Criminal Revision Application No.118 of 2004

30th April, 2008

Petitioner Counsel: Mr. J. C. SATPUTE
Respondent Counsel: Mr. NIRANJAN MUNDARGI,Ms. M. H. MHATRE

Cases Cited:
Mohd. Hadi Raja Vs. State of Bihar, (1998)5 S.C.C. 91 [Para 11,15]

JUDGMENT

JUDGMENT :- Heard the rival parties.

2. Perused application and the material available on record.

3. This revision petition is directed against the order dated 20.11.2003 passed on Misc. Application No.83 of 2001 in Special Case No.56 of 1998 (RC 24/A/1994) by a Special Judge for Central Bureau of Investigation for Greater Mumbai ('CBI' for short) allowing application for discharge holding that the prosecution is bad for want of sanction under Section 197 of Criminal Procedure Code (Cr.P.C. for short) to prosecute respondent no.1 (original accused no.7) and finding it unnecessary to deal with other contentions raised by respondent no.1 on merits in support of his plea for discharge.

FACTUAL MATRIX :

4. The factual matrix reveals that respondent No.1 and seven others have been named as "accused" in a case registered as RC 24/A/1994 for the offence punishable under Sections 120-B read with Section 420 of the Indian Penal Code.

5. The case of the prosecution, in short, is that Shri. Venkateshan, the Chairman and Managing Director, Rashtriya Chemical Fertilizers Limited ('R.C.F. Ltd.' for short) Chembur, Mumbai, while functioning during the years 1987 to 1991, had abused his official position inasmuch as conspired with respondent no.1 - the then Deputy General Manager, R.C.F. Ltd. Chembur Mumbai, Mr. Roop Kishan Dargar, Chief Marketing Manager, R.C.F. Ltd. Chembur, Mumbai, Mr. L. S. Bapna, the then Marketing Manager, R.C.F. Ltd. and Shri. Pradip Ramrakhiani, one of the Partners of "M/s. Pradip and Co. Mumbai" with Proprietor of M/s. Raja Chemical Corporation, Mumbai and cheated the R.C.F. Ltd. by unauthorizedly supplying sodium nitrate and sodium citrate to the said Shri. Pradip Ramrakhiani contrary to the policy of supplying material on "Pay Cash Carry Basis" and thereby caused wrongful loss to the R.C.F. Ltd. and corresponding gain to Mr. Pradip Ramrakhiani.

6. Respondent No.1 (original accused no.7) came to be charge-sheeted for the offence mentioned above alongwith others. He appeared before the learned Sessions Judge Greater Bombay at Mumbai on 9.9.1999 and received copy of charge-sheet. After receiving charge-sheet he prayed for discharge by moving an application dated 27-2-2001 under Section 227 of Cr.P.C., raising therein various legal and factual contentions amongst other, one of the contentions was that the prosecution is bad for want of sanction under section 197 of the Cr.P.C..

7. Per contra, the contention of the prosecution was that the sanction is not necessary for want of applicability of section 197 to the Employees working with R.C.F. Ltd., Mumbai since they are not required to be removed with the sanction of the Government.

8. The aforesaid application moved by respondent No.1-accused seeking discharge was heard by Special Judge for C.B.I. Greater Mumbai, who, by his order dated 20.11.2003 was pleased to allow the application on the solitary ground that sanction under Section 197 of the Cr.P.C. was necessary as such the prosecution is bad for want of sanction. However, the learned Judge did not consider the other contentions raised by the respondent No.1 (original accused No.7) on merits.

9. Being aggrieved by the aforesaid order discharging respondent No.1 on the sole ground of absence of sanction, the prosecution has invoked the revisional jurisdiction of this Court under Section 397 read with Section 401 of the Cr.P.C..

SUBMISSIONS :-

10. Mr. Satpute, learned special counsel for the applicant-C.B.I. submits that the protection by way of sanction to prosecute under Section 197 of the Cr.P.C. is not available to the officers of the Government Corporations or companies or the public undertakings who are independent entities even though their employees are public servants and such organisations are public undertakings and as such "State" within the meaning of Article 12 of the Constitution of India on account of deep and pervasive control of the Government. He further submits that the word "public servant" has not been defined in the Cr.P.C. but by virtue of Section 2(y) thereof "public servant" defined in Section 21 of the Indian Penal Code (I.P.C.) will have the same meaning in the Criminal Procedure Code. However, in his submission protection under Section 197, Cr.P.C. is available only to those public servants strictly falling within the sweep of Section 197 requiring sanction of the Government to prosecute them. He submits that the present respondent No.1 does not fall within the four corners of Section 197, Cr.P.C. because for his removal sanction of the Government is not necessary.

11. Mr. Satpute placed reliance on the Apex Court judgment in the case of Mohd. Hadi Raja Vs. State of Bihar and Anr., (1998)5 S.C.C. 91.

12. Mr. Niranjan Mundargi, in reply tried to contend contrary to what is canvassed by Mr. Satpute but could not take his submission to the logical end.

CONSIDERATION :-

13. Before considering the submissions made, it is necessary to turn to the text of statutory provision, namely; Section 197 of the Cr.P.C. which thus reads :-

"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, or 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 :

(2) --

(3) --

(3-A) --

(3-B) --

(4) -."

14. Reading of the sub-Section (1) of Section 197 would indicate that one of the basic requirements for applicability of the section is that the public servant must be removable from his office with the sanction of the Government. The public servant for whose removal sanction of the Government is not necessary he does not fall within the sweep of the said Section.

15. The above Section was a subject matter of legal debate before Apex Court in the case of Mohd. Hadi Raja Vs. State of Bihar (cited supra) the Apex Court ruled as under :

"20. Although the instrumentality or agency with a corporate veil, for all intents and purposes may be held to be a third arm of the Government and such instrumentality discharges the duties and functions which the State intends to do as indicated in Ajay Hasia case such instrumentality or agency is none the less a juridical person having a separate legal entity. Therefore, such instrumentality must be held to have an independent status distinct from the State and cannot be treated as a government department for all purposes. Therefore, even if an officer of such instrumentality or agency takes or receives, keeps or expends any property or executes any contract, such acts even though in ultimate analysis may be held to have been done in the interest of the State, such action cannot be construed, as of rule, an action of the Government by its employees or by an authority empowered by the Government. It may be indicated here that it is not necessary that persons falling under any of the descriptions given in various clauses under Section 21 of IPC need to be appointed by the Government. If such person falls under any of the descriptions as contained in various clauses of Section 21 of the Indian Penal Code, such person must be held to be a public servant. Explanation I of Section 21 indicates that persons falling under any of the above descriptions are public servants whether appointed by the Government or not. Explanation 2 indicates that 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 there may be in his right to hold that situation. Sub-clause (b) of clause twelve of Section 21 expressly makes the officers of local authority and corporation established by or under a Central, Provincial or State Act or a government-owned company as defined in Section 617 of the Companies Act, 1956, public servants. But protection under Section 197, Cr.P.C. is not available to a public servant unless other conditions indicated in that section are fulfilled."

"27. Therefore, in our considered opinion, the protection by way of sanction under Section 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 Article 12 of the Constitution on account of deep and pervasive control of the Government. The appeals are disposed of accordingly. It is, however, made clear that we have not taken into consideration various other grounds raised in these appeals challenging the maintainability of the criminal proceedings initiated against the officers concerned of the public undertakings or the government companies. It will be open to the accused concerned to challenge the validity of the criminal cases initiated against them on other grounds, if such challenge is available in law. Such questions, if raised, in these appeals are kept open to be considered in accordance with law by the appropriate authority." (Emphasis supplied)

16. In view of the settled legal position referred to herein the impugned order is unsustainable and liable to be set aside.

17. At this juncture, it is relevant to note that in para 2 of the impugned order Special Judge has specifically observed that it was unnecessary for him to dwell on the other contentions raised since the prosecution is ipso facto bad for want of sanction under Section 197 of Cr.P.C. It is, thus, clear that the learned Special Judge did not apply his mind to the other contentions raised by respondent No.1 on merits to seek discharge, viz; absence of material to frame a charge against him. As such, it is necessary to remand this matter for consideration of other contentions raised on merits by respondent No.1.

18. In the above view of the matter, the impugned order is quashed and set aside. The proceedings are remitted back to the Special Judge for consideration of other contentions not dealt with by him. Needless to observe that the issue of sanction under Section 197, Cr.P.C. stands concluded by this order. The Special Court is, thus, directed to hear and decide the application afresh on its own merits within four weeks from the date of receipt of copy of the order following the principles of natural justice.

19. Parties are directed to appear before the Special Court on 20.5.2008.

20. Application stands disposed of in terms of this order. No order as to costs.

Ordered accordingly.