# & FRAUD CELL v. RAMESH GELLI AND OTHERS

- **Citation:** [2016] 1 S.C.R. 762
- **Court:** Supreme Court of India
- **Decided:** 2016-02-23
- **Case number:** Criminal Appeal Nos. I 077-1081 of2013
- **Bench:** Prafulla C. Pant, RANJAN GOGOi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/fraud-cell-v-ramesh-gelli-and-others-31105
- **Pages:** 25

## Headnote

Prevention of Corruption Act, 1988 - s. 13(2) read with s.
J 3(1)(d) - Banking Regulation Act, 1949 - s. 46A - Chairman,
Directors and Officers of GTE-private bank, before its amalgamation
with the Oriental Bank of Commerce - Whether public servants for
the purposes of their prosecution in respect of offences punishable
under the PC Act - Held: Chairman/Managing Director and
Executive Director of GTE bank are public servants for the purposes
of PC Act by virtue of s. 46A of the Banking Regulation Act, 1949 -
Jn view of definition of public servant in s. 46A as amended, the
Managing Director and Executive Director of a Banking Company
operating under licence issued by Reserve Bank of India, were
already public servants, as such they cannot be excluded from
definition of 'public servant' - Merely because the PC Act repealed
ss. 161 to 165A !PC, it cannot be said, that the legislature had
illlention to make s. 46A inapplicable for the purposes of PC Act -
Law which is not shown ultra vires must be given proper meaning -
s. 46A cannot be left meaningless and requires harmonious
construction - Interpretation of statutes.
Allowing the appeal filed by CBI and dismissing the writ
petition filed by accused, the Court
PER PRAFULLA C. PANT, J.
HELD: 1.1 The object of enactment of Prevention of
Corruption Act, 1988, was to make the anti corruption law more
effective and widen its coverage. In view of definition of public
servant in Section 46A of Banking Regulation Act, 1949 as
amended the Managing Director and Executive Director of :i
Banking Company operating under licence issued by Reserve
Bank of India, were already public servants, as such they cannot
be excluded from definition of 'public servant'. Over the general
definition of 'public servant' given in Section 21 IPC, it is_ the
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CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
definition of 'public servant' given in the P.C. Act read with Section
46-A of Banking Regulation Act, which holds the field for the
purposes of offences under the said Act. For banking business
what cannot be forgotten is Section 46A of Banking Regulation
Act, 1949 and merely for the reason that Sections 161 to 165A
IPC have been repealed by the P.C. Act, 1988, relevance of Section
46A of Banking Regulation Act, 1949, is not lost. [Para 24] [779B-D]
1.2 When P.C. Act, 1988 came into force, Section 46 of
Banking Regulation Act, 1949 was already in place, and since
the scope of P.C. Act, 1988 was to widen the definition of "public
servant", as such, merely for the reason that in 1994, while
clarifying the word "chairman", legislature did not substitute
words "for the purposes of P.C. Act, 1988" for the expression
"for the purposes of Chapter IX of the Penal Code in Section
46A of Banking Regulation Act, 1949, it cannot be said, that the
legislature had intention to make Section 46A inapplicable· for
the purposes of P.C. Act, 1988, by which Sections 161 to 165A
IPC were omitted, and the offences stood replaced by Sections 7
to 12 of P.C. Act, 1988. [Para 25] [779-E-F]
1.3 A law which is not shown ultra vires must be given
proper meaning. Section 46-A of Banking Regulation Act, 1949,
cannot be left meaningless and requires harmonious construction.
As such, the Special Judge (CBI) erred in not taking cognizance
of offence punishable under Section 13(2) read with Section
13(1)(d) of P.C. Act, 1988. However, the accused cannot be said
to be public servant within the meaning of Section 21 IPC, as
such offence under Section 409 IPC may not get attracted, it is
left open for the trial court to take cognizance Qf other offences
punishable under the Penal Code, if the same get attracted.
Therefore, the courts below erred in law in holding that accused
who were Chairman/Managing Director and Executive Director
of GTB respectively, were not public servants for the purposes
of Prevention of Corruption Act, 1988. As such, the orders
impugned are set aside. [Paras 26, 27] [779-G-H; 780-A-C]
Govt. of Andhra Pradesh and

## Text

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[2016] l S.C.R. 762
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CENTRAL BUREAU OF INVESTIGATION, BANK SECURITIES
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& FRAUD CELL
v.
RAMESH GELL! AND OTHERS
(Criminal Appeal Nos. I 077-1081 of2013)
FEBRUARY 23, 2016
[PRAFULLA C. PANT AND RANJAN GOGOi, JJ.)
Prevention of Corruption Act, 1988 - s. 13(2) read with s.
J 3(1)(d) - Banking Regulation Act, 1949 - s. 46A - Chairman,
Directors and Officers of GTE-private bank, before its amalgamation
with the Oriental Bank of Commerce - Whether public servants for
the purposes of their prosecution in respect of offences punishable
under the PC Act - Held: Chairman/Managing Director and
Executive Director of GTE bank are public servants for the purposes
of PC Act by virtue of s. 46A of the Banking Regulation Act, 1949 -
Jn view of definition of public servant in s. 46A as amended, the
Managing Director and Executive Director of a Banking Company
operating under licence issued by Reserve Bank of India, were
already public servants, as such they cannot be excluded from
definition of 'public servant' - Merely because the PC Act repealed
ss. 161 to 165A !PC, it cannot be said, that the legislature had
illlention to make s. 46A inapplicable for the purposes of PC Act -
Law which is not shown ultra vires must be given proper meaning -
s. 46A cannot be left meaningless and requires harmonious
construction - Interpretation of statutes.
Allowing the appeal filed by CBI and dismissing the writ
petition filed by accused, the Court
PER PRAFULLA C. PANT, J.
HELD: 1.1 The object of enactment of Prevention of
Corruption Act, 1988, was to make the anti corruption law more
effective and widen its coverage. In view of definition of public
servant in Section 46A of Banking Regulation Act, 1949 as
amended the Managing Director and Executive Director of :i
Banking Company operating under licence issued by Reserve
Bank of India, were already public servants, as such they cannot
be excluded from definition of 'public servant'. Over the general
definition of 'public servant' given in Section 21 IPC, it is_ the
762
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
definition of 'public servant' given in the P.C. Act read with Section
46-A of Banking Regulation Act, which holds the field for the
purposes of offences under the said Act. For banking business
what cannot be forgotten is Section 46A of Banking Regulation
Act, 1949 and merely for the reason that Sections 161 to 165A
IPC have been repealed by the P.C. Act, 1988, relevance of Section
46A of Banking Regulation Act, 1949, is not lost. [Para 24] [779B-D]
1.2 When P.C. Act, 1988 came into force, Section 46 of
Banking Regulation Act, 1949 was already in place, and since
the scope of P.C. Act, 1988 was to widen the definition of "public
servant", as such, merely for the reason that in 1994, while
clarifying the word "chairman", legislature did not substitute
words "for the purposes of P.C. Act, 1988" for the expression
"for the purposes of Chapter IX of the Penal Code in Section
46A of Banking Regulation Act, 1949, it cannot be said, that the
legislature had intention to make Section 46A inapplicable· for
the purposes of P.C. Act, 1988, by which Sections 161 to 165A
IPC were omitted, and the offences stood replaced by Sections 7
to 12 of P.C. Act, 1988. [Para 25] [779-E-F]
1.3 A law which is not shown ultra vires must be given
proper meaning. Section 46-A of Banking Regulation Act, 1949,
cannot be left meaningless and requires harmonious construction.
As such, the Special Judge (CBI) erred in not taking cognizance
of offence punishable under Section 13(2) read with Section
13(1)(d) of P.C. Act, 1988. However, the accused cannot be said
to be public servant within the meaning of Section 21 IPC, as
such offence under Section 409 IPC may not get attracted, it is
left open for the trial court to take cognizance Qf other offences
punishable under the Penal Code, if the same get attracted.
Therefore, the courts below erred in law in holding that accused
who were Chairman/Managing Director and Executive Director
of GTB respectively, were not public servants for the purposes
of Prevention of Corruption Act, 1988. As such, the orders
impugned are set aside. [Paras 26, 27] [779-G-H; 780-A-C]
Govt. of Andhra Pradesh and Others vs. P Venku Reddy
2002 (2) Suppl. SCR 538: (2002) 7 SCC 631; Federal
Bank Ltd. vs. Sagar Thomas and others 2003 (4) Suppl.
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(2016] I S.C.R.
SCR 121: (2003) 10 SCC 733; State of Maharashtra
& ors. vs. Brij/a/ Sadasukh Modanin 2015 SCC Online
SC 1403; P. V. Narasimha Rao vs. State (CBIISPEJ 1998
(2) SCR 870: (1998) 4 SCC 626; Housing Board of
Haryana v. Hwyana Housing Board Employees' Union
and others 1995 (4) Suppl. SCR 533: (1996) 1 SCC
95; Manish Trivedi v. State of Rajas than 2013 (12) SCR
205: (2014) 14 sec 420 - referred to.
PER RANJAN GOGOi, J. (SUPPLEMENTING):
1.1 The definition of public duty in Section 2(b) of the PC
Act, indeed, is wide. Discharge of duties in which the State, the
public or the community at large has an interest has been brought
within the ambit of the expression 'public duty'. Performance of
such public duty by a person who is holding an office which requires
or authorize him to perform such duty is the si11e qua 11011 of the
definitiQn of the public servant contained in Section 2(c)(viii) of
the PC Act. [Para 5) [781-E-F]
1.2 In the objects and reasons stated for enactment of the
Prevention of Corruption Act, 1988 it has been made more than
clear that the Act, illfer 11/ia, envisages widening of the scope of
th'e 'definition of public servant, nevertheless, the mere
performance of public duties by the holder of any office cannot
bring the incumbent within the meaning of the expression 'public
servant' as contained in Section 2(c) of the PC Act. The broad
definition of 'public duty' contained in Section 2(b) would be
capable of encompassing any duty attached to any office inasmuch
as in the cootem porary scenario there is hardly any office whose
duties cannot, in the last resort, be traced to having a bearing on
public interest' or the interest of the community at large. Such a
wide understanding of the definition of public servant may have
the effect of obliterating all distinctions between the holder of a
private office or a public office ought to be maintained. Therefore,
it would be more reasonable to understand the expression "public
servant" by reference to the office and the duties performed in
connection therewith to be of a public character. [Para 7) [782-AD)
1.3 Section 46A, was amended by Act 20 of 1994 to bring
within its fold a larger category of functionaries of a banking
company. Earlier, only the chairman, director and auditor had
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
come within the pnrview of the Section 46A. By virtue of Section
46A, office bearers/employees of a Banking Company (including
a Private Banking Company) were "public servants" for the
purposes of Chapter IX I.P.C. with the enactment of the PC Act
the offences under Section 161 to 165A included in Chapter IX
of Code came to be deleted from the said Chapter IX and
engrafted under Sections 7 to 12 of the PC Act. With the deletion
of the said provisions from Chapter IX of the I.P.C. and inclusion
of the same in the PC Act there ought to have been a
corresponding insertion in Section 46A of the BR Act with regard
to the deeming provision therein being continued in respect of
officials of a Banking Company insofar as the offences under
Sections 7 to 12 of the PC Act are concerned. However, the same
was not done. The Court need not speculate the reasons therefor,
though, perhaps one possible reason could be the wide expanse
of the definition of "public servant" as made by Section 2(c) of
the PC Act. In a situation where the legislative intent behind the
enactment of the PC Act was, inter alia, to expand the definition
of "public servant'', the omission to incorporate the relevant
provisions of the PC Act in Section 46A of the BR Act after
deletion of Sections 161 to 165A of the I.P.C. from Chapter IX
can be construed to be a wholly unintended legislative omission
which the Court can fill up by a process of interpretation. Though
the rule of casus omissus i.e. "what has not been provided for in
the statute cannot be supplied by the Courts" is a strict rule of
interpretation there are certain well known exceptions thereto.
[Paras 8, 10) [782-F-H; 783-A-EJ
1.4 The enactment of the PC Act with the clear intent to
widen the definition of 'public servant' cannot be allowed to have
the opposite effect by expressing judicial helplessness to rectify
or fill up what is a clear omission in .Section 46A. The omission to
continue to extend the deeming provisions in Section 46A to the
offences under Sections 7 to 12 of the PC Act must be understood
to be clearly unintended and hence capable of admitting a judicial
exercise to fill up the same. The unequivocal legislative intent to
widen the definition of "public servant" by enacting the PC Act
cannot be allowed to be defeated by interpreting and
understanding the omission in Section 46A of the BR Act to be
incapable of being filled up by the court. [Para 13] (786-C-D]
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P. V Narasimha Rao vs. Stare (CBIISPE) 1998 (2) SCR
870:(1998) 4 SCC 626; Bangalore Water Supply &
Sewerage Board Vs. A Rajappa and Others 1978 (3)
SCR 207:(1978) 2 SCC 213; Dadi Jagannadham Vs.
Jammulu Ramulu and others 2001 (2) Suppl. SCR
60:(2001) 7 sec 71 - referred to.
McMillan Vs. Guest (1942) AC 561; Seaford Court
Estates Ltd. Vs. Asher (1949) 2 AllER 155; Magar &
St. Mellons Rural District Council Vs. Newport
Corporation (1950) 2 AUER 1226 - referred to.
Case Law Reference
In the judi:;ment of Prafulla C. Pant, J.
2002 (2) Suppl. SCR 538
referred to.
Para 10
2003 (4) Suppl. SCR 121
referred to.
Para 10
2015 SCC Online SC 1403
referred to.
Para 19
1998 (~) SCR 870
referred to.
Para.20
1995 (4) Suppl. SCR 533
referred to.
Para 21
2013 (12) SCR 205
referred to.
Para 22
In the judi:;ment of Ranjan Goi:;oi, J.
1998 (2) SCR 870
referred to
Para 6
1978 (3) SCR 207
referred to
Para 11
2001 (2) Suppl. SCR 60
referred to
Para 12
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
Nos. 1077-1081 of2013
From the Judgment and Order dated 13.07.2009 of the High Court
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of Judicature at Mumbai in Criminal Revision Application No. