Delhi District Court
Unique Id : 02401R0034791996 vs . on 22 February, 2016
Unique ID : 02401R0034791996
IN THE COURT OF SPECIAL JUDGE, CBI (PC ACT)-06, CENTRAL DISTRICT,
TIS HAZARI COURTS, DELHI
Unique ID : 02401R0034791996
CC No. 32/12
RC No. 2(A)/93/CBI/SIU-X
CBI
Vs.
1. Harbir Singh Harnotia
S/o Sh. Asha Ram,
R/o 2830, Bihari Colony,
Shahadara, Delhi. .....Accused No.1
2. Sh. P. Singh (since deceased)
S/o Sh. Lautoo Singh
R/o Nutan Vidya Mandir School,
GCR Enclave, Delhi. .....Accused No.2
3. Sh. Ram Prakash Nagar,
S/o Sh. Basant Ram,
R/o B-7/67, Sector-18, Rohini, Delhi .....Accused No.3
4. Sh. Rajesh Jain,
S/o Late Sh. S.C. Jain,
R/o 4554, Deputy Ganj,
Sadar Bazar, Delhi .....Accused No.4
5. Smt. Rashmi Jain
W/o Sh. Rajesh Jain,
R/o 4554, Deputy Ganj,
Sadar Bazar, Delhi. .....Accused No.5
6. Smt. Rani Jain,
W/o Late Sh. Anil Jain,
R/o 4554, Deputy Ganj,
Sadar Bazar, Delhi. .....Accused No.6
7. M/s Indo Dutch Foods Pvt. Ltd.
107, Hargovind Enclave, Delhi
through its Director H.S.Harnotia .....Accused No.7
8. M/s Shreshtha Exporters Pvt. Ltd.
Shrestha Vihar, New Delhi
through its Director P.Singh .....Accused No.8
9. M/s Pious Chits & Cines Pvt. Ltd.
4834, Deputy Ganj, Sadar Bazar, Delhi
through its Director Rajesh Jain. .....Accused No.9
10. M/s Pious Growth Fund Co. Pvt. Ltd.
4834, Deputy Ganj, Sadar Bazar, Delhi
through its Director Rajesh Jain. .....Accused No.10
11. M/s Pious Tours & Travels, Pvt. Ltd,
4834, Deputy Ganj, Sadar Bazar, Delhi
through its Director Rajesh Jain. .....Accused No.11
CBI Vs. H.S.Harnotia page 1 of 13
Unique ID : 02401R0034791996
ORDER
1. This order shall determine the point as regards jurisdiction of Special Judge appointed to try offences punishable under Prevention of Corruption Act 1988 (hereinafter referred in short as PC Act) to proceed with the trial, in this case.
2. Accused persons in this case were sent up to face trial before this court for the offences punishable under Sec. 120-B IPC r/w Sec. 420 IPC & Sec. 13(2) r/w Sec. 13(1)(d) PC Act 1988 and for the substantive offences under Sec. Sec. 13(2) r/w Sec. 13(1)(d) of PC Act, 1988 as well as u/s 420 IPC.
3. In brief, case of prosecution is that accused Harbir Singh Harnotia (A-1) and Ram Prakash Nagar (A-3) were Chairman and CEO cum Manager respectively of Parishad Co-operative Bank (herein after called as PCB), Karol Bagh, Delhi. During the year 1991-93, they had allegedly cheated PCB in Conspiracy with co-accused persons A-4 to A-11 by corrupt and illegal means by abusing their official position. Charges were framed against them by Learned Predecessor of this court vide order dated 13.05.2002. P. Singh (A-2) expired on 19.11.2014 and proceedings against him stood abated on 08.01.2015. In order to establish accusation prosecution examined 84 witnesses. Prosecution evidence was closed on 30th September, 2015. Question regarding jurisdiction of this court arose at the stage of recording statement of accused u/s 313 Cr.P.C. while considering the evidence adduced by the prosecution to find out whether A-1 and A-3 were public servants or not. This question is significant as it pertains to the jurisdiction of this court to try the case.
