Delhi District Court
State Through Cbi V. S.K. Garg And Others vs Sheetla Sahai And on 2 February, 2016
State through CBI v. S.K. Garg and others
IN THE COURT OF SH. PAWAN KUMAR JAIN,
SPECIAL JUDGE, CBI-01, NORTH-WEST DISTRICT,
ROHINI COURTS COMPLEX, DELHI
IN THE MATTER OF:
CBI No. 01/2015
ID No. : 02404R0462842015
FIR No.: RC. BD1/2015/E-0009/BS&FC/CBI/New Delhi
U/Sec. : 120B IPC r/w 420/409/ IPC r/w 13 (2) r/w
13(1) (c) & (d) of PC Act, 1988
STATE
THROUGH
CENTRAL BUREAU OF INVESTIGATION,
NEW DELHI
VERUS
SURESH KUMAR GARG & OTHERS
ORDER RESERVED ON : 12.01.2016
ORDER PRONOUNCED ON : 02.02.2016
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State through CBI v. S.K. Garg and others
Appearance: Sh. Naveen Kumar Singh, Ld. Sr. PP for CBI
Sh. Bijender Singh, Advocate, counsel for
accused S.K. Garg
Sh. Anand Maheshwari and Sh. Meenesh
Dubey, Advocates, counsels for accused
Jainis Dubey
ORDER ON THE POINT OF COGNIZANCE:-
1. Facts in brief as unfolded from the charge-sheet are as
under:-
(i) That Mr. Praveen Kumar, Deputy General Manager, Bank
of Baroda, Regional Office, New Delhi made a written complaint dated
September 24, 2015 against 59 current account holders and unknown
bank officials/private persons alleging that unknown bank officials of
the Bank of Baroda, Ashok Vihar, New Delhi by abusing their official
position entered into a criminal conspiracy with 59 account holders
and in furtherance of the said conspiracy, said unknown bank officials
allowed overseas remittance of Foreign Exchange of approximately
` 6000/- crore (However during further verification, the said figure
scale down to the tune of ` 46.81 crore) in illegal and highly irregular
manner by violating the established norms of the Bank.
(ii) It was alleged that S.K. Garg was posted as Assistant
General Manager and Branch Head of Bank of Baroda at Ashok Vihar
Branch since July 19, 2014 till his suspension i.e. on September 22,
2015. As Branch Head, he was looking after overall functioning of the
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branch including business development.
(iii) It was alleged that accused Jainis Dubey joined the
Bank of Baroda as probationary officer on September 10, 2012. He
was transferred to Ashok Vihar Branch on August 04, 2014 as Forex
in-charge. He was looking after the Forex Department of the said
branch till his suspension on September 12, 2015.
Operational procedure to be followed to execute advance Foreign
Import Remittances :-
2. The operational procedure to be followed to execute
advance foreign import remittances and the accounts through which
these are executed is explained below :-
(i) Current Account of the accused firm from where funds
are remitted by the account holder to foreign clients.
(ii) Credit Console Account of BOB Branch which can only
be operated through forex menu of the Finacle software.
(iii) Other Miscellaneous Accounts of BOB Branch namely
Credit Commission Account, Credit Postage Account, Credit Service
Account etc. in which the commission, service tax etc. on the remitted
amount is received by the branch.
(iv) BITTA account (Baroda Integrated Treasury
Transaction Account) maintained as US$ account. Any foreign
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State through CBI v. S.K. Garg and others
remittance will be reported in this account in dollar terms converted
from rupee amount. BITTA account is maintained by the Treasury
Branch of BOB at Mumbai and will have entries from all the authorised
branches of BOB. There is no separate BITTA account of BOB
Branch.
(v) NOSTRO Account of BOB :-
(a) NOSTRO Account will be in foreign currency.
(b) It is a record of money held by a bank in another country
in the currency of that country i.e. a bank in country. A keeping a
record of money held by a bank in country B, in the currency of
country B.
(c) The NOSTRO Account of BOB is in USA.
(vi) The Process of foreign remittance and reconciliation of
accounts thereafter.
(vii) Once a firm wants to send advance remittances for
imports, it will approach BOB with a request letter including copy of its
Import-Export Code (IEC) Proforma Invoice, 15 CA/CB forms etc.
(viii) A memorandum for remittance is prepared by BOB
Branch after compliance of the bank guidelines and is to be signed by
forex officer and another officer not less than scale-IV i.e. Chief
Manager or Head of the Branch.
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(ix) There should be sufficient balance/fund in the account
of the firm for making the said remittance.
(x) Thereafter, the Forex Officer will obtain exchange rate of
the foreign currency, herein US$ vis-a-vis Treasury Branch BOB
Mumbai on ADS network.
(xi) Once exchange rate is available, the forex officer will
pass the entry in the Finnacle system in the account of the firm. Due
to this entry the following accounts of the bank are affected as stated
below :-
(a) Bank account of the firm in BOB will be debited
(reduced) according to the requested amount and the Console
account of BOB Branch will be credited (increased) by the same
account.
(b) Thereafter Console account of BOB will be debited
(reduced) and BITTA account of BOB will be credited (increased) by
the same amount in dollar terms.
(c) Now the treasury branch BOB will debit (reduce) BITTA
account and credit (increase) the MIRROR account of the bank in
dollar terms. Therefore, BITTA account shall stand at ZERO/stand
reconciled at the end of the day.
(xii) Meanwhile, the forex officer of BOB Branch after
debiting (decreasing) the customer's account and crediting
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(increasing) the BITTA, will send a SWIFT message to the overseas
bank maintaining NOSTRO account of BOB mentioning the foreign
client, its account details and the amount to be remitted in dollar
terms.
(xiii) The overseas bank will now debit (decrease) the
NOSTRO account of BOB and credit (increase) the foreign
client/recipient bank account, thereby, transferring the required
amount.
(xiv) Now BOB will reconcile the MIRROR account
maintained in India and NOSTRO ACCOUNT of BOB maintained
abroad to check any discrepancy thereof.
3. It was alleged that in mid July, 2015, Ashok Aneja,
General Manager (Retail Banking) informed Mr. Praveen Kumar,
Deputy General Manager, Bank of Baroda, Regional Office, Delhi
Metro Region-01, New Delhi about huge import payments made from
Bank of Baroda, Ashok Vihar, New Delhi. Taking cognizance on the
said information, Mr. Praveen Kumar deputed one of his officers
named Mr. Vijay Nandwani, Manager (Forex) Bank of Baroda,
Parliament Street, New Delhi to enquire into such transactions of
Ashok Vihar Branch. The said officer verified the import transactions of
Ashok Vihar Branch and reported the some irregular entries in the
Foreign Remittances such as manipulation of Exchange Rate of US
Dollar. In the meantime, the Internal Audit of the bank was also
conducted by the Zonal Internal, Audit Department, who submitted its
report in the first week of September. In the said report, certain serious
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violation of the banks' norms in Foreign Remittances were observed.
Accordingly, Mr. Praveen Kumar apprised Zonal Office, who in turn
asked Mr. Praveen Kumar to lodge a complaint with CBI.
4. It was alleged that a team of three officials namely Mr.
T.N. Suresh, Chief Manager (Corporate Financial Services Branch)
Bank of Baroda, Sansad Marg, New Delhi; Mr. Umesh Chugh, Chief
Manager, (Zonal Internal Audit Division) Bank of Baroda, Rajendra
Bhawan, New Delhi and Mr. Deepak Arora, Senior Manager (Credit)
Bank of Baroda, Delhi Metro Region-01, Sansad Marg, New Delhi was
constituted by the Regional Office to reconcile the entries pertaining to
the alleged foreign remittances made from Ashok Vihar Branch, New
Delhi to Hongkong during the period August, 2014 to July, 2015 and to
ascertain whether any financial loss had been caused through such
foreign remittances.
5. It was alleged that the said team reconciled all foreign
exchange remittances during the aforesaid period and concluded that
net wrongful loss to the tune of ` 13,75,45,819.28 was caused to the
Bank of Baroda in the alleged foreign remittances made from Ashok
Vihar Branch during the aforesaid period. The computation of the loss
caused to the bank is as under :-
(i) Loss by way of punching wrong Exchange Rate :-
(a) It was alleged that the modus-operandi by the accused
bank official was that instead of obtaining ongoing exchange rate from
Treasury Branch, Mumbai and punching the same Exchange Rate of
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USD which might be around 01USD=INR 62 to 65, they punched
Exchange Rate as 1.00/0.0001/0.001 in the system, instead of
ongoing exchange rate. It was alleged that as a result of the
customer's accounts were debited with a meagre amount against
foreign exchange remitted resulting in direct loss to the bank. It was
alleged that there were total 16 such foreign remittances made by
punching exchange rate as 1.00/0.0001/0.001 from the Treasury
Branch, Mumbai. The total of such amount remitted is ` 8,89,38,070/-.
(ii) Deletion of debit entries manually :-
(a) It was alleged that there were 9 such entries where the
debit to the customers were manually deleted in the FINACLE system,
therefore, the accounts of customers were not debited and BITTA was
not credited with the corresponding amount, but the foreign
remittances were made causing respective wrongful loss of USD to
the Bank of Baroda.
(b) The Modus-operandi of the bank official was that the
transaction of foreign remittances were not reported to Treasury
Branch, Mumbai for which the SWIFT had already been sent by the
branch to the concerned Overseas Branch. By way of sending the
SWIFT message by the Branch, the Overseas Bank debited the
NOSTRO account to Treasury Branch, Mumbai and credited the Bank
of Beneficiary with the equal amount of USD. However, since the said
transactions were not reported by the branch to the Treasury Branch,
Mumbai, the account of foreign remittance were not reconciled with
the NOSTRO Account and the amounts are still outstanding. The total
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amount of such entry is ` 3,17,92,472.40
(iii) Debiting office accounts and crediting the accounts
of accused firm :-
(a) It was alleged that there were 22 such accounts wherein
the amounts were debited from BITTA account and the accounts of
different companies were credited as there were no sufficient fund
available in the account of said companies at the time of transactions.
Subsequently, the debit entries in the BITTA account were adjusted
either by debiting the account of same party or the account of some
other party. It was alleged that the amount mentioned in the table as
shown in the charge-sheet are the amounts for which foreign
remittances were made by the bank, but the said amounts are still
outstanding against the accounts of the company. Therefore, the said
amounts are to be recovered by the bank from the respective
company and the total of such entry is ` 18,96,31,458.58.
