Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1329 OF 2009
State of Maharashtra & Ors. ... Appellants
Versus
Brijlal Sadasukh Modani ... Respondent
J U D G M E N T
Dipak Misra, J.
The respondent served in different capacities in
Osmanabad Janata Sehkari Bank Ltd., Osmanabad (for
short, “the Bank”) since 1972. On attaining the age of 58
years, he stood superannuated in June 2004. The
Managing Committee of the Bank, however, extended
service of the respondent for a further period of two years
and after completion of one year, he sought leave of the
Bank to be allowed to retire as he was in ill-health and
accordingly he retired in the month of June, 2005. As the
Signature Not Verified
Digitally signed by
Gulshan Kumar Arora
Date: 2015.12.16
17:14:55 IST
Reason:
factual matrix would unveil, he was appointed as an
Accountant in the Bank in the year 1972 and was promoted
2
to the post of Manager in 1981 and eventually to the post of
General Manager, which post he held till his retirement. Be
it stated, while he was in service, he received a notice signed
by the Deputy Superintendent of Police, Anti Corruption
Bureau, Osmanabad requiring him to give details of the
property acquired by him. In response to the said letter, the
respondent on 15.2.2001 replied that the provisions of
Prevention of Corruption Act, 1988 (for short, “the 1988
Act”) was not applicable to him. After his superannuation,
he received two letters from the same investigating authority
to attend an enquiry so that his statement could be
recorded in respect of his properties and expenditure, to
which he replied. Thereafter, he preferred Criminal Writ
Petition No. 729 of 2006 before the High Court of Judicature
of Bombay, Bench at Aurangabad, assailing the notices
which were in the realm of investigation.
2. The principal plank of submission in the writ petition
was that he was not a public servant as defined under
sub-section (c) of Section 2 of 1988 Act and he cannot by
any means of interpretation of Section 21 of the Indian
Penal Code (IPC) be treated as such. On behalf of the State
3
and the investigating agency it was contended that the writ
petitioner would come under the definition of public servant
as per Section 2(c) (iii) and (ix) of the 1988 Act. It was also
urged that the Bank is governed by Multi-State Cooperative
Societies Act, 2002 (for short, “the 2002 Act”) inasmuch as
it has been registered as a multi-state cooperative bank on
12.7.2000. Reliance was also placed on Section 56 of the
Banking Regulations Act, 1949 (hereinafter referred to “the
1949 Act”) for the purpose of bolstering the stand in view of
the amendment to Section 56, the provisions of the 1949
Act would be applicable to the cooperative bank. It was also
highlighted that as per the 1949 Act, the Reserve Bank of
India has direct control and supervision over the cooperative
banks and the same is evincible from Section 35A and 26 of
the 1949 Act. In addition to the aforesaid, emphasis was
laid on Section 122 and 123 of the 2002 Act to highlight the
power of the Central Government to issue directions to the
multi-state cooperative banks is in public interest.
3. The High Court referred to certain provisions of the
Maharashtra Cooperative Societies Act, 1960 (for short “the
1960 Act”), 2002 Act, 1988 Act and 1949 Act, took note of
4
the submissions of the learned counsel for the petitioner
which was to the effect that there is no control of the State
Government or the Central Government or any other
authority on the functioning of the Bank and, therefore, he
could not be termed as a public servant, as is defined under
the 1988 Act, and perused the bye-laws of the Bank on the
bedrock of various provisions of different Acts which have
been referred to hereinbefore; and thereafter referring to the
decisions rendered in S.S. Rana v. Registrar, Coop.
1
Societies & Anr. , Ajay Hasia v. Khalid Mujib
2
Sehravardi , Zoroastrain Coop. Housing Society Ltd. v.
3
District Registrar, Coop. Societies (Urban) & Ors. ,
4
State of Maharashtra v. Laljit Rajshi Shah , Ramesh
5
Balkrishna Kulkarni v. State of Maharashtra , Federal
6
Bank Ltd. v. Sagar Thomas came to hold that so far as
the Bank is concerned, the Central Government has not
purchased any share of the Bank.
1
(2006) 11 SCC 634
2
(1981) 1 SCC 722
3
(2005) 5 SCC 632
4
AIR 2000 SC 937
5
(1985) 3 SCC 606
6
AIR 2003 SC 4325 = (2003) 10 SCC 733
5
4. Be it stated, the High Court distinguished the decision
7
rendered in Govt. of A.P. v. P. Venku Reddy , and
proceeded further to state as follows:-
“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 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
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.”
5. On the basis of the aforesaid analysis, the High Court
quashed the two notices issued by the Deputy
Superintendent of Police, Anti-Corruption Bureau,
7
(2002) 7 SCC 631
6
Osmanabad. Hence, this appeal, by special leave, by the
State of Maharashtra and its functionaries.
6. We have heard Mr. Shankar Chillarge, learned counsel
for the appellants and Mr. Sudhanshu S. Chaudhari,
learned counsel for the respondent.
7. It is submitted by Mr. Shankar Chillarge, learned
counsel for the State that regard being had to the broad
definitions of public servant under Section 2(c)(iii) of the
1988 Act, the respondent should have been treated as a
public servant under the purview of the 1988 Act and the
High Court has fallen into grave error by treating him not to
be one by misconstruing the provision. It is urged by him
that if the statutory scheme of the 1949 Act and the 2002
Act is seen, it will be quite clear that he comes within the
dictionary clause of the 1988 Act. Learned counsel for the
appellants would further submit that purposive
interpretation should be placed on the provision but the
excessively narrow construction placed by the High Court is
absolutely erroneous and hence, the order impugned
deserves to be dislodged. Learned counsel for the State has
7
8
relied on Almitra H. Patel v. Union of India and State of
9
M.P. v. Rameshwar .
8. Mr. Sudhanshu S. Chaudhari, learned counsel for the
respondent, per contra, has submitted that when reply was
given by the respondent in 2001 and the Deputy
Superintendent of Police, Anti-Corruption Bureau, kept
quiet for five years till 10.11.2006, it is to be presumed that
he was satisfied with the explanation and there was no
justification to issue further notice. It is his submission
that to bring the respondent within the purview of Section
2(c) (iii) and (ix) of the 1988 Act, it is obligatory on the part
of the appellants to establish that the respondent is an
employee of a body or a cooperative society owned and
controlled or aided by the Government as defined in Section
617 of the Companies Act, 1956. Learned counsel would
contend that the admitted position is that the bank in
question has not received any financial aid either from the
Central Government or the State Government and,
therefore, the provisions would not apply to him. It is urged
by Mr. Chaudhari that the provisions of Banking Regulation
8
(2000) 2 SCC 679
9
(2009) 11 SCC 424
8
(Amendment) and Miscellaneous Provisions Act, 2004 would
not be attracted to this case inasmuch as the
administration of the multi-state cooperative society vests in
the general body and by virtue of the powers enumerated
under the 1949 Act to be exercised by the Reserve Bank of
India would not tantamount to control over the cooperative
bank and hence, he cannot be treated as a public servant.
To bolster his submissions, he has placed reliance on
Samrao Vitthal Cooperative Bank Ltd. & Anr. v.
10
Padubidri Pattabhiram Bhat & Ors. , State of U.P. v.
11
Vishwanath Kapoor & Ors. , Hanmant Janardhan
12
Patil v. State of Maharashtra , Executive Committee,
Vaish Degree College, Shamli & Ors. v. Lakshmi Narain
13
& Ors. , Federal Bank (supra), S.S. Dhanoa v.
14
Municipal Corporation, Delhi & Ors. , and S.S. Rana
(supra).
9. Firstly, we shall refer to some of the authorities cited at
the Bar. In Samrao Vitthal Cooperative Bank Ltd.
(supra), High Court of Bombay was dealing with the issue
10
AIR 1993 Bom. 91
11
1980 CrLJ 494
12
1993 Mh.LJ 511
13
(1976) 2 SCC 58
14
(1981) 3 SCC 431
9
whether the appellant Bank was “State” within the meaning
of Article 12 of the Constitution. The Full Bench, after
referring to various provisions of the Multi-State Cooperative
Societies Act, 1984 and the 1960 Act, came to hold as
follows:-
“24. A Multi-State Co-operative Bank cannot be
compared, in the manner of its functioning,
with the State Bank of India at all. As set out
earlier, the Central Government does not have
any all pervasive control over a Multi-State
Co-operative Bank. Hence, merely because
banking function is of public importance, this
factor itself is not sufficient to make the
appellant bank "State" or "other authority"
under Article 12.
25. In the case of Narayan v. Maharashtra
State Co-operative Land Development Bank
Ltd., reported in 1991 (1) BomCR 469 the
Nagpur Bench of our High Court held that the
Maharashtra State Co-operative Land
Development Bank Limited was "State" or
"other authority" under Art. 12. In doing so, the
Nagpur Bench relied upon the judgment of the
learned single Judge in the present case. The
Nagpur Bench relied upon two factors only for
the purpose of holding that the Maharashtra
Slate Co-operative Land Development Bank was
"State" within the meaning of Art. 12. It said (at
page 474) that the Maharashtra State
Co-operative Land Development Bank Limited
is a creature of the statute and it is discharging
public functions which the State could have
discharged through its agency. Hence it held
that the Bank was a State. In our opinion, the
10
Division Bench, over emphasised the fact that
the Bank was a creature of the statute. As the
Supreme Court has repeatedly said, the
manner in which an organisation is created is
not of any direct relevance. What is required to
be seen is whether there is pervasive State
control over its management and functioning.
