section 46-A of Banking Regulation Act,

which holds the field for the purposes of offences under

the said Act. For banking business what cannot be

forgotten is Section 46A of Banking Regulation Act, 1949

and merely for the reason that Sections 161 to 165A of

IPC have been repealed by the P.C. Act, 1988, relevance

of Section 46A of Banking Regulation Act, 1949, is not

lost.

25.Be it noted that when Prevention of Corruption Act,

1988 came into force, Section 46-A of Banking

Regulation Act, 1949 was already in place, and since the

scope of P.C. Act, 1988 was to widen the definition of

26

Page 40 “public servant”. As such, merely for the reason that in

1994, while clarifying the word “chairman”, legislature

did not substitute words “for the purposes of Prevention

of Corruption Act, 1988” for the expression “for the

purposes of Chapter IX of the Indian Penal Code (45 of

1860)” in Section 46A of Banking Regulation Act, 1949,

it cannot be said, that the legislature had intention to

make Section 46A inapplicable for the purposes of P.C.

Act, 1988, by which Sections 161 to 165A of IPC were

omitted, and the offences stood replaced by Sections 7 to

12 of P.C. Act, 1988.

26.A law which is not shown ultravires must be given

proper meaning. Section 46-A of Banking Regulation

Act, 1949, cannot be left meaningless and requires

harmonious construction. As such in our opinion, the

Special Judge (CBI) has erred in not taking cognizance of

offence punishable under Section 13(2) read with Section

13(1)(d) of P.C. Act, 1988. However, we may make it

clear that in the present case the accused cannot be said

to be public servant within the meaning of Section 21

27

Page 41 IPC, as such offence under Section 409 IPC may not get

attracted, we leave it open for the trial court to take

cognizance of other offences punishable under Indian

Penal Code, if the same get attracted.

27.Therefore, having considered the submissions made

before us, and after going through the papers on record,

and further keeping in mind the Statement of Objects

and Reasons of the Bill relating to Prevention of

Corruption Act, 1988 read with Section 46A of Banking

Regulation Act, 1949, we are of the opinion that the

courts below have erred in law in holding that accused

Ramesh Gelli and Sridhar Subasri, who were

Chairman/Managing Director and Executive Director of

GTB respectively, were not public servants for the

purposes of Prevention of Corruption Act, 1988. As such,

the orders impugned are liable to be set aside.

Accordingly, without expressing any opinion on final

merits of the cases before the trial courts in Mumbai and

Delhi, Criminal Appeal Nos. 1077-1081 of 2013 filed by

28

Page 42 CBI, are allowed, and Writ Petition (Crl.) No. 167 of 2015

stands dismissed.

…………………………… ..J.

[PRAFULLA C. PANT]

New Delhi;

February 23, 2016.

29