(iv) Non realising rupee against USDs :-
(a) It was alleged that there were 7 such instances wherein
the accounts of parties were to be credited by INR against USD/travel
card etc. deposited by them. It was alleged that though the said 7
accounts were not related to alleged related/group accounts, but in the
said accounts, BITTA was debited and correspondingly parties
accounts were credited. However, no credit were received in the
BITTA against such credits in the parties' account.
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(b) It was alleged that the amounts mentioned against M/s
Mohan Plastic, M/s Centrum Direct are concerned, foreign currencies
were shown to have been received in the respective accounts were
equivalently credited in Indian rupees debiting the BITTA, but the fate
of physical foreign currency deposited by the concerned party is yet
not known. It was alleged that apparently the same were
misappropriated by the accused public servants.
(c) It was alleged that the amount mentioned against M/s
Surgeon Health Care, the party had requested the branch to cancel
his travel card and to credit the balance amount of the said card in his
account. The balance was credited in the amount of the said company
by debiting the BITTA, but the card transaction was not reported to the
Treasury Branch, Mumbai for getting BITTA credited. Moreover, the
whereabouts of the said card was not known. It was alleged that
apparently the same was misappropriated by accused public servants.
(d) As regards M/s S.B. Industries and Hind Kirana
company, the transactions were made without reporting to Treasury
and without crediting to BITTA and SWIFT message was sent
presuming a returned TT sent earlier as the cover fund.
(e) In the account of M/s Ocean De Fashion, the account
was credited by Indian rupee ` 58,777/- presuming with return of TT
amounting USD 1000. However, the said transaction was not reported
to Treasury Branch, Mumbai and therefore, the BITTA was not
registered.
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(f) As regards M/s Sunil Woolen Mills, the account was
credited by debiting BITTA account, however, no corresponding credit
was made in BITTA account.
(g) It was alleged that by way of above mentioned
transactions, a loss to the tune of ` 42,13,340/- was caused by the
accused persons to the Bank of Baroda.
(v) Debiting the accounts without authority :-
(a) It was alleged that the accused persons had debited the
accounts of the firms/companies as mentioned in the charge-sheet
without authority of the concerned firm/company, correspondingly the
BITTA account of the bank was credited. Consequently, Bank is liable
to pay respective amounts to the concerned firms/companies. It was
alleged that the same was done with an intention to adjust the
Console Office Account of the bank as the said amount was debited to
credit the accounts of accused company as mentioned in para (iii)
under the heading Debiting office accounts and crediting the accounts
of accused firms. In this way, a sum of ` 16,90,42,687.05 is payable
by the bank to the account holders.
(vi) Not reporting transactions to Treasury Branch and
not sending SWIFT message :-
(a) It was alleged that the accounts of 2 firms were debited
by the amounts mentioned in the charge-sheet and the BITTA was
credited with corresponding amount. However, no reporting was made
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to Treasury Branch and SWIFT message was also not sent to the
Overseas Bank. Subsequently, the BITTA fund were adjusted against
the amounts due towards accused companies. Therefore, the Bank is
liable to pay ` 73,52,977/- to the concerned parties.
6. It was alleged that in the aforesaid manner, the accused
persons had caused a loss to the tune of ` 13,81,79,676.93.
7. It was further alleged that during investigation, it was
revealed that a sum of ` 20,43,721/- towards Incidental Charges was
debited from BITTA and the office account of the bank was credited by
corresponding account. This entry was to be reversed to BITTA
account, but the same was not done and therefore this is liability to the
Bank.
8. It was further alleged that likewise an amount of `
14,09,064/- was received by Ashok Vihar Branch from Treasury
Branch as share of exchange, but the same was not credited in the
profit account of the bank. Rather the same was misappropriated by
the accused bank official. Therefore, a sum of ` 20,43,721/- is payable
by the bank whereas the sum of ` 14,98,064/- is recoverable by the
bank, thus the total net loss caused to the bank is ` 6,33,857/-. It was
alleged that the total loss caused to the bank becomes
` 13,75,45,819.28 (` 13,81,79,676.93 - ` 6,33,857/-).
9. It was alleged that the entries pertaining to the above said
transactions in the FINACLE of Bank of Baroda were made/verified by
as many as 12 bank officials including present accused persons.
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10. It was further alleged that out of 59 accounts, 27
accounts were opened at Regional Office while remaining 32 bank
accounts were opened at Ashok Vihar Branch. It was further alleged
that these accounts were opened without permission from Regional
Office.
(i) It was alleged that the Regional Office did not open the
account of M/s Jai Santoshi Trade Impex Pvt. Ltd due to non
compliance of KYC norms, but later on the said account was opened
by the AGM of Ashok Vihar Branch vide account No. 07130200001271
whereas in the Regional Office, the said account stands in the name
of M/s Mahamaya Enterprises. It was alleged that no permission was
sought from the Regional Office to open the said account.
(ii) Similarly, the Regional Office refused to open the
account of M/s Dabang Marketing and Trading Pvt. Ltd. due to non
compliance of KYC, but later on the account was opened by the AGM
of Ashok Vihar Branch without any permission from Regional Office.
11. CBI completed the investigation holding that there are
sufficient material on record in the form of oral and documentary
evidence to show that the accused persons by abusing their official
position and criminal conspiracy with each other and the alleged
account holders with fraudulent and dishonest intention cheated and
misappropriated fund of the bank to the tune of ` 13,75,45,819.28
causing loss to Bank of Baroda, Ashok Vihar Branch, Delhi.
12. After completing investigation, challan was filed against
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the accused persons for the offence under Section 120B IPC r/w
Section 420/409 IPC and Section 13 (2) r/w Section 13 (1) (c) (d) of
PC Act, 1988. and substantive offence thereto on the part of both the
accused persons. Sanction under Section 19 (c) of PC Act was also
obtained against both the accused persons, however, no sanction has
been obtained under Section 197 Cr. P.C.
CONTENTIONS RAISED ON BEHALF OF CBI :-
13. Learned Senior Public Prosecutor for CBI sagaciously
argued that though accused persons are 'public servants' in terms of
Section 2 (c) of Prevention of Corruption Act, 1988, yet they are not
public servants in terms of Section 197 Cr. P.C because their service
is not removable either by Union Government or State Government
and they were not appointed in connection with affairs either of
Central Government or the State Government. It was argued that in
order to seek protection under Section 197 Cr. P.C, there must be
some evidence to show that the service of public servant can be
removed either by Union Government or State Government. It was
contended that since in the instant case both the accused persons
were employed by the bank, which is nothing but a company, thus
they can be removed from their office without the consent or approval
of Central Government or State Government as the case may be,
hence they are not entitled for any protection under Section 197 Cr.
P.C. In support of his contention, reliance has been placed on the
judgment Mohd. Hadi Raja v. State of Bihar and another (1998)
INSC 252 wherein it was held that the employees/officers of public
undertaking/Govt. company are not entitled for protection under
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Section 197 Cr. P.C despite the fact that such undertakings/companies
are State under Article 12 of Constitution of India. Further, reliance has
been placed on the judgment State Bank of India and others v.
Vijay Kumar and others AIR 1991 SC 79 wherein it was held that the
bank officers are not entitled for protection provided under Article 311
of Constitution of India. Reliance has also been placed on the
judgment N.K. Sharma v. Abhimanyu Appeal (CRL) 514 of 2001
decided 07.10.2005 by the Apex Court wherein it was held that the
M.D. of a Cooperative Society is not entitled for protection under
Section 197 Cr. P.C.
(i) In the next limb of his arguments, learned Senior Public
Prosecutor contended that assuming for the sake of arguments that
accused persons are public servants under Section 197 Cr. P.C, but
vigorously contended that in order to seek protection, there must be
some evidence to show that the act allegedly committed by the
accused persons had any connection in discharge of their official
duties. It was astutely argued that the allegations against the accused
persons are that they had misappropriated the public money and also
committed cheating by entering into criminal conspiracy with 59
account holders. It was contended that entering into criminal
conspiracy cannot be a part of official duty of any public servant and in
support of his contention, reliance has been placed on the judgment
Ronald Wood Mathams v. State of West Bengal AIR 1954 SC 455.
It was further submitted that taking of bribe and cheating cannot be a
part of discharge of official duty of any public servant and in support of
his contention, reliance has been placed on the judgment K. Satwant
Singh v. State of Punjab AIR 1960 SC 266. It was further argued that
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the guidelines to provide protection to the public servant have been
laid down by the Apex Court in Matajog Dobey v. H.C. Bhari and
others AIR 1956 SC 44, but sagaciously argued that the act of the
accused persons do not come within the purview of the said
guidelines. It was further argued that since they had entered into
criminal conspiracy with dishonest intention to cheat bank and
committed misappropriation of public money, their acts had no direct
or indirect connection with the discharge of their official duties. It was
further argued that their official position only provided an opportunity
to them to commit the said offences, thus the said acts do not require
any protection under Section 197 Cr. P.C.
CONTENTIONS RAISED BY COUNSELS FOR ACCUSED
PERSONS :-
14. On the contrary, learned counsel appearing for the
accused persons, who were permitted to assist the Court on the said
legal issue, contended that since both the accused persons were
working in the Bank of Baroda, thus they are governed by the
provisions of Banking Regulations Act, 1949 and Banking and
Companies (Acquisition and Transfer of Undertakings) Act, 1970 and
1980. It was sagaciously argued that Section 46A was inserted in the
Banking Regulations Act, 1949 with effect from January 14, 1957
clarifying that all the employees of bank are public servants for the
purpose of Chapter -IX of the Penal Code. It was further submitted
that Section 51 of the said Act clarifies that provisions of the said Act
also apply to State Bank of India as well as other notified bank which
also included Bank of Baroda. It was further contended that from
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Section 3 and 14 of the Banking and Companies (Acquisition and
Transfer of Undertakings) Act, 1980, it also becomes clear that the
custodian of the bank is a public servant. It was further submitted that
even this issue was settled by the Apex Court in Union Bank of India
and others v. Ashok Kumar Mitra 1995 (2) SCC 768 and by High
Court of Bombay in State of Maharashtra v. L.D. Kanchan and
others 1989 (1) BomCR 59 wherein it was clarified that the
employee of a National Bank is a public servant. It was further
submitted that since the accused persons are government servants as
defined under Section 21 of IPC, they are entitled for protection
available under Section 197 Cr. P.C. It was further argued that since
the acts allegedly committed by the them have direct relations in
discharge of their official duties, thus they are also entitled for
protection provided under Section 197 Cr. P.C in terms of judgment
Prof. N.K. Ganguly v. CBI in Criminal Appeal No. 798 of 2015
decided by the Apex Court on November 19, 2015 and
Shreekantiah Ramayya Munipalli v. State of Bombay AIR 1955 SC
287.