4. Sh. H.S.Harnotia (A-1) as well as Sh. M.P.S.Kasana, counsel appearing for CBI Vs. H.S.Harnotia page 2 of 13 Unique ID : 02401R0034791996 A-3 submitted that PCB, Karol Bagh, is a Co-operative Bank registered under Delhi Societies Registration Act, 1972 governed by its own By-laws. According to accused, PCB was not receiving any financial aid from the Central Government or State Government or any authority or body owned or controlled by the government and therefore, accused namely Harbir Singh Harnotia (A-1) and Ram Prakash Nagar (A-3) are not "public servant" in terms of the definition of 'public servant' in Sec. 2(c) of PC Act, 1988 and thus, this court of Special Judge has no jurisdiction to hear and try this case.
5. On behalf of accused, it is submitted that similar FIRs i.e. RC 1A, RC 3A, RC 4A & RC 5A of 1993 were registered against the accused in which trial had been concluded and after conclusion of the trial, Ld. Spl. Judge vide his judgment dated 11.10.2012 gave the findings that accused persons were not 'public servant'. Therefore, Special Judge who was not having jurisdiction to conduct the trial in said cases had sent the matter to the court of Chief Metropolitan Magistrate for trial. Ld. Counsel for the accused placed reliance on the judgments reported as State of Maharashtra and Anr Vs Prabhakarrao and Anr 1, and State of Karnataka Vs M. Muniswamy2, Ld. Counsel also referred 'Federal Bank Limited Vs Sagar Thomas & Ors3 and Greater Bombay Co-operative Bank Limited Vs M/s United Yarn Tex Pvt. Ltd. & Ors'. in support of their submission that prosecution is obliged to establish by adducing substantive evidence that accused at the time of commission of offence was a public servant.
6. Sh. Rajesh Manchanda, learned counsel appearing for A/R of M/s Shretha Exports Company (A-8) further submitted that in the present case, allegations are of 1 JT 2002 (Suppl. 1) SC 5 2 2004 SCC (Crl.) 1151 3 AIR 2003 13 SCC 418 CBI Vs. H.S.Harnotia page 3 of 13 Unique ID : 02401R0034791996 dis-honest misappropriation of the funds for their own use by office bearers of PCB and allowing other persons to do so and allegations are covered by Section 118 of Delhi Cooperative Societies Act. Offence committed is under the Delhi Cooperative Societies Act 1972 and the cognizance thereof cannot be taken without previous sanction of the Registrar and that, in the present case there is no such sanction from the registrar has been obtained and therefore, accused cannot be prosecuted for the offences under the IPC as well.
7. Sh. Prabhat Kumar, Senior PP as well as Sh. Surender Sinha, Special PP for CBI have taken the plea that the accused being the paid officer bearers of Parishad Co-Operative Bank (PCB), fall into category of "public servants". It is submitted that section 2 (c)(viii) of PC Act, 1988 defines public servant "as any person who hold an office by virtue of which he is authorized or required to perform any public duty". The term "public duty" has been defined in Sec. 2(b) of PC Act as 'a duty in the discharge of which the State, the public or the community at large has an interest'. Ld Prosecutor submitted that PCB was performing duty in discharge of which the State, the public or the community at large has an interest as it used to take deposits from public, though used to give loan or take deposit only to or from members of PCB. It is submitted that moreover, co-operatives Banks are under the preview of RBI as well as Registrar of the Co-operative Societies, Delhi Administration, which can nominate a government officer on the Board of the Co- operative Bank. Thus, it is argued that it cannot be said that PCB was not controlled by government or any authority.
8. Ld. Public Prosecutor further submitted that the accused (A-1 & A-3) while functioning as Chairman and CEO respectively of PCB, were holding office by virtue CBI Vs. H.S.Harnotia page 4 of 13 Unique ID : 02401R0034791996 of which they were authorized or required to perform the "public duty". Ld.Prosecutor referred to Sec. 2(c)(viii) of PC Act, which reads as "Any person who holds an office by virtue of which he is authorized or required to perform any public duty". Public duty has been defined in Sec. 2(b) of PC Act, which reads as "Public duty means a duty in the discharge of which the State, the public or the community at large has an interest."
9. It is submitted that PCB was registered under the Co-operative Societies Act and office bearer of a Co-operative Society engaged in banking activities and getting financial aid from Central Government or State Government or any authority or body owned or controlled by government, would be public servant in terms of Sec. 2 (c)(ix) of PC Act, 1988, which reads as under:-
"Any person who is president, secretary or other office-bearer of a registered co-operative society engaged in agriculture, industry, trade or banking, receiving or having received any financial aid from the Central Government or 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 Sec. 617 of the Companies Act, 1956".
10. In State Of Maharashtra And Anr. vs Prabhakarrao And Anr. 4, it was observed that 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.
11. In State of Karnataka Vs M Muniswamy 2004 SCC (Cri) 1151 it was 4 JT 2002 Suppl 1 SC 5 CBI Vs. H.S.Harnotia page 5 of 13 Unique ID : 02401R0034791996 observed that:
"In this particular case no document has been produced to show that Indian Tourism Development Corporation was a government company. PW16, the General Manager of Ashoka Gotel did not say that ITDC was a government company. All that he had said was that it was a corporation created under the Companies Act. If PW16 had further said that the Government held more than 50% of the shares of that Company the court could perhaps have come to the conclusion that even in spite of a specific statement made by the witness, the Corporation was a government company. As we have checked up the evidence of PW 16 we have noticed that the witnesses had not stated anything about that crucial aspect. It is important in this context to point out that even when the respondent was questioned under Section 313 of the Code of Criminal Procedure no question could be put by the Court regarding the status of the Corporation as a government company."
12. In Federal Bank Ltd Vs Sagar Thomas & Ors 5 Supreme Court has held as follows:
"Merely because the Reserve Bank of India lays the banking policy in the banking system or in the interest of monetary stability or sound economic growth having due regard to the interests of the depositors etc as provided under S. 5(c) (a) of the Banking Regulation Act does not mean that the private companies carrying on the business of or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activities in banking and these companies are to act according to these provisions failing which certain consequences follows as indicated in the Act itself. Provision regarding acquisition of a banking company by the Government , it may be pointed out that any private property can be acquired by the Government in public interest. It is now judicially accepted norms that 5 AIR 2003 13 SCC 418 CBI Vs. H.S.Harnotia page 6 of 13 Unique ID : 02401R0034791996 private interest has to give way to the public interest. If private property is acquired in public interest it does not mean that the party whose property is acquired is performing or discharging any function or duty of public character though it would be so for acquiring authority."
13. It was observed in Greater Bombay Co-operative Bank Ltd Vs M/S United Yarn Tex Pvt Ltd & Ors 6 that the distinction between peoples cooperative banks serving their members and corporate banks doing commercial transactions is fundamental to the constitutional dispensation and understanding cooperative banking generally and in the context of cooperative banking not coming under the ambit of the BR Act. Thus, even if the co operative are involved in the activity of banking which involves lending and borrowing, this is purely incidental to their main cooperative activity which is function in public domain.
14. It was further observed that:-
"The RDB Act was passed in 1993 when Parliament had before it the provisions of the BR Act as amended by Act No.23 of 1965 by addition of some more clauses in Section 56 of the Act. The Parliament was fully aware that the provisions of the Br Act apply to cooperative societies as they apply to banking companies. The Parliament was also aware that the definition of 'banking company' in S.5 (c) had not been altered by Act No.23 of 1965 and it was kept intact and in fact additional definitions were added by S.56 (c). Co- operative bank was separately defined by the newly inserted Cl. (cci) and primary cooperative bank was similarly separately defined by Cl. (ccv). The Parliament was simply assigning a meaning to words; it was not incorporating or even referring to the substantive provisions of the BR Act. The meaning of banking company must therefore, necessarily be strictly confined to the words used in S.5(c) of the Br Act. It would have been the earliest thing for Parliament to say that 6 (2007) 6 SCC 236 CBI Vs. H.S.Harnotia page 7 of 13 Unique ID : 02401R0034791996 banking company shall mean banking company as defined in S.5(c) and shall include co-operative bank as defined in S.5(cci) and primary cooperative bank as defined in S.59ccv). However, the Parliament did not do so. There was thus a conscious exclusing and deliberate omission of co-operative banks from the purview of the RDB Act. The reason for excluding co operative banks seems to be that cooperative banks have comprehensive, self-contained and less expensive remedies available to them under the State Cooperative Societies Acts of the States concerned, while other banks and financial institutions did not have such speedy remedies and they had to file suit in Civil Courts."
15. In Greater Bombay's case (supra) it was held that :
"Co-operative banks' established under the Maharashtra Co-operative Societies Act, 1960 (MCS Act, 1960): the Andhra Pradesh Co- operative Societies Act, 1964 (APCS Act, 1964): and the Multi-State Co-operative Societies Act, 2002 (MSCS Act, 2002) transacting the business of banking, do not fall within the meaning of 'banking company' as defined in S.5(c) of the Banking Regulation Act, 1949 (BR Act). Therefore, the provisions of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (RDB Act) by invoking the Doctrine of Incorporation are not applicable to the recovery of dues by the co-operative from their members."
16. In view of above observation of Hon'ble Supreme Court with regard to Banking Regulation Act qua the private companies carrying on business of commercial activities of banking and with regard to co operative bank run by co operative societies, it is clear that employee of such co operative banks which are neither receiving or having ever received any financial aid from the Central Govt or State Govt or from any co operation or any authority or body owned or control by the Govt are not the public servant as defined U/S 2 (c) (viii) and (ix) of PC Act 1988.
CBI Vs. H.S.Harnotia page 8 of 13
Unique ID : 02401R0034791996
17. Adverting to the instant case, prosecution was required to establish that any of the accused or Harbir Singh Harnotia (A-1) and Ram Prakash Nagar (A-3) being tried by this court were "public servant" at the time of commission of offence and for that prosecution had to establish that they come within the purview of any of the clause of Sec. 2(c) of PC Act, 1988. Case of the accused is that PCB was not receiving and never received any financial aid from the Central Government or State Government or any authority or body owned or controlled by the government and therefore, accused Harbir Singh Harnotia (A-1) and Ram Prakash Nagar (A-3), who were the Chairman and CEO of PCB, cannot be described as public servant.
18. Therefore, on closure of prosecution evidence, question which required answer while considering incriminating evidence emerged on record in order to question and examine the accused persons as required u/s 313(1)(b) Cr.P.C., was, whether the Parishad Cooperative Bank of which applicants were office-bearers, had ever received any financial aid from the central government or state government or any authority or body owned or control by the government and whether the accused were holding an office by virtue of which they were authorized or required to perform public duty, and then whether they were public servant within the meaning of PC Act.
19. To prove accusations, during trial, prosecution examined 84 witnesses out of which 14 witnesses have been examined who were the official or had some connection with the Parishad Cooperative Bank. PW-1 Ramesh Kumar, clerk-cum- typist, Parishad Cooperative Bank; PW-2 Sh. Uday Vir Singh, Director & Vice Chairman of Parishad Cooperative Bank; PW-3 Sh. Ram Pal Singh Gautam, Co- opted Director of Parishad Cooperative Bank on 3rd March, 1991. He was elected as CBI Vs. H.S.Harnotia page 9 of 13 Unique ID : 02401R0034791996 director on 31st May, 1992 and resigned on 18th November, 1992; PW-4 Sh. Anil Bakshi, working as Clerk in Parishad Cooperative Bank; PW-5 Sh. Pratap Singh, working as Clerk-cum-cashier in Parishad Cooperative Bank; PW-6 Sh. Ramji Lal, was the Chairman of Parishad Cooperative Bank during 1986 to 1989; PW-7 Smt. Sunita Chhabra, Clerk in Parishad Cooperative Bank during 1989 to 1996; PW-10 Sh. O.P. Kaim, Director of Parishad Cooperative Bank since 1989 to 1993; PW-11 Mrs. Kavita Chhabra, Clerk in Parishad Cooperative Bank from 1990 to 1997; PW- 12 Smt. Jyoti Joshi, Clerk-cum-cashier in Parishad Cooperative Bank; PW-25 Sh. Yoginder Makwana, Founder and share holder, PCB and thereafter he also worked as Chairman, PCB; PW-47 Sh.Chander K. Mehrotra, Manager, PCB; PW-82 Sh. Gopal Paharia, Director , PCB during the period 1991-1993; PW-73 Sh. Ashok Kapoor, Chief Executive Officer, PCB.
20. On scrutiny of evidence on record as a whole, this court finds that none of the prosecution witness has uttered as regards receiving of financial aid by the Parishad Cooperative Bank from the Central Government or State Government or any authority or body owned or controlled by the government. There is no material on record to indicate that (A-1) & (A-3) were public servants.
21. It may be noted that in his deposition, PW10 O.P. Kain stated that the working of the bank is governed by the bye-laws of the bank and Cooperative Societies Act Sh. S.C.Dandriyal (PW-67), Investigating Officer, who investigated this case and filed charge sheet, in his deposition stated that he could not show any document indicating that H.S. Harnotia (A-1) was getting any kind of financial assistance/aid from the Government. PW-67 deposed that PCB was a cooperative bank register as a society with Registrar of Society and that there was no officer of CBI Vs. H.S.Harnotia page 10 of 13 Unique ID : 02401R0034791996 the RBI or Registrar of Society deputed in the bank to look after the day to day work or for any direct control of the PCB. In response on suggesting that H.S. Harnotia (A-1) was not a public servant, PW-67 IO had this to say "since FIR had already been registered earlier, therefore, I was given to understand that he is a public servant. I had not collected any additional or independent evidence regarding the fact that he was a public servant".