Moreover, merely because an organisation
performs functions of public importance, one
cannot hold that the organisation is "State"
under Article 12. The only other factor which
the Nagpur Bench looked at was the fact that
the Bank was regulated by laws enacted by the
State. Such regulatory laws as we have said
earlier, are enacted to cover a large number of
organisations. The laws which regulate the
functioning of such organisations are
presumably enacted in public interest. This
does not mean that any of these organisations,
if they perform public functions, automatically
become "State" under Article 12. In our view
the above decision does not apply tests to
determine when an organisation can be
considered as "State" under Art. 12 correctly”.
10. In S.S. Rana (supra), while dealing with the
maintainability of a writ petition by an employee working in
a Cooperative Bank under the Himachal Pradesh
Cooperative Societies Act, 1968, this Court referred to the
earlier decisions, namely, Ajay Hasia (supra) and Pradeep
15
Kumar Biswas v. Indian Institute of Chemical Biology ,
opined that the society did not satisfy the tests laid down in
15
(2002) 5 SCC 111
11
the case of Pradeep Kumar Biswas (supra) and hence, the
High Court was not in error in arriving at the conclusion
that the society was not a State under Article 12 of the
Constitution.
11. In this regard, it is profitable to refer to Gayatri De v.
16
Mousumi Cooperative Housing Society Ltd. and others
wherein the Court held as follows:-
“54. In the case of S.R. Tewari v. Distt. Board,
17
Agra this Court held that the powers of
statutory authorities are always subject to the
statute which has constituted it and must be
exercised consistently with the statute, and the
courts have, in appropriate cases, the power to
declare an action of the body illegal or ultra vires ,
even if the action relates to determination of
employment of a servant.
55. We have, in paragraphs supra, considered the
judgments for and against on the question of
maintainability of writ petition. The judgments
cited by the learned Senior Counsel appearing for
the respondents are distinguishable on facts and
on law. Those cases are not cases covered by the
appointment of a Special Officer to manage the
administration of the Society and its affairs. In
the instant case, the Special Officer was
appointed by the High Court to discharge the
functions of the Society, therefore, he should be
regarded as a public authority and hence, the
writ petition is maintainable.”
16
(2004) 5 SCC 90
17
AIR 1964 SC 1680
12
The said decision has been distinguished in S.S. Rana
case (supra).
12. In P. Venku Reddy (supra), the assail was to an order
of the Division Bench of the High Court of Andhra Pradesh
where it had quashed the criminal proceeding instituted
under the 1988 Act in respect of a supervisor working in
District Cooperative Central Bank Limited. In that context,
the Court observed:-
“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
18
Singh .)
18
(2000) 5 SCC 88
13
13. As a matter of fact, we find that the point
arising before us on the definition of “public
servant” that it does include an employee of a
banking cooperative 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 v.
19
Prabhakarrao .”
13. In Rameshwar (supra), the issue that arose before
this Court was whether the respondent therein was a public
servant for the purposes of the 1988 Act, regard being had
to the fact that he was a Director of Indore Premier
Cooperative Bank Ltd. On behalf of the State, reliance was
placed on Section 87 of the M.P. Cooperative Societies Act,
1960 which provides that Registrar and other officers as
well as employees of a cooperative bank or a cooperative
society would be deemed to be public servants under the
1988 Act and on that basis the Court came to hold that the
Chairman and the Executive Officer of the Bank would come
within the definition of “public servant” under Section 2(c)
(ix) of the 1988 Act. On a perusal of the judgment it
appears that the Court has been persuaded by the
conferment of status on the officers of the bank as public
19
(2002) 7 SCC 636
14
servants and the definition of the “public servant” under the
1988 Act.
14. As far as State of Madhya Pradesh is concerned, there
is no difficulty as the M.P. Cooperative Societies Act, 1960
itself declares the authorities as public servant. The issue
that arises for consideration in the present case is whether
a multi-State society which handles crores of rupees and
the persons who handle such huge amounts of money
should be allowed to escape the rigour of corruption charges
under the 1988 Act on the ground that they do not come
under the ambit and sweep of Article 12 of the Constitution
or solely because of construction placed under Section 2(c)
(ix) of the 1988 Act. That apart, another significant issue
also arises for consideration. Section 2(ix) to make an
employee of a cooperative society provides certain conditions
or conditions precedent to be satisfied and, therefore, the
question would be, whether the High Court by only stating
that it is the admitted position should have quashed the
proceeding. There are various stages and hence, the thrust
of the matter is in a corruption case whether exercise of
jurisdiction under Section 482 of the Code of Criminal
15
Procedure, 1973 is warrantable. In this regard, the relevant
paragraphs from the Statement of Objects and Reasons are
requisite to be reproduced. It is as follows:-
“2. The Prevention of Corruption Act, 1947, was
amended in 1964 based on the recommendations
of the Santhanam 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 Act 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 165-A 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 on
interlocutory orders have also been included.”