DISCUSSION :-
15. I have heard rival submissions advanced by counsel for
both the parties, perused the record carefully and gave my thoughtful
consideration to their contentions.
16. First question emerges whether the employees of a
Nationalised Bank are 'public servants' in terms of Section 21 of the
Penal Code.
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17. Before dealing with the contentions raised by the
counsel for the parties, I deem it appropriate to refer to the relevant
provisions in this regard.
18. Clause twelfth of Section 21 of IPC reads as under:
"Twelfth - Every Person-
(a) in the service or pay of the Government or
remunerated by fees or commission for the
performance of any public duty by the Government;
(b) in the service or pay of a local authority, a
corporation established by or under a Central,
Provincial or State Act or a Government company
as defined in Section 617 of the Companies Act,
1956 (1 of 1956).
A Municipal Commissioner is a public servant.
Explanation 1. - Persons falling under any of the
above descriptions 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 defects there
may be in his right to hold that situation.
Explanation 3. - The word "election" denotes an
election for the purpose of selecting members of
any legislative, municipal or other public authority,
of whatever character, the method of selection to
which is by, or under, any law prescribed as by
election.
(emphasis supplied)
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19. Section 2 of Prevention of Corruption Act 1947 reads as
under :
"For the purposes of this Act, "public
servant" means a public servant as defined in
Section 21 of the IPC."
20. The definition of public servant was widened in
Prevention of Corruption Act, 1988. Section 2 (c) of the said Act reads
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 (1 of 1956);
(iv)............
(v).............
(vi)............
(vii)............
(viii)...........
(ix) any person who is the president, secretary or
other office bearer of a registered cooperative
society engaged in agriculture, industry, trade or
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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)
(x)............
(xi)...........
(xii)...........
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 there
may be in his right to hold that situation.
21. Section 46 (A) was inserted in Banking Regulation Act,
1949 by way of Amendment Act 95 of 1956 with effect from January
14, 1957, same reads as under:
46 A. 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.
(emphasis supplied)
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22. Section 14 of Banking Companies (Acquisition and
Transfer of undertakings) Act, 1970 and 1980, every custodian of a
new bank is a public servant and the said Section reads as under :
14. Custodian to be public servant.-Every
Custodian of a corresponding new bank shall be
deemed to be a public servant for the purposes of
Chapter IX of the Indian Penal Code (45 of 1860).
(emphasis supplied)
23. From the Section 46 (A) of the Banking Regulations Act,
1949, it becomes abundantly clear that all the employees of a Bank
are public servant for the purposes Chapter-IX of the IPC.
(i) Chapter-IX deals with the offences by or relating to public
servants from Section 161 to 171 IPC. In view of the enactment of PC
Act, 1988, Section 161 to 165 (A) of the IPC Act have been repealed.
However, the remaining Sections i.e. 166 to 171 remained in the
Penal Code. Section 166 deals with the public servants disobeying the
law with intent to cause injury to any person; Section 167 deals with
the public servants framing incorrect documents with intent to cause
injury; Section 168 deals with the public servants unlawful enacting in
trade; Section 169 deals with the public servant unlawful buying or
biding for property; Section 170 deals with impersonating a public
servant and Section 171 deals with wearing garb or carrying token
used by public servant with fraudulent intent.
24. Now coming to the judgment relied upon by learned
Senior Public Prosecutor for CBI.
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25. In State Bank of India and others v. Vijay Kumar and
others (supra), bank officer took a plea that he is entitled for the
protection available under Article 311 of the Constitution of India which
reads as under:
"No person who is a member of civil service
of the union or a all India service or a civil service
of a State or holds a civil post under the union or a
State shall be dismissed or removed by an
authority subordinate to that by which he was
appointed."
(i) In the said case, it was held that the right or protection
guaranteed under Article 311 of the Constitution are available to
members of civil service of the Union or all India service of a civil
service of a State or who holds a civil post under the Union or a State.
It was further held that admittedly the employees of the State Bank of
India do not fall under any of these categories, thus they cannot seek
any protection under Article 311 (1) of the Constitution. However, they
can claim such rights which have been conferred upon them under
Regulations 52 (2) (a) of the General Regulations. In the said
judgment, it was not discussed at all whether the employees of
Nationalised Bank are public servant either in terms of Section 21 of
the IPC or under 197 Cr. P.C. Thus, to my mind, the said judgment is
not helpful to the prosecution in any manner.
(ii) In N.K. Sharma v. Abhimanyu (supra), the question
arose before the Apex Court was whether a Class-I officer of the State
Government (Haryana), who was deputed to work as Managing
Director of a Cooperative Society was public servant in terms of
CBI No. 01/15 Page 22 of 64
State through CBI v. S.K. Garg and others
Section 21 of the IPC, thus he was entitled for protection available
under Section 197 Cr. P.C or not? After considering the facts of the
said case, it was held that admittedly salary of the appellant was not
paid by the Government. He at the relevant time was not in the service
of the State. Accordingly, it was held that no sanction under Section
197 Cr. P.C was required. It is pertinent to state that the said case did
not deal with the issue whether the employees of a Nationalised Bank
are public servants or not. Thus, to my mind, the said judgment is also
not helpful to the prosecution case in any manner.
(iii) In Oriental Bank of Commerce v. Delhi Development
Authority (1982) CRL LJ 2230, it was held that the Nationalised Bank
is neither a "Corporation" nor "Government Company" under Section
617 of the Companies Act and their employees could not be a "public
servant" within the meaning of Clause 12 (b) of Section 21 of the IPC.
However, the said view was rejected by the Bombay High Court in
State of Maharashtra v. L.D.Kanchan and others 1989 (1) BOMCR
59 and also overruled by the Constitution Bench of Apex Court in
Ashoka Marketing Ltd. v. Punjab National Bank (1990) 4 SCC 406.
(iv) In L.D. Kanchan's case (supra), CBI had filed a
charge-sheet against the employees of a Nationalised Bank for the
offence punishable under Section 120B IPC r/w Section
465/467/471/420 IPC and under Section 5 (1) (d) r/w Section 5 (2) of
the PC Act, 1947. In the said case, learned Special Judge discharged
the employees of the Nationalised Bank holding that they were not
public servants. Aggrieved by the said order, CBI challenged the same
by filing a revision petition before the High Court of Bombay wherein
CBI No. 01/15 Page 23 of 64
State through CBI v. S.K. Garg and others
CBI took the plea that the employees of a Nationalised Bank are
public servants. It is pertinent to state that under the Prevention of
Corruption Act, 1947, definition of 'public servant' was the same as it
was under Section 21 of Penal Code. In the said matter, High Court of
Bombay accepted the plea of CBI and held that the employees of
Nationalised Bank are the 'public servants' within the meaning of
Section 21 (12) (b) of the IPC, but surprisingly in 2016, CBI took a
contrary view that the employees of the Nationalised Bank are not
public servants under Section 21 of the IPC. In the said matter, it was
also held that one who is a public servant for the purpose of Chapter-
IX of the IPC is also a public servant within the meaning of Section 21
(12) (b) of IPC. Relevant portion is reproduced as under :
"Therefore, a harmonious reading of Section
46A and 51 of the Banking Regulation Act together
with Section 14 of the Banking Companies
(Acquisition and Transfer of Undertakings) Acts of
1970 and 1980 clearly shows that an employee of
a nationalised bank is a "public servant" within the
meaning of Chapter IX of the Indian Penal Code for
which definition, as stated above, one has to resort
to Section 21 (c) (b) of the Indian Penal Code.
Section 2 of the Prevention of Corruption Act
provides that "public servant" in the said Act means
a "public servant" as defined in Section 21 of the
Indian Penal Code. Therefore, it is obvious that
one who is a "public servant" for the purpose of the
Chapter IX of the Indian Penal Code is also a
"public servant" within the meaning of Section 21
(12) (b) of the Indian Penal Code in so far as it
relates to the definition of a "public servant" under
the Prevention of Corruption Act. Any other
interpretation of the word "public servant", giving
two different meaning, one under the Indian Penal
Code and the other under the Prevention
Corruption Act, would lead to absurdity.
CBI No. 01/15 Page 24 of 64
State through CBI v. S.K. Garg and others
(vi) In the said judgment, it was also held that the
Nationalised Banks are not only 'Government company', but also
'corporation'. The relevant portion is reproduced as under :
A harmonious reading of these provisions of
law makes it clear that a nationalised bank is not
only a "body corporate" (which word is
interchangeable with the word "Corporation")
established under a Central Act but also a
"Government company" within the meaning of
Section 617 of the Companies Act and the
employees of such a bank are "public servants"
within the meaning of clause (12) (b) of Section 21
of the Indian Penal Code.
26. This question again cropped up before the Apex Court
in Union of India and another v. Ashok Kumar Mitra. In the said
case, CBI filed a charge-sheet against the officers of Nationalised
Bank for the offence punishable under Section 120B IPC r/w Section
420/409/467/468/471 and 477 (A) IPC and 5 (2) r/w Section 5(1) (c)
(d) of PC Act, 1947. In the said case also, accused took the plea that
he was not a public servant, but the said plea was rejected by the
learned Special Judge. However, accepted by the High Court.
Aggrieved by the decision of the High Court, CBI approached the
Apex Court. The paras 7 and 8 are relevant and same are reproduced
as under:
Para No. 7. The controversy, whether a
nationalised bank is only a body corporate or is a
corporation is no longer res-integra. On account of
the nationalisation, the nationalised banks are not
only established by a Central Act but are also
owned and controlled by the Central Government.
CBI No. 01/15 Page 25 of 64
State through CBI v. S.K. Garg and others
Para No. 8. A Constitution Bench of this Court in
Ashoka Marketing Ltd. v. Punjab National Bank
specifically considered the question whether a
nationalised bank is a 'Corporation' or a "body
corporate" and held:
"Keeping in view the provisions of the Banks
Nationalisation Act we are of the opinion that the
nationalised bank is a corporation established by a
Central Act and it is owned and controlled by the
Central Government."