22. On asking, IO/PW-67 expressed ignorance, if Parishad Cooperative Bank was not having any shares or was not obtaining any financial aid from any government agency or government undertaking/Institution. On specifically asking as to how he had come to the conclusion that H.S. Harnotia (A-1) and other co- accused were public servants, PW-67 stated that he had obtained legal opinion from his department. He was granted time to refer the case diary. Then, he further stated that No such legal opinion was placed on record and he could not show the same. This court is satisfied that there is nothing in the testimony of the IO PW-67 or in the deposition of any other witness to indicate that PCB or his office bearer H.S. Harnotia (A-1) or (A-3) were receiving or had 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.
23. It is pertinent to note that there is no averment in the charge-sheet as well to indicate the PCB was receiving or had 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 CBI Vs. H.S.Harnotia page 11 of 13 Unique ID : 02401R0034791996 aided by the Government or a Government company. Indisputably , Parishad Cooperative Bank was a private bank in which only the members of Co-operative society could open their accounts or obtain oan etc. according to its bye-laws. There is no averment in the charge-sheet that accused H.S. Harnotia (A-1) and R.P. Nagar (A-3) or any other employee of Parishad Cooperative Bank were holding office by virtue of which they were authorized or required to perform any public duty. This court finds that prosecution has not been able to establish the fact that Parishad Cooperative Bank was receiving or having ever received any financial aid from the Central Government or State Government or from any co-operation or any authority or body owned or control by the Government or that accused H.S. Harnotia (A-1) and R.P. Nagar (A-3) were holding office by virtue of which they were authorized or required to perform any public duty.
24. Trying a case by a Special Judge under Section 3(1) PC Act is a sine-qua- non for exercising jurisdiction by the Special Judge for trying any offence, other than an offence specified in Section 3. "Trying any case" under Section 3(1) is, therefore, a jurisdictional fact for the Special Judge to exercise powers to try any offence other than an offence specified in Section 3. Where the jurisdiction of a Court is dependent on the existence of a particular state of affairs, then, state of affair is preliminary to the merits of the issue. Existence of a jurisdictional fact is a condition precedent to the assumption of jurisdiction by a Court. By erroneously assuming existence of the jurisdictional fact, a Court cannot confer upon itself jurisdiction which otherwise it does not possess.
25. According to prosecution, except accused H S Harnotia (A-1) and R P Nagar (A-3), no other accused is public servant in this case. In view of finding of this court CBI Vs. H.S.Harnotia page 12 of 13 Unique ID : 02401R0034791996 that accused H S Harnotia (A-1) and R P Nagar (A-3) were not public servants at the alleged time of the commission of offence, as defined U/S 2 (c) (viii) and (ix) of PC Act 1988 , as such none of the accused was public servant at the time of commission of this offence. In these circumstances, when none of the accused was public servant at the time of commission of this offence provision of P C Act 1988 are not applicable to any of the accused because according to Section 3 and 4 of P C Act 1988 a Special Judge, duly notified, is empowered for conducting the trial of only those cases which are punishable under section P C Act and any conspiracy to commit or any attempt to commit or any abatement of any of the offence specified under P C Act. Therefore, this court of Special Judge has no jurisdiction to conduct the trial of this case. Hence, this court cannot enter into the merits of the case.
26. In view of the foregoing reasons, this case file is ordered to be sent and placed before the Court of Ld Chief Metropolitan Magistrate (Central District), Tis Hazari Delhi who may either himself conduct the trial of this case or may assign the case to any other court of competent jurisdiction for trial, in accordance with law. Parties are directed to appear before the court of learned CMM on 2nd March, 2016. complete file shall be sent by the Ahlamd, before the court of Ld. CMM on or before the next date.
Announced in the open court
on 22th February, 2016 (VINAY KUMAR KHANNA)
Special Judge-CBI (P.C.Act)-06,
Central, Tis Hazari, Delhi
CBI Vs. H.S.Harnotia page 13 of 13