M. GOPALAKRISHNANversusSTATE BY ADDL. S.P. CBI, B.S. & F.C., BANGALORE

..                             [2009] 3 S.C.R. 151

     .r
                             M. GOPALAKRISHNAN                            A
                                        v.
            STATE BY ADDL. S.P. CBI, B.S. & F.C., BANGALORE
                    (Criminal Appeal No. 505 of 2006)
                              FEBRUARY 11, 2009
                                                                          B
              [DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM
                             SHARMA, JJ.]

               CODE OF CRIMINAL PROCEDURE, 1973 :
                                                                          c
               ss. 197 and 482 - Petition for quashing of criminal
          prosecution against Chairman and managing director of a
          Banking company for lack of sanction uls 197 - Held :
          Banking Regulation Act would prevail over the Nationalised
          Banks (Management and Miscellaneous provisions),
     J                                                                     D
           Scheme, 1970 - In view of specific provision for removal of
          Chairman under the 1949 Act, prima facie, he would not come
          within the scope of s.197 - Besides, it is yet to be established
          whether the acts were committed by the accused in the
          position of his official duty - Judgment of High Court
                                                                           E
          dismissing the petition does not suffer from any infirmity to
          warrant interference - Penal Code, 1860 - ss. 120-B and 420
          - Prevention of Corr.uption Act, 1988 - ss 11, 12, 13(1) and
          13(2) - Banking Regulation Act, 1949 - Nationalised Banks
          (Management and Miscellaneous Provisions) Scheme, 1970.
                                                                          F
              A case uls 120-B read withs. 420 IPC and ss. 11, 12
          and 13(2) read with ss. 13(1)(d) of the Prevention of
          Corruption Act, 1988 was registered by CBI against the
          appellant-Executive Director and Chairman and Managing
          Director, Indian Bank. The appellant filed a petition uls       G
          482 CrPC seeking to quash the proceedings. The other
          accused also filed similar petitions. The High Court
          dismissed the petitions. Aggrieved, the accused filed the
          appeals.
                                       151                                H
    152        SUPREME COURT REPORTS             [2009) 3 S.C.R.


A        It was contended for the appellant in Crl. A. No. 505
    of 2006, that his appointment having been made by the
    Central Government under the provisions of Nationalised
    Banks (Management and Miscellaneous Provisions)
    Scheme, 1970 and, as such, he being a public servant,
· B in the absence of any sanction u/s 197(1 )(a) 01f the Code,
    cognizance taken by the court was invalid. The stand of
    the respondent was that under the Banking Regulation
    Act, 1949, the Chairman of a Banking Company would be
    appointed only by the Reserve Bank of India which alone
  C would be the authority competent to remove the
    Chairman and, therefore, provisions of s. 197 of the Code
    would not be attracted.

          Dismissing the appeals, the Court

D       HELD: Banking Regulation Act, 1949 shall prevail
  over the Nationalised Banks (Management and
  Miscellaneous Provisions) Scheme, 1920 which was
  formulated u/s 9 of the Banking Companies (Acquisition
  and Transfer of Undertakings) Act, 1970. In this view, the
E appellant cannot claim to be 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 removal of the Chairman UJlder the 1949 Act,
  it is prima facie clear that the appellant will not come within
F the scope of s.197 of the Code. Besides, the High Court
  has rightly held that the question whether the appellant
  is removable from service by the Reserve Bank or the
  Central Government is really of an academic interest
  because it is yet to be established that the impugned acts
G were done by the appellant in the position of his official
  duty. The order of the High Court does not suffer from
  any infirmity to warrant interference. [Para 16, 19 and 20]
  [159-B-C; 160-8]

          P.K. Pradhan v. State of Sikkim 2001 SCC (Crl.) 1234
H
           M. GOPALAKRISHNAN v. STATE BY ADDL. S.P. CBI, B.S. 153
                         & F.C., BANGALORE

           and Parkash Singh Badal v. State of Punjab 2007 (1) SCC           A
           1, relied on
                                 Case Law Reference:
                2001 sec (Crl.) 1234        relied on              para 17
                                                                             B
                2001 (1) sec 1              relied on              para 20
               CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
           No. 505 of 2006.

                From the Order dated 31.3.2004 of the High Court of          c
           Judicature at Madras in Crl.O.P. No. 4313 of 2003.

                                        WITH

 "         Criminal Appeal Nos. 274, 277, 278, 279 and 280 of 2009.
      ..                                                                     D
              K. Ramamoorthy, V.G. Pragasam, S.J. Aristotle, S.
           Mukandan and Prabu Ramasubramanian for the Appellant.

                B.B. Singh and P. Parmeswaran for the Respondent.

               The Judgment of the Court was delivered by                    E

 ~
               DR. ARIJIT PASAYAT, J. 1. Leave granted in Special
       A
           Leave Petitions.

                2. Challenge in all these appeals is to the order passed
-          by a learned Single Judge of the Madras High Court in each
           case dismissing the application under Section 482 of the Code
                                                                             F

           of Criminal Procedure, 1973 (in short the 'Code'). Stand of the
           appellant is that there was no sanction for prosecution as
           contemplated under law.
                                                                             G
               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           H
...
 '
    154         SUPREME COURT REPORTS               (2009] 3 S.C.R.


A 1208 of the Indian Penal Code, 1860 (in short the 'IPC') read
  with Section 420 IPC and Sections 11, 12, and 1~1(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
B the offences, as aforementioned, resulting in filing of a final
  report followed by taking cognizance of the case by the court
  concerned.

        The respective stands of the parties before the High Court
    were as follows:
c
        The appellant 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
D 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
E 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 be quashed.
F        The respondent-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 the trial.

G         The final report reads:

       "That accused M. Gopalakrishnan (A 1) while functioning
  as the Executive Director and Chairman and Managing
  Director, Indian Bank connived to commit criminal misconduct
H by public servants by corrupt or illegal means or by abuse of


                                                                            •
             M. GOPALAKRISHNAN v. STATE BY ADDL. S.P. CBI,             155
             S.S. & F.C., BANGALORE [OR. ARIJIT PASAYAT, J.]
     'f
           their official position as public servants or they while holding   A
           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             B
          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 A 1 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. A 18 to A20 named above valuable thing
                                                                              c
          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.
                                                                              D
          Jayakumar (A 19) 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.             E
          Thus the accused A 1 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.

               4. Thus it is seen the capacity or the position of the         F
          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        G
          1945). In the above decision it is observed as follows:

              "For the purpose of requirement of sanction under Section
              197 of the Code the accused will be such public servant
              who cannot be r.emoved from his office except by or with
                                                                              H
'.
    156        SUPREME COURT REPORTS               (2009] 3 S.C.R.


A         the sanction of the Government. Further, the accused will
          not only be a public servant of above descripltion 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
B         official duties."

       5. 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
C 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".

       6. As revealed by the records the appellant was appointed           ,,.
D 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
E 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
F service thereby taking the accused within the ambit of Section
  197 of Code.

         7. Nationalised Banks (Management and Miscellaneous
    Provisions) Scheme 1970 defines "Chairman" under Rule 5(1)
    as follows:
G
          "Chairman (1) the Central Government shall, after
          consultation with the Reserve Bank appoint one of the
          Directors to be the Chairman of the Board."

          8. According to Rule 7 of the Scheme:-
H
             M. GOPALAK13JSHNAN v. STATE BY ADDL. S.P. CBI,                157
             B.S. & F.C., BANGALORE [DR ARIJIT PASAYAT, J.]
     "f        "The Central Government may, after consultation with the           A
               Reserve Bank appoint the same person to hold, at the
               same time both the office of the Chairman and the
               Managing Director".

              9. When it comes to terms of office and remuneration etc.           B
          Rule 8(1 )(a) reads:

                "Notwithstanding anything contained in sub-clause (1 ), the
     ;,
                Central Government shall have the right to terminate the
                term of office of a whole time Director, including the
                Managing Director, at any time before the expiry of the term      c
                specified under that sub-clause by giving to him a notice
               of not less than three months' in writing or three months'
               salary and allowances in lieu of notice and the whole time
~
               Director, in~luding the Managing Director shall also have
               the right to relinquish his office at any time before the expiry   D
               of the term specified under that sub-clause by giving to the
               Central Government notice of not less than three months
               in writing."