The Constitution Bench expressly overruled the
judgment of the Delhi High Court in the Oriental
Bank of Commerce case and held that the
distinction drawn in that judgment between a "body
corporate" and a 'Corporation' in relation a
nationalised bank is erroneous and that the view
that a nationalised bank is not a corporation could
not be sustained. Thus, it now rests settled that a
nationalised bank is a corporation which is
established by a Central Act and is owned and
controlled by the Central Government. Are the
employees of Corporations which are owned and
controlled by the Central Government and are
established by a Central Act, "public servants"?
..............
..............
On a plain reading of the above provision, it follows that the view of the Calcutta High Court in the impugned judgment holding that the Branch Manager of Bank of India is not a 'public servant' under Section 21 of IPC is erroneous and cannot be sustained.
(emphasis supplied)
27. From the aforesaid judgments, it becomes crystal clear that the Nationalised Banks are 'Corporation' established by the CBI No. 01/15 Page 26 of 64 State through CBI v. S.K. Garg and others Central Government and the Nationalised Banks are owned and controlled by the Central Government.
28. Taking cue from the L.D. Kanchan's case, I am also of the opinion that once a person is a public servant under Section 21 (12) (b) of IPC, he is also a public servant for all purposes as mentioned in the Penal Code as well as in Code of Criminal Procedure.
29. Now, I proceed to examine the second issue that is raised from the contentions of learned Senior Public Prosecutor for CBI whether the accused persons are entitled for protection available under Section 197 Cr. P.C or not?
30. To avail the protection under Section 197 Cr. P.C, it has to be established :-
(i) that the accused are public servants;
(ii) that they shall not be removed from their office save by
or without the sanction of Government;
(iii) that they are accused of an offence alleged to have
been committed by them;
(a) while acting or purporting to act;
(b) in discharge of their official duties.
CBI No. 01/15 Page 27 of 64
State through CBI v. S.K. Garg and others
(iv) that the accused were employed at the time of
commission of alleged offence in connection with the affairs of the Union or State as the case may be.
31. Now coming to the judgment Mohd. Hadi Raja v. State of Bihar (supra) strongly relied upon by the counsel for CBI. I have perused the said judgment carefully. On perusal of the judgment, it become clear that the said judgment does not relate to the Nationalised Bank. It appears that it relates to the companies or public undertakings which were directly or indirectly run by the Government because in the said judgment, there is a reference of Hindustan Steel Ltd's. case, Prag Tools Corporation's case, Ajay Hansia's case and Hindustan Steel Works Ltd's. case. In the said case, issue was raised before the Apex Court whether the provision of sanction under Section 197 Cr. P.C are applicable for prosecuting the officers of the Public Sector Undertakings or the Government companies on account of deep and pervasive control of finance and administration of such undertakings and Government companies, they are held as such within the meaning of Article 12 of the Constitution of India. Though in the said case, a plea was taken on behalf of the State that the employees of such undertakings and Government companies are public servant, thus they are entitled for protection available under Section 197 Cr. P.C, but it was rejected by the Apex Court holding that the protection under Section 197 Cr. P.C is not available to the public servant unless the other conditions as indicated in the section are fulfilled.
32. Now question arises whether in the instant case, other CBI No. 01/15 Page 28 of 64 State through CBI v. S.K. Garg and others conditions as stated above have been fulfilled or not?
33. Though Section 197 Cr. P.C talks about the Government, but the word 'Government' is not defined under the Code. From the judgment of Constitution Bench in Ashoka Marketing Ltd. v. Punjab National Bank (supra), it becomes crystal clear that the Nationalised Banks are Corporation and the same are established by the Central Government and these banks are owned and controlled by the Central Government. This clearly shows that the Nationalised Bank are directly owned and controlled by the Central Government and they strictly function in terms of directions of the Central Government and the Central Government controls the affairs of nationalised banks through Reserve Bank of India.
34. In India 14 major commercial banks were nationalised on July 19, 1969. The second phase of nationalisation had taken place in April, 1980. In the year 1950-51, there were 430 commercial banks, which were controlled by business houses, thus they failed in catering to the credit needs of poor section of the society. The prime or major objective of the nationalisation of these banks was to ensure release of huge amounts held by the private banks by way of deposits from general public for the equitable and inclusive credit of the country's economic and facilitate easy access to credit for the common people for the various productivity needs of the masses of this country who were deprived from the resources of the Nation. Nationalisation of Commercial Banks was an attempt to achieve one of the objectives of preamble of the Constitution of India i.e. provide economic justice to its citizens. By nationalisation of the banks, CBI No. 01/15 Page 29 of 64 State through CBI v. S.K. Garg and others Government of India made an attempt to ensure that the benefits of its economic policies be reached in the hands of the poorest among poors and this effort is still going on in the form of launching various social welfare schemes by the Government of India like Pradhan Mantri Jandhan Yojna. In this background, it can safely be said that nationalised banks are the arms of the Government of India to serve masses of this country.
(i) Since, in terms of union list of 7 schedule of the Constitution of India, banking is the affairs of Union Government, thus Nationalised Banks are the affairs of the Union Government. Since, the accused persons were employed in the affairs of Union Government, thus they are entitled for the protection available under Section 197 Cr. P.C provided other condition is fulfilled i.e. if the alleged offence had been committed while acting or purporting to act in discharge of the official duty.
35. Further, it is also pertinent to mention that in Prof. N.K. Ganguly v. CBI (supra), protection under Section 197 Cr. P.C was given to the appellant who was a Director General in the Indian Council of Medical Research, which was a registered society under Society Registration Act, 1860. Similarly in Baijnath Gupta and others v. State of Madhya Pradesh, AIR 1966 220, protection under Section 197 Cr. P.C was considered to the employee of Madhya Bharat Electric Supply which was an enterprises run by the Government of Madhya Bharat. Similarly, in Raghunath Anant Govilkar v. State of Maharashtra and others (2008) 11 SCC 289, protection under Section 197 Cr. P.C was considered to the employee CBI No. 01/15 Page 30 of 64 State through CBI v. S.K. Garg and others of Maharastron Housing and Area Development Authority. Similarly, in Rajib Ranjan and others v. R. Vijay Kumar (2015) 1 SCC 513, protection under Section 197 Cr. P.C was considered to the officers of Jharkhand Electricity Board. From the said judgments, it can safely be culled out that if an organisation is fully owned and controlled by the Government then such organisation is treated as Government for the purpose of providing protection to its employees.
36. In view of the aforesaid discussion, I am of the considered opinion that being the officers of Nationalised Bank, present accused persons are entitled for the protection available under Section 197 Cr. P.C as they were employed by the Government in the affairs of Union i.e. banking and they cannot be removed from their services without the consent of the authority as mentioned in the Rules and Regulations which were enacted by the Parliament.
37. Now, I proceed to deal with the next limb of arguments whether the acts of the accused persons satisfy the last condition i.e. whether the alleged offence had been committed while they acted or purporting to act in discharge of their official duties.
38. In this regard, I deem it appropriate to refer the judgments Hori Ram Singh v. Emperor AIR 1939 FC 43 and Shreekantiah Ramayya Munipalli v. State of Bombay AIR 1955 SC 287, Amrik Singh v. State of Pepsu AIR 1955 SC 309. Since, in Amrik Singh case, first two judgments were discussed in detail, I deem it appropriate to discuss the law laid down in Amrik Singh case (supra).
CBI No. 01/15 Page 31 of 64State through CBI v. S.K. Garg and others
39. In Amrik Singh's case, the allegations against the accused were that his duty was to disburse the wages to workers against their signature or thumb impression in the monthly acquittance roll. It was alleged that he had received the wages of ` 51/- after putting his thumb impression in the said monthly acquittance roll and misappropriated the said amount. Accordingly, he was charge-sheeted for the offence punishable under Section 465/409 IPC. The question of sanction was raised first time before the Apex Court. The moot question arose before the Apex Court whether the sanction under Section 197 (1) Cr. P.C was necessary for the prosecution of appellant under Section 409 IPC or not?
(i) While dealing with the above said question, Hon'ble Apex Court referred to the judgment of Hori Ram Singh v. Emperor (supra) in Para No. 5 and 6 and same are reproduced as under :
Para No. 5. There has been considerable divergence of judicial opinion on the scope of Section 197(1) of the Code of Criminal Procedure. The question has latterly been the subject of consideration by the highest courts in this country, and by the Privy Council, and the position may now be taken to be fairly well-settled. Hori Ram Singh v. Emperor [ AIR 1939 FC 43 : 1939 FCR 159] is a decision of the Federal Court on the necessity for sanction under Section 270 of the Government of India Act, 1935, which is similar in terms to Section 197(1) of the Code of Criminal Procedure. The facts in that case were that a Sub-Assistant Surgeon was charged under Section 409 with having dishonestly removed certain medicines from a hospital which was under his charge, to his own residence, and under Section 477-A, with having failed to enter them in the stock book. The sanction of the Government had not been obtained for the prosecution under Section 270 of the Government CBI No. 01/15 Page 32 of 64 State through CBI v. S.K. Garg and others of India Act, and the point for decision was whether it was necessary. It was held that the charge under Section 477-A required sanction, as "the official capacity is involved in the very act complained of as amounting to a crime"; but that no sanction was required for a charge under Section 409, because "the official capacity is material only in connection with the 'entrustment' and does not necessarily enter into the later act of misappropriation or conversion, which is the act complained of".
Para No. 6. In the course of his judgment, Varadachariar, J. discussed the scope of Section 197(1) of the Code of Criminal Procedure and after observing that the decisions on that section were not uniform, proceeded to group them under three categories those which had held that sanction was necessary when the act complained of attached to the official character of the person doing it, those which had held that it was necessary in all cases in which the official character of the person gave him an opportunity for the commission of the crime, and those which had held it necessary when the offence was committed while the accused was actually engaged in the performance of official duties. The learned Judge expressed his agreement with the first of the three views.
In H.H.B. Gill v. King [ AIR 1948 PC 128 : 75 IA 41] the question arose directly with reference to Section 197(1) of the Code of Criminal Procedure. There, the accused was charged under Section 16 with taking bribes, and under Section 120-B with conspiracy. On the question whether sanction was necessary under Section 197(1) it was held by the Privy Council that there was no difference in scope between that section and Section 270 of the Government of India Act, 1935, and approving the statement of the law by Varadachariar, J. in Hori Ram Singh v. Emperor [ AIR 1939 FC 43 : 1939 FCR 159] Lord Simonds observed:
"A public servant can only be said to act or to purport to act in the discharge of his official duty, if CBI No. 01/15 Page 33 of 64 State through CBI v. S.K. Garg and others his act is such as to lie within the scope of his official duty........The test may well be whether the public servant, if challenged, can reasonably claim that, what he does, he does in virtue of his office".