15. Section 2(c)(ix) on which immense thrust has been
given by the learned counsel for the State on the basis of
16
certain authorities of this Court, reads as follows:-
“( 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 (1 of 1956);”
16. On a perusal of the decisions of this Court, it is
manifest that stress has always been laid on Section 2(c)(ix)
of the 1988 Act as a consequence of which the fall out is
that the registered cooperative society must have received
financial aid from the Central Government or the State
Government or any other institution mentioned therein.
17. The High Court has referred to various provisions of
the 1949 Act and proceeded on the status of cooperative
society and eventually has held that:-
“So far as the Bank is concerned, the Central
Government has not purchased any share of the
Bank. It is argued by the learned A.P.P. that the
power conferred on the Reserve Bank of India
and the Central Registrar under the provisions of
the Banking Regulation Act 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
17
advanced by the learned APP. 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
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 authorities do not
exercise any direct, deep and pervasive control
over the functioning of the Bank.
18. And again:-
“… 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.”
19. In Prabhakarrao (supra) the Court was dealing with
the issue whether the High Court was justified in holding
that the accused was not a public servant. In the said case,
the High Court had placed heavy reliance on the authority
20
of State of Maharashtra v. Laljit Rajshi Shah . In P.
20
(2000) 2 SCC 699
18
Venku Reddy (supra), the Court has distinguished the said
decision and referred to Section 2 of the 1988 Act and in
that context observed thus:-
“3. Under clause ( iii ) of Section 2( c ), 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 and under clause ( ix ) the
President, Secretary and other office-bearers of a
registered cooperative society engaged in
agriculture, industry, have been included in the
definition of “public servant”.
4. The question for consideration is whether the
accused in the present case comes within the
purview of the aforementioned clauses or any
other clause of Section 2( c ) of the Prevention of
Corruption Act, 1988. For determination of the
question, enquiry into facts, relating to the
management, control and funding of the society,
is necessary to be ascertained.”
20. 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
19
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 understood in
the backdrop of corruption. In Shri Ram Singh (supra),
this Court had to say this:-
“Corruption in a civilised society is a disease like
cancer, which if not detected in time, is sure to
maliganise ( sic ) the polity of the country leading
to disastrous consequences. It is termed as a
plague which is not only contagious but if not
controlled spreads like a fire in a jungle. Its virus
is compared with HIV leading to AIDS, being
incurable. It has also been termed as royal
thievery. The socio-political system exposed to
such a dreaded communicable disease is likely to
crumble under its own weight. Corruption is
opposed to democracy and social order, being not
only anti-people, but aimed and targeted against
them. It affects the economy and destroys the
cultural heritage. Unless nipped in the bud at the
earliest, it is likely to cause turbulence —
shaking of the socio-economic-political system in
an otherwise healthy, wealthy, effective and
vibrating society.”
21. We share the said perception, and reiterate with agony.
The ingemination has to be realized with sanctity.
Therefore, we are of the convinced opinion that it was
entirely unnecessary on the part of the High Court to enter
20
into elaborate deliberation to arrive at the conclusion that
the respondent was not a public servant. Regard being had
to the facts of the case, we think it would be apposite that it
is left to be dealt with in the course of trial whether the
society concerned has ever been granted any kind of aid or
not.
22. In view of the aforesaid premises, we allow the appeal,
set aside the judgment and order passed by the High Court
and direct that the issue i.e. whether the respondent is a
public servant or not, shall be gone into during the trial.
........................................J.
[DIPAK MISRA]
........................................J.
[ADARSH KUMAR GOEL]
NEW DELHI
DECEMBER 15, 2015.
ITEM NO.1A COURT NO.4 SECTION IIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Criminal Appeal No(s). 1329/2009
STATE OF MAHARASHTRA & ORS. Appellant(s)
VERSUS
BRIJLAL SADASUKH MODANI Respondent(s)
Date : 15/12/2015 This appeal was called on for judgment today.
For Appellant(s) Mr. Shankar Chillarge, Adv.
Mr. Nishant Ramakantrao Katneshwarkar,Adv.
For Respondent(s) Mr. Sudhanshu S. Chaudhari, Adv.
Mr. A.M. Irpatgire, Adv.
Mr. Vatsalya Vigya, Adv.
Mr. Naresh Kumar,Adv.
Hon'ble Mr. Justice Dipak Misra pronounced the judgment of the
Bench consisting His Lordship and Hon'ble Mr. Justice Adarsh Kumar
Goel.
The appeal is allowed in terms of the signed reportable
judgment.
(Gulshan Kumar Arora) (H.S. Parasher)
Court Master Court Master
(Signed reportable judgment is placed on the file)