               10. In the same manner, Section 8(4) reads:-
                                                                                  E
               "The Central Government may, if it is satisfied that it is
,.             expedient in the interests of the nationalized bank so to
               do, remove a whole time Director including the Managing
               Director from office."
                                                                                  F
~
                11. The above provisions are relied on to say that appellant
          is a public servant removable only by the Central Government.

               12. The above provisions as well as the notification relied
          on by the appellant would indicate as if he was appointed by
                                                                                  G
          the Central Government, thereby impliedly saying that he could
          be removed only by the Central Government. If this position is
          correct then the sanction contemplated under Section 197 of
          Code should come to the aid of the appellant and if there is no
          sanction, taking cognizance of the case may be against the
                                                                                  H
    158         SUPREME COURT REPORTS                [2009] 3 S.C.R.


A provisions of the law.

       13. The learned counsel for the respondent submitted that
  under the Banking Regulation Act, 1949 the Chairman of a
  Banking Company is appointed only by the Rese1ve Bank of
B India and the Reserve Bank of India alone is the competent
  authority to remove the Chairman and in this view though the
  appellant is described as a public servant he will not
  come within the phrasing contemplated under Section 197 o
    Code requiring sanction since the Central Governmen
   is not concerned for his removal.
c
          14. Section 1O(bb) of the Banking Regulation Act says:

          "Where the office of the Chairman of the Board of Directors

D
          appointed on a whole time basis or a Managing Director
          of a Banking Company is vacant, the Reserve Bank may,
          if it is of opinion that the continuation of such vacancy is
          likely to adversely affect the interests of the Banking
                                                                         -
          Company, appoint a person eligible under sub-section (4)
          of Section 10-B to be so appointed to be the Chairman
          of the Board of Directors appointed on a whole time basis
E
          or a Managing Director of the Banking Company, he shall
          so long as the person so appointed is not a Director of
          such Banking Company, he shall so long as he holds the
          office of the Chairman of the Board of Directors appointed
          on a whole time basis or a Managing Director, lbe deemed
F
          to be a Director of the Banking Company."

        15. Section 36(AA) empowers the Reserve Bank to
    remove Managerial and other persons from office including any
    Chairman and Director which reads as follows:
G
          "Where the Reserve Bank is satisfied that in the public
          interest or for preventing the affairs of a Banking Company
          being conducted in a manner detrimental to the interests
          of the depositors or for securing the proper management
          of any Banking Company, it is necessary so to do, the
H
          M. GOPALAKRISHNAN v. STATE BY ADDL. S.P. CBI, B.S. 159
               & F.C., BANGALORE [DR. ARIJIT PASAYAT, J.]
    ...        Reserve Bank may for reasons to be recorded in writing          A
               by order remove from office within effect from such date
               as may be specified in the order any Chairman, Director,
               Chief Executive Officer by whatever name called or other
               officer or employee of the Banking Company."
                                                                               B
               16. 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       c
          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.     D
          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.
                                                                               E
               17. Learned 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 as follows:
    ,,.
              "Question of requirement of sanction for prosecution could
              be raised at any time after cognizance of the offence is         F
'
              taken, may be even at the time of conclusion of trial or after
              conviction."

              It is also observed that:
                                                                               G
    l
              "The claim of the accused that the act alleged was done
              reasonably and not in pretended course of his official duty
              can be e::amined 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
                                                                               H

•
    160         SUPREME COURT REPORTS                 (2009] 3 S.C.R.


A         judgment after conclusion of trial."

         18. 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 iJe left open
    to be decided later on.
B
        19. 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
C by the appellant in position of his official duty.

          20. In Parkash Singh Badal v. State of Punjab (2007 (1)
    sec 1) it was noted as follows:
                 ''The offence of cheating under Section 420 or for
D         that matter offences relatable to Sections 467, 468, 471
          and 1208 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
E         an opportunity for commission of the offence."

         21. Above being the position, the High Court's view does
    not suffer from infirmity to warrant interference. The appeals fail
    and are dismissed.
F RP.                                            Appeals dismissed.        ,