(emphasis supplied)
(ii) Hon'ble Apex Court summed up the proposition of law in Para No. 7 and same is reproduced as under :
Para No. 7. The result of the authorities may thus be summed up: It is not every offence committed by a public servant that requires sanction for prosecution under Section 197(1) of the Code of Criminal Procedure; nor even every act done by him while he is actually engaged in the performance of his official duties; but if the act complained of is directly concerned with his official duties so that, if questioned, it could be claimed to have been done by virtue of the office, then sanction would be necessary; and that would be so, irrespective of whether it was, in fact, a proper discharge of his duties, because that would really be a matter of defence on the merits, which would have to be investigated at the trial, and could not arise at the stage of the grant of sanction, which must precede the institution of the prosecution.
(emphasis supplied)
(iii) During the course of arguments, State conceded before the Apex Court that the sanction under Section 197 Cr. P.C was required to prosecute the accused for the offence punishable under Section 465 IPC, but took the plea that no sanction was required for the offence punishable under Section 409 IPC and the said issue was dealt with by the Apex Court in Para 8 to 10, which are reproduced as under :CBI No. 01/15 Page 34 of 64
State through CBI v. S.K. Garg and others Para No. 8. It is conceded for the respondent that on the principle above enunciated, sanction would be required for prosecuting the appellant under Section 465, as the charge was in respect of his duty of obtaining signatures or thumb impressions of the employees before wages were paid to them. But he contends that misappropriation of funds could, under no circumstances, be said to be within the scope of the duties of a public servant, that he could not, when charged with it, claim justification for it by virtue of his office, that therefore no sanction under Section 197(1) was necessary, and that the question was concluded by the decisions in Hori Ram Singh v. Emperor [ AIR 1939 FC 43 : 1939 FCR 159] and Albert West Meads v. King [ AIR 1948 PC 156 : 75 IA 185] , in both of which the charges were of criminal misappropriation. We are of opinion that this is too broad a statement of the legal position, and that the two decisions cited lend no support to it. In our judgment, even when the charge is one of misappropriation by a public servant, whether sanction is required under Section 197(1) will depend upon the facts of each case. If the acts complained of are so integrally connected with the duties attaching to the office as to be inseparable from them, then sanction under Section 197(1) would be necessary; but if there was no necessary connection between them and the performance of those duties, the official status furnishing only the occasion or opportunity for the acts, then no sanction would be required.
Para No. 9. Quite recently, this court had to consider in Shreekantiah Ramayya Munipalli v. State of Bombay [ Criminal Appeal No. 89 of 1954] the necessity for sanction under Section 197(1), when the charge was one of misappropriation under Section 409. There, the law was laid down in the following terms:
"The section has content and its language must be CBI No. 01/15 Page 35 of 64 State through CBI v. S.K. Garg and others given meaning.
What it says is -- 'when any public servant ... 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....' We have therefore first to concentrate on the word 'offence'.
Now an offence seldom consists of a single act. It is usually composed of several elements and, as a rule, a whole series of acts must be proved before it can be established. In the present case, the elements alleged against the second accused are, first, that there was an 'entrustment' and/or 'dominion'; second, that the entrustment and/or dominion was 'in his capacity as a public servant'; third, that there was a 'disposal'; and fourth, that the disposal was 'dishonest'. Now it is evident that the entrustment and/or dominion here were in an official capacity, and it is equally evident that there could in this case be no disposal, lawful or otherwise, save by an act done or purporting to be done in an official capacity".
On the facts, it was held in that case that the several acts which were complained of, were official acts, and that the prosecution was bad for want of sanction.
Para No. 10. The decisions in Hori Ram Singh v. Emperor [ AIR 1939 FC 43: 1939 FCR 159] , and Albert WestMeads v. King [ AIR 1948 PC 156 : 75 IA 185] when properly examined, do not support the extreme contention urged on behalf of the respondent. In Hori Ram Singh v. Emperor [ AIR 1939 FC 43 : 1939 FCR 159] the medicines had not been entered in the stock book, and were removed by the accused to his residence, and the CBI No. 01/15 Page 36 of 64 State through CBI v. S.K. Garg and others charge against him was that in so removing them he had committed misappropriation. It was no part of the duty of the accused to remove medicines to his house, and he could not claim that he did so by virtue of his office. He could have made such a claim if he had, let us suppose, entered the medicines in the stock books and shown them as expended in the hospital. But, on the facts, no official act was involved, and that was why Varadachariar, J. observed that, "... so far as the charge under Section 409 was concerned, the acts in respect of which he was intended to be prosecuted could not be regarded as acts done or purported to be done in execution of his duty".
Reference may also be made to the following observations of Sulaiman, J. in the same case:
"The question whether a criminal breach of trust can be committed while purporting to act in execution of his duty is not capable of being answered hypothetically in the abstract, without any reference to the actual facts of the case. An attempt to answer the question in a generalised way has been responsible for loose language used in some of the cases cited before us.... The question whether the act purported to have been done in execution of duty or not must depend on the special circumstances of each case."
(emphasis supplied)
(iv) At last, Apex Court held that the sanction was required in the above said case to prosecute the accused for the offence punishable under Section 409 IPC. In this regard, Para No. 12 is relevant and reproduced as under :CBI No. 01/15 Page 37 of 64
State through CBI v. S.K. Garg and others Para No. 12. In this view, we have to examine whether the acts with which the appellant is charged directly bear on the duties which he has got to discharge as a public servant. The appellant received the sum of ` 51 alleged to have been misappropriated, as Subdivisions Officer, and he admits receipt of the same. Then it was his duty to pay that amount to the khalasi Parma, and take his signature or thumb-impression in acknowledge- ment thereof. The accused does claim to have paid the amount to Parma, and the acquittance roll records the payment, and there is in acknowledgement thereof a thumb-impression as against his name. If what appears on the face of the roll is true and whether it is true or not is not a matter relevant at the stage of sanction then the acts with which the appellant is charged fall within the scope of his duties, and can be justified by him as done by virtue of his office. Clearly, therefore, sanction was required under Section 197(1) of the Code of Criminal Procedure before the appellant could be prosecuted under Section 409, and the absence of such sanction is fatal to the maintainability of the prosecution. The conviction should, therefore, be quashed.
(emphasis supplied)
40. In Harihar Prasad v. State of Bihar (1972) 3 SCC 89, Hon'ble Apex Court after referring to the cases namely Shreekantiah Ramayya Munipalli v. State of Bombay (supra), Amrik Singh v. State of Pepsu (supra) held that no sanction is required in respect of acts complained of in the present case for the charges under Section 120 B IPC read with Section 409 IPC. The said observation is reproduced as under :
" The real question therefore is whether the acts complained of in the present case were directly concerned with the official duties of the three public CBI No. 01/15 Page 38 of 64 State through CBI v. S.K. Garg and others servants. As far as the offence of criminal conspiracy punishable under Section 120-B, read with Section 409 of the Indian Penal Code is concerned and also Section 5(2) of the Prevention of Corruption Act, are concerned they cannot be said to be of the nature mentioned in Section 197 of the Code of Criminal Procedure. To put it shortly, it is no part of the duty of a public servant, while discharging his official duties, to enter into a criminal conspiracy or to indulge in criminal misconduct. Want of sanction under Section 197 of the Code of Criminal Procedure is, therefore, no bar."
(emphasis supplied)
(i) Perusal of the said observations, make it clear that the observations were made in the light of peculiar facts involved in the said case. In the said case, the allegations against the accused persons were that they had not only awarded the contract to their known contractors, but they had also drawn the bills frequently in their own name and gave advance payment to the contractors despite the fact that the contractors had not executed the work as per the terms and conditions. Even they had accepted bribe from the said contractors and the amount was recovered from them. In the light of these peculiar facts, it was held that no sanction was required for the charges of Section 120B IPC read with Section 409 IPC and this is abundantly clear from the observations of Hon'ble Apex Court when it categorically stated that the real question is whether the acts complained of in the present case were directly concerned with the official duties of the three public servants. Thus, as per the observations of Hon'ble Apex Court, no sanction is required because the above facts were not found directly concerned with the official CBI No. 01/15 Page 39 of 64 State through CBI v. S.K. Garg and others duties of the accused persons. The said judgment was clarified by the Apex Court in R. Balakrishna Pillai v. State of Kerala and Another (1996) 1 SCC 478. In the said case, CBI had taken the plea that in view of the finding in Harihar Prasad v. State of Bihar (supra) case, no sanction is required for the offence of conspiracy. The relevant portion of Para No. 6 is reproduced as under:
Para No. 6. The next question is whether the offence alleged against the appellant can be said to have been committed by him while acting or purporting to act in the discharge of his official duty. It was contended by the learned counsel for the State that the charge of conspiracy would not attract Section 197 of the Code for the simple reason that it is no part of the duty of a Minister while discharging his official duties to enter into a criminal conspiracy. In support of his contention, he placed strong reliance on the decision of this Court in Harihar Prasad v. State of Bihar [(1972) 3 SCC 89 : 1972 SCC (Cri) 409 : 1972 Cri LJ 707] . He drew our attention to the observations in paragraph 74 of the judgment where the Court, while considering the question whether the acts complained of were directly concerned with the official duties of the public servants concerned, observed that it was no duty of a public servant to enter into a criminal conspiracy and hence want of sanction under Section 197 of the Code was no bar to the prosecution. The question whether the acts complained of had a direct nexus or relation with the discharge of official duties by the public servant concerned would depend on the facts of each case. There can be no general proposition that whenever there is a charge of criminal conspiracy levelled against a public servant in or out of office the bar of Section 197(1) of the Code would have no application. Such a view would render Section 197(1) of the Code specious.
Therefore, the question would have to be examined in the facts of each case. The observations were made by the Court in the CBI No. 01/15 Page 40 of 64 State through CBI v. S.K. Garg and others special facts of that case which clearly indicated that the criminal conspiracy entered into by the three delinquent public servants had no relation whatsoever with their official duties and, therefore, the bar of Section 197(1) was not attracted. It must also be remembered that the said decision was rendered keeping in view Section 197(1), as it then stood, but we do not base our decision on that distinction. Our attention was next invited to a three-Judge decision in B. Saha v. M.S. Kochar [(1979) 4 SCC 177 : 1979 SCC (Cri) 939] . The relevant observations relied upon are to be found in paragraph 17 of the judgment. It is pointed out that the words "any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty" employed Section 197(1) of the Code, are capable of both a narrow and a wide interpretation but their Lordships pointed out that if they were construed too narrowly, the section will be rendered altogether sterile, for, "it is no part of an official duty to commit an offence, and never can be". At the same time, if they were too widely construed, they will take under their umbrella every act constituting an offence committed in the course of the same transaction in which the official duty is performed or is purported to be performed. The right approach, it was pointed out, was to see that the meaning of this expression lies between these two extremes. While on the one hand, it is not every offence committed by a public servant while engaged in the performance of his official duty, which is entitled to the protection. Only an act constituting an offence directly or reasonably connected with his official duty will require sanction for prosecution. To put it briefly, it is the quality of the act that is important, and if it falls within the scope of the aforequoted words, the protection of Section 197 will have to be extended to the public servant concerned. This decision, therefore, points out what approach the Court should adopt while construing Section 197(1) of the Code and its application to the facts of the case on hand.
(emphasis supplied) CBI No. 01/15 Page 41 of 64 State through CBI v. S.K. Garg and others
(ii) Thus, it becomes clear that mere fact that the investigating agency had filed the charge-sheet under Section 120B IPC read with Section 420/409 IPC is ipso-facto not sufficient to deprive public servants from protection available under Section 197 Cr. P.C. It depends upon facts of each case. If the acts were committed by the public servants in discharge of his official duties, sanction would be required under Section 197 Cr. P.C irrespective of the fact that the said acts attract the provisions of Section 120B IPC read with Section 409/420 IPC.
41. In Matajog Dobey v. H.C. Bhari and others (supra), Apex Court held as under :
"There must be reasonable connection between the act and the discharge of official duty; the act must appear such relation to the duty that the accused could lay a reasonable, but not pretended or fanciful claim that he did it in the course of the performance of his duties."
42. In State of Madhya Pradesh Vs Sheetla Sahai and others (2009) 8 SCC 617, Apex Court propounded the rule of safe and sure test to determine whether the sanction is required for the act complained of public servants or not. In this regard, Para No. 61 is relevant and same is reproduced as under :
Para 61 Strong reliance has been placed by Mr. Tulsi on a judgment of this Court in Centre for Public Interest Litigation and Another Vs Union of India and Another [(2005) 8 SCC 202]. In that case, it was held :
"9 The protection given under Section 197 is to CBI No. 01/15 Page 42 of 64 State through CBI v. S.K. Garg and others protect responsible public servants against the institution of possibly vexatious criminal proceedings for offences alleged to have been committed by them while they are acting or purporting to act as public servants. The policy of the legislature is to afford adequate protection to public servants to ensure that they are not prosecuted for anything done by them in the discharge of their duties without reasonable cause, and if sanction is granted, to confer on the Government, if they choose to exercise it, complete control of the prosecution.
This protection has certain limits and is available only when the alleged act done by the pubic servant is reasonably connected with the discharge of his official duty and is not merely a cloak for doing the objectionable act. If in doing his official duty, he acted in excess of his duty, but there is a reasonable connection between the act and performance of the official duty, the excess will not be a sufficient ground to deprive the public servant, but whether it was committed by a public servant acting or purporting to act as such in the discharge of his official capacity. Before Section 197 can be invoked, it must be shown that the official concerned was accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duties. It is not the duty which requires examination so much as the act, because the official act can be performed both in the discharge of the official duty as well as in dereliction of it. The act must fall within the scope and range of the official duties of the public servant concerned. It is the quality of the act which is important and the protection of this section is available if the act falls within the scope and range of his official duty. There cannot be any universal rule to determine whether there is a reasonable connection between the act done and the official duty, nor is it possible to lay down any such rule. One safe and sure test in this regard would be to consider if the omission or neglect on the part of the public servant to commit the act complained of CBI No. 01/15 Page 43 of 64 State through CBI v. S.K. Garg and others could have made him answerable for a charge of dereliction of his official duty. If the answer to this question is in the affirmative, it may be said that such act was committed by the public servant while acting in the discharge of his official duty and there was every connection with the act complained of and the official duty of the public servant. This aspect makes it clear that the concept of Section 197 does not get immediately attracted on institution of the complaint case.
10. Use of the expression "official duty" implies that the act or omission must have been done by the public servant in the course of his service and that it should have been in discharge of his duty. The section does not extend its protective cover to every act or omission done by a public servant in service but restricts its scope of operation to only those acts or omissions which are done by a public servant in discharge of official duty.
11. If on facts, therefore, it is prima-facie found that the act or omission for which the accused was charged had reasonable connection with discharge of his duty then it must be held to be official to which applicability of Section 197 of the Code cannot be disputed."
(emphasis supplied)
43. Now coming to the judgment Ronald Wood Mathams v. State of West Bengal (supra), no doubt in the said case, it was held by the Apex Court that the charge of conspiracy and bribe do not require any sanction under Section 197 Cr. P.C. However, the observation is required to be looked into in the light of peculiar facts of the said case. In the said case, the allegations against the accused persons were that the some excess payment was made to the contractor and in order to avoid the refund of the excess payment, contractor had entered into a conspiracy with public servants and CBI No. 01/15 Page 44 of 64 State through CBI v. S.K. Garg and others submitted a false claim for construction of the road, which was purported to have been carried out by the contractor in execution of the order placed by one of the appellants. The other accused persons measured the alleged so-called constructed road and prepared the bills. In view of the services rendered in favour of the contractor, they received the bribe of ` 30,000/-. On inquiry, it was revealed that the said road was never constructed by the said contractor; rather it was constructed by the military. In the light of these peculiar facts, it was held that the conspiracy and taking bribe are not part of the official act of the public servants, thus the same do not require any protection under Section 197 Cr. P.C. However, the facts of the case at hand are totally different.
(i) Similarly, facts of the case K. Satwant Singh v. State of Punjab (supra) are totally different from the facts of the case at hand. In the said case, K. Satwant Singh had executed certain work in Burma and thereafter he submitted huge claim running into lakhs of rupees. The said claims were sent by the Government of Burma to Major Henderson at Jhansi for verification as he was officer, who had knowledge of these matters. As per the allegations, Henderson had certified many of these claims to be correct and sent the papers back. On the basis of his certification, the claim was passed in favour of K. Satwant Singh, but later on it was found that K. Satwant Singh had not executed the said work and he had submitted a false claim. Accordingly, the charge-sheet was filed against K. Satwant Singh for the offence punishable under Section 420 IPC and against Henderson for the offence punishable under Section 420/109 IPC. No doubt, in the said case, it was held by the Apex Court that it appears that some CBI No. 01/15 Page 45 of 64 State through CBI v. S.K. Garg and others of the offences cannot by their very nature be regarded as having been committed by public servants while acting or purporting to act in discharge of their official duty. For instance, acceptance of bribe; cheating or abetment thereof. There is no hesitation in saying that where a public servant commits the offence of cheating or abets another so to cheat; the offence committed by him is not one while he is acting or purporting to act in discharge of his official duty; as such offences have no necessary connection between them and performance of the duties of a public servant. Official status furnishing only the occasion or opportunity for commission of the offence. However, it was further held that it is to be remembered that Henderson was not prosecuted for any offence concerning his act of certification. He was prosecuted for abetting the appellant to cheat and further held that Henderson's offence was not one committed by him while acting or purporting to act in discharge of their official duty. From the said judgment, it becomes clear that in the said case, sanction was not required because Henderson was charge-sheeted for the abetment of cheating and he was not charge-sheeted for the false certification in favour of K. Satwant Singh. However, in the instant case, the facts of the case are totally different. In the present case, accused persons are charge-sheeted for the entries made by them in discharge of their official duties, which resulted some wrongful loss to the Banks. Thus, to my mind, the said case is not helpful to the prosecution to deprive the accused persons from the protection available under Section 197 Cr. P.C.
44. In Baijnath Gupta and others v. State of Madhya Pradesh (supra), the allegations were that both the accused persons CBI No. 01/15 Page 46 of 64 State through CBI v. S.K. Garg and others in conspiracy with each other had embezzled the amount of ` 10,000/- on August 25, 1950 from the Government money and made false entries of receipt and expenditure in the concerned Government registers for concealment of this embezzlement. It was further alleged that both the accused persons in conspiracy with each other also embezzled in the sum of ` 21,133.50 on September 29, 1950 and expenditure of ` 1450/- was shown and it was written there that this amount had been remitted in the Treasury, but actually ` 1133.50 were remitted in the Treasury on that day and the balance sum of ` 21,450/- was embezzled and a false entry was made in the accounts book. Accordingly, charge-sheet was filed against them for the offence punishable under Section 409/477A/34 IPC. Though there was a difference of opinion on the point of sanction qua Section 409 IPC, however, there was a firm view of the Hon'ble Bench that the sanction under Section 197 Cr. P.C was required for the acts of making false entries in the accounts book, which is punishable under Section 477A IPC. As per the desisting view, sanction was required for the alleged act of embezzlement, but as per the majority view, no sanction was required under Section 197 Cr. P.C for the act of embezzlement. It was held that the sanction of the State Government was not necessary for the prosecution of Mr. Gupta under Section 409 IPC because the act of criminal misappropriation was not committed by the appellant while he was acting or purporting to act in discharge of his official duties and the offence had no direct connection with the duties of the appellant as a public servant and the official status of the appellants only furnished the appellant with an occasion or an opportunity to commit the offence. But the said observation is to be looked into in the light of peculiar facts of the said case. In the said CBI No. 01/15 Page 47 of 64 State through CBI v. S.K. Garg and others case, allegations were that accused had embezzled the amount from the Government money and made a false entries in the books of account to hide their embezzlement, but the facts of the case at hand are totally different. In the instant case, main allegations are that accused persons had made certain incorrect entries and not sent the intimation to different branches, which resulted the wrongful loss to the Banks. Neither there is any allegation nor evidence to show that accused persons had removed any money unauthorisedly from the cash of Bank and misappropriated the same dishonestly, thus, to my mind, the said judgment is also not helpful to the prosecution in any manner.
45. Recently, Hon'ble Apex Court had considered most of the above said judgments in Prof. N.K. Ganguly v. CBI (supra) after considering the entire case law including observations made by the Apex Court in Parkash Singh Badal v. State of Punjab and others (2007) 1 SCC 1, Hon'ble Apex Court held as under:
" Mr. P.P. Khurana and Mr. Gopal Subramaniam, the learned senior counsel appearing on behalf of some of the appellant, on the other hand, contends that the decision in the Parkash Singh Badal case needs to be appreciated in light of the facts of that case. Thus, while stating that the offences under Sections 420/467/468/471 IPC and 120B IPC can by no stretch of imagination and by their very nature be regarded as having been committed by any public servant while acting of purporting to act in discharge of his official duty, this Court did not mean that merely because an official was charged with an offence under these sections, no sanction was required to be taken.
The learned counsel placed reliance on the CBI No. 01/15 Page 48 of 64 State through CBI v. S.K. Garg and others following paragraph of the judgment to emphasis the same:
"51. In Baijnath v. State of M.P. [1966 (1) SCR 210] the position was succinctly stated as follows:
"... it is the quality of the Act that is important and if it falls within the scope and range of his official duty the protection contemplated by Section 197 of the Code of Criminal Procedure will be attracted."
The learned senior counsel also placed reliance on the three judge bench decision of this Court rendered in the case of Shreekantiah Ramayya Munipalli, referred to supra, wherein it was held as under:
"18. ...... If Section 197 of the Code of Criminal Procedure is construed too narrowly it can never be applied, for of course it is not part of an official's duty to commit an offence and never can be. But it is not the duty we have to examine so much as the act because an official act can be performed in the discharge of official duty as well as in dereliction of it.....
19. Now an offence seldom consists of a single act. It is usually composed of several elements and as a rule a whole series of acts must be proved before it can be established..... Now it is evident that the entrustment and/or domino here were in an official capacity and it is equally evident that there could in this case be no disposal, lawful or otherwise, save by an act done or purporting to be done in an official capacity........."
25. From a perusal of the case law referred to supra, it becomes clear that for the purpose of obtaining previous sanction from the appropriate government under Section 197 of Cr. P.C, it is imperative that the alleged offence is committed in discharge of official duty by the accused. It is also important for the Court to examine the allegations contained in the final report against the Appellants, to decide whether previous sanction is required to be obtained by the respondent from the appropriate CBI No. 01/15 Page 49 of 64 State through CBI v. S.K. Garg and others government before taking cognizance of the alleged offence by the learned Special Judge against the accused. In the instant case, since the allegations made against the Appellants in the final report filed by the respondent that the alleged offences were committed by them in discharge of their official duty, therefore, it was essential for the learned Special Judge to correctly decide as to whether the previous sanction from the Central Government under Section 197 of Cr. P.C was required to be taken by the respondent, before taking cognizance and passing an order issuing summons to the appellants for their presence.
(emphasis supplied)
46. From the aforesaid discussion, the following propositions of law emerge:-
(i) It is not every offence committed by a public servant that requires sanction for prosecution under Section 197 Cr. P.C; nor even every act done by him while he is actually engaged in the performance of his official duties.
(ii) But, if the act complained of is directly concerned with his official duties so that if questioned, it could be claimed to have been done by the public servants by virtue of the office and then sanction would be necessary.
(iii) Even where the charges are for cheating, conspiracy or misappropriation by public servant, question whether the sanction is required under Section 197 (1) Cr. P.C will depend upon facts of the each case. If the acts complained of are so integrally connected with CBI No. 01/15 Page 50 of 64 State through CBI v. S.K. Garg and others the duties attaching to the office so as to be inseparable, sanction would be necessary. If there was no necessary connection between the duty and the act, the official status furnishing only the occasion or opportunity for the acts then no sanction would be required.
(iv) There is no universal rule to determine whether there is a reasonable connection between the act done and the official duty, nor it is possible to lay down any such rule.
(v) However, there is one safe and sure test to determine this connection, if the omission or neglect on the part of public servant to commit the act complained of could have made him answerable for a charge of dereliction of his official duty and if the answer to this question is in affirmative, it may be said that the such act was committed by the public servant while acting in discharge of his official duties and there was every connection with the act complained of and the official duty of the public servant.
(vi) An official act can be performed in discharge of official duty as well as in dereliction of it.
47. It is pertinent to state that in R. Balakrishna Pillai v. State of Kerala and Another (supra), State of Madhya Pradesh v. Sheetla Sahai and others (supra), Prof. N.K. Ganguly v. CBI, accused persons were charge-sheeted by CBI for the offences under Penal Code as well as under Prevention of Corruption Act. Since, CBI had not obtained sanction under Section 197 Cr. P.C and act complained of was found in connection with the discharge of official CBI No. 01/15 Page 51 of 64 State through CBI v. S.K. Garg and others duties, in the said cases, accused persons were discharged from the penal charges.
48. Now I proceed to examine the facts of the case at hand to ascertain whether there is any reasonable connection between the acts of public servants i.e. accused persons and their duties and whether their acts qualify the safe and sure test propounded by the Apex Court in State of Madhya Pradesh vs. Sheetla Sahai and Others (supra).
49. It is admitted case of CBI that the accused persons were working as AGM and FOREX officer respectively in Bank of Baroda, a nationalized bank at Ashok Vihar Branch. As per allegations levelled in the FIR, accused persons by their different acts caused a loss to the tune of ` 13,75,45,819.28.
50. After conducting the investigation CBI concluded as under:-
"Thus, there is sufficient material on record in the form of oral and documentary evidence to show that the aforesaid accused persons by abusing their official position and in criminal conspiracy with each other and the alleged account holders with fraudulent and dishonest intention cheated and misappropriated the funds of the bank to the tune of ` 13,75,45,819.28p causing wrongful loss to the Bank of Baroda, Ashok Vihar Branch, New Delhi".
(i) Thus, it is admitted case of the CBI that the accused persons abused their official position when they caused the above said loss to the bank. To my mind, the said finding is itself sufficient to hold that the offences allegedly committed by the accused persons CBI No. 01/15 Page 52 of 64 State through CBI v. S.K. Garg and others were committed while they acted or purported to act in discharge of their official duties being public servants. However, in order to ascertain whether there was any connection between their acts and their official duties or not, I prefer to deal with each category of acts also.
51. As per chargesheet, the accused persons had caused the said loss to the bank by the following types of acts:-
(a) Loss by way of Punching wrong Exchange Rate
(b) Deletion of debit entries manually
(c) Deleting office accounts and crediting the accounts of accused firms
(d) Non Realising Rupees against USDs
(e) Debiting the accounts without authority
(f) Non reporting the transaction to Treasury Branch and not sending Swift Message
52. Now, I take up the said acts one by one.
(a) Loss by way of Punching wrong Exchange Rate:-
53. As per chargtee-sheet, the modus-operandi adopted by the accused bank officials was that instead of obtaining on-going exchange rate from Treasury Branch, Mumbai and punching the same Exchange Rate to USD; which might be around 01 USD=INR 62 to 65, they punched Exchange Rate as 1.00 /0.0001/ 0.001 in the system.
CBI No. 01/15 Page 53 of 64State through CBI v. S.K. Garg and others As a result, the customer's accounts were debited with a meagre amount against the foreign exchange remittance, resulting in direct loss to the bank. It was alleged that this modus-operandi was adopted in 16 foreign remittances. In the chargesheet, CBI also mentioned the Code number of the bank officials who created, posted and verified the said transactions.
(i) Assuming for the sake of arguments that the above allegations are gospel truth, but these allegations prima-facie show that the said bank officials had punched wrong Exchange Rate while they were discharging their duties in the bank. Thus, there was a reasonable connection between their acts and the official duties. Further, to my mind, the said allegations also qualify the safe and sure test as propounded by the Apex Court in State of Madhya Pradesh vs. Sheetla Sahai and Others (supra).
(ii) Perusal of the chargesheet reveals that none of these 16 foreign remittances were created by either of the accused persons. Rather, same were created by Mr. Kapil Khatri, Ms. Pooja Verma and Mr. Akash Khatri. But no action was taken against them.
(iii) No doubt as per chargesheet, 13 entries were posted by accused Jainis Dubey but remaining three entries were posted by two other bank officials namely Gaurav Sharma and Mr. Kapil Khatri but no action was taken against them.
(iv) No doubt as per chargesheet all entries except three were verified by accused Jainis Dubey. Though the three entries were CBI No. 01/15 Page 54 of 64 State through CBI v. S.K. Garg and others verified by two different persons namely Mr. Gaurav Sharma and Mr. Kapil Khatri, but no action was taken against them.
(b) Deletion of debit entries manually:-
54. As per charge-sheet, the modus operandi adopted by the accused bank official was the transactions of foreign remittance were not reported to Treasury Branch, Mumbai for which SWIFT message had already been sent by the Branch to the concerned Overseas Branch. By way of sending the SWIFT message by the Branch, the Overseas Bank debited the Nostro account of Treasury Branch, Mumbai and credited the bank of Beneficiary with the equal amount of USD. However, since the said transactions were not reported to the Treasury Branch, the amount of foreign remittances were not reconciled with the NOSTRO Account and the amounts are still outstanding.
(i) Assuming the above allegations as gospel truth, but the said allegations at the most indicate that it is a case of some lapses on the part of bank officials and it is settled law that official act also indicates dereliction of duty. Thus, to my mind there was a reasonable connection between the alleged acts and the official duties of the bank officials. Further, the said acts also qualify the safe and sure test as propounded by the Apex Court in State of Madhya Pradesh vs. Sheetla Sahai and Others (supra).
(ii) Further, from the chargesheet it appears that though two transactions were created by two different persons namely Mr. CBI No. 01/15 Page 55 of 64 State through CBI v. S.K. Garg and others Kapil Khatri and Mr. Satish Kumar Meena, but surprisingly no action was taken against them. Similarly, eight transactions out of nine transactions were posted by different persons namely Mr. Satish Kumar Meena and Mr. Kapil Khatri. But no action was taken against these two persons. Though only single transaction was posted by accused Jainis Dubey but he had been held liable for all the transactions.
(iii) As per chargesheet, three transactions were verified by two different persons namely Mr. Satish Kumar Meena and Mr. Kapil Khatri whereas remaining transactions were verified by the system itself but no action had been taken against these two persons.
(c) Debiting office accounts and crediting the accounts of accused firms:-
55. As per chargesheet, in 22 accounts, amounts were debited from BITTA account and accounts of the said companies were credited as there were no sufficient funds available in the account of respective companies at the time of transactions. Subsequently, the debit entries in the BITTA account were adjusted either by debiting the account of the same party or the account of some other party. However, the amount mentioned in the table as recited in the chargesheet are the amount for which foreign remittances were made by the Bank but the amounts are still outstanding against the accounts of the company, thus bank had to recover the outstanding amount to the tune of ` 18,96,31,458.58.
(i) From the above allegations, it appears that the entries CBI No. 01/15 Page 56 of 64 State through CBI v. S.K. Garg and others were made for the purpose of adjustment. Though the name of bank officials who made the entries is not mentioned in the chargesheet, yet it appears that the Bank officials whosoever made the entries had made the same while acting his duties as the bank official, thus it cannot be said that there was no reasonable action between the alleged entries or the duties performed by the bank officials.
(ii) Further, as per chargesheet, two entries are related to the Rani Bagh Branch; one entry each relates to Ram Pura Branch, Parliament Street Branch and Netaji Subhash Place Branch. Remaining entries relate to Ashok Vihar Branch. It is admitted case of CBI that both the accused persons were posted at Ashok Vihar Branch but they were also held responsible for the entries which relate to other branches. Surprisingly, no action had been taken against the bank officials of the said branches.
(d) Non Realising Rupees against USDs:-
56. As per chargesheet, in seven accounts, amount was credited in the account against US Dollar/Travel Card deposited by the account holders. It was also alleged that the said seven accounts are not related to the alleged Related/group accounts. In the chargesheet, CBI has mentioned the detail of five accounts as under:-
(i) It was alleged that in the account of M/s Mohan Plastics and M/s Centrum Direct, the foreign currencies were shown to have been received in the respective accounts and the accounts were equivalently credited in Indian rupees debiting BITTA but the fate of CBI No. 01/15 Page 57 of 64 State through CBI v. S.K. Garg and others physical foreign currency deposited by the concerned party is yet not known. It was alleged that it is the apparent that the same were misappropriated by the public servants. However, in the chargesheet, it is not specified who had misappropriated the said foreign currencies.
(ii) As per the statement of PW Inder Mohan Gupta, proprietor of M/s Mohan Plastics Industries stated before the CBI that he used to deposit the remaining foreign currencies with the Bank of Baroda, Jawahar Nagar Branch where he was maintaining a current account. He further stated before the CBI that vide application dated January 28, 2015 he had deposited 17000 US Dollar in the Bank of Baroda, Jawahar Nagar Branch to credit in his account with the equivalent rupees. Accordingly, the Branch had credited a sum of ` 10,40,400/- in his account on February 2, 2015.
(iii) PW Begraj, Chief Manager of Jawahar Nagar Branch corroborated the statement of PW Inder Mohan Gupta and further stated that since his Branch was 'C' Category Branch, Branch was not dealing in foreign exchange. He further clarified that whenever any customer deposits any foreign currency with a request to credit his account with equivalent Indian rupee, the said foreign currency is forwarded to the Ashok Vihar Branch through a covering letter of the Bank and on receipt of the foreign currency, the Ashok Vihar Branch credits the account of the customer with equivalent Indian rupee. He further states that he sent the deposited foreign currency through covering letter dated January 28, 2015 to the AGM and further stated that since Mr. Jainis Dubey was Incharge of Foreign Exchange at Ashok Vihar Branch, thus as per the guidelines, foreign currencies to CBI No. 01/15 Page 58 of 64 State through CBI v. S.K. Garg and others be delivered to him.
(iv) It is admitted case of the CBI that the foreign currencies were deposited to the customers by Inder Mohan Gupta in his Branch at Jawahar Nagar, which was sent by PW Begraj to the AGM of Ashok Vihar Branch through his covering letter dated January 28, 2015. It is also admitted case of CBI that the due credit was given in the account of customer against the said foreign currency by the Ashok Vihar Branch. Thus, it is admitted case of CBI that the foreign currency was received by the bank officials of Ashok Vihar Branch in discharge of their officials duties and they have given the credit in discharge of their official duties. Mere physical status of the said currency is not known is not sufficient to say that there was no reasonable connection between the acts of the bank officials and their official duties. Moreover, I am of the view that the alleged acts of the bank officials also qualify the safe and sure test as propounded by the Apex Court in State of Madhya Pradesh vs. Sheetla Sahai and Others (supra).
(v) No detail of the foreign currency allegedly deposited by M/s Centrum Direct is mentioned in the chargesheet. Even no statement of any official from the said company is recorded.
(vi) It was further alleged that M/s Surgion Health Care had requested the Branch to cancel his Travel Card and to credit the balance amount of the said Card in its account. It was further alleged that the balance was credited in the account of said company by debiting the BITTA but the said Card transaction was not reported to CBI No. 01/15 Page 59 of 64 State through CBI v. S.K. Garg and others the Treasury Branch, Mumbai for getting BITTA credited. Moreover, the whereabouts of said Card is not known.
(vii) Assuming that above allegations are gospel truth.
But it cannot said that there was no reasonable connection between the alleged acts and the official duties of the bank officials. Non reporting to the Treasury Branch, Mumbai may be a lapse on the part of bank officials. But the said lapse is not sufficient to show that there was no connection between the act and the official duties as it is settled law that dereliction in duties is also connected with official duties.
(viii) Similar allegations were also made relating to entries made in the account of M/s S.B.Industries and Hind Kirana Company, M/s Ocean De Fashion and M/s Sunil Woollen Mills.
(ix) Further, as per charge-sheet only one account i.e. account of M/s Sunil Woollen Mills was maintained at Ashok Vihar Branch. The other six accounts were maintained at different branches. This shows that the Branch must have received a request from the other branches to make entries but there are certain lapses or deficiencies at the end of bank officials of Ashok Vihar Branch. But it cannot be said that there was no reasonable connection between the alleged lapses and the acts of the bank officials of Ashok Vihar Branch.
(e) Debiting the accounts without authority:-
CBI No. 01/15 Page 60 of 64State through CBI v. S.K. Garg and others
57. It was alleged that certain accounts were debited without the authority of the concerned firm/company and accordingly, the BITTA account of the said Bank was credited. Thus, the Bank is liable to pay the respective amounts to the concerned firms/companies. It was further alleged that it was done with intent to adjust the Console Office Account of the bank as the said account was debited to credit the accounts of accused companies.
(i) From the allegations, it is clear that the said entries were made to adjust the console office account and not due to any dishonest intention.
(ii) As per chargesheet, three accounts were credited by two Branches namely Shalimar Bagh Branch and Rani Bagh Branch. The remaining entries were made in the account maintained at Ashok Vihar Branch.
(iii) There is nothing on the record which may show that there was no reasonable connection between the alleged entries made by the Bank officials of Ashok Vihar and their official duties. Further, the alleged entries prima-facie shows that the acts of the bank officials qualify the safe and sure test proponded by the Apex Court in State of Madhya Pradesh vs. Sheetla Sahai and Others (supra).
(f) Not reporting the transaction to Treasury Branch and not sending Swift Message:-
58. As per allegations, the amount was debited in two accounts and the BITTA was credited with corresponding amounts.
CBI No. 01/15 Page 61 of 64State through CBI v. S.K. Garg and others However, no reporting was made to Treasury Branch and SWIFT message was also not sent to the Overseas Bank. As per allegations, subsequently BITTA funds were adjusted against the amount due towards the accused companies, therefore, the bank is liable to pay the respective amount to the said parties.
(i) Assuming for the sake of arguments that the above allegations are true, but these allegations are not sufficient in any manner to show that there was no connection between the alleged acts and the official duties of the bank officials. Rather, since entries were made by the bank officials in the accounts of two firms in discharge of their duties it prima-facie shows that the same were made by the Bank official while discharging their official duties. There may be some lapses on the part of bank officials as they had not sent the SWIFT message and intimation to the Treasury Branch, Mumbai. But the said lapses are not sufficient to show that there was no connection between their acts and their duties. As already stated that dereliction in performing the duty is also connected with official duties. Thus, I am of the view that there was not only reasonable connection between the alleged acts and official duties of the bank officials but the said acts also qualify the safe and sure test as propounded by the Apex Court in State of Madhya Pradesh vs. Sheetla Sahai and Others (supra).
59. From the above discussion, it becomes clear that the role attributed to the accused persons are that they had made certain entries in different accounts, which they should not have been made being the responsible bank officials. It was alleged that they had made CBI No. 01/15 Page 62 of 64 State through CBI v. S.K. Garg and others the said entries as they were in conspiracy with certain unknown accused persons and their said acts caused wrongful loss to the bank. It is pertinent to state that in case Baijnath Gupta and others v. State of M.P. (supra), Amrik Singh v. State of Pepsu (supra), Hori Ram v. Emperor (supra) allegations were levelled that they had made deliberately fictitious entries in the books of accounts to commit cheating or misappropriation of funds, however in all the said cases, it was held that making of such entries in the books of accounts had relation in connection with the discharge of their officials duties, thus sanction was required under Section 197 Cr.P.C for the offence relating to making the said entries. Accordingly, in the present case also, I am of the view that the entries in question were made by the bank officials while performing their duties as the bank officer being public servants. Thus, their acts had reasonable connection with their official duties. Whatever lapses mentioned in the chargesheet are not sufficient to show that there was no reasonable connection between their alleged acts and official duties. Rather, lapses shows that they did not perform their duties diligently and it is settled law that dereliction in discharge of official duties is not sufficient to show that there was no connection between the acts and the official duties. Rather, it shows that there was reasonable connection between the acts and the official duties.
60. In the light of the aforesaid discussion, I am of the considered opinion that being the government servant, both the accused persons are entitled for the protection available under Section 197 Cr.P.C. Since, in this case CBI had not obtained mandatory sanction under 197 Cr.P.C for the offences punishable CBI No. 01/15 Page 63 of 64 State through CBI v. S.K. Garg and others under Section 120B read with 420/409 IPC, no cognizance can be taken by this Court for the said offences, accordingly, I hereby decline to take cognizance for the above said offences for want of mandatory sanction under 197 Cr. P.C.
61. However, in my view there are sufficient evidence on record to take cognizance for the offence punishable under Section 13(2) read with 13(1)(c) & (d) of Prevention of Corruption Act, 1988, accordingly I take cognizance for the same.
Announced in the open Court (PAWAN KUMAR JAIN) nd on this 2 February, 2016 Special Judge-01, CBI, North West Rohini Courts, Delhi CBI No. 01/15 Page 64 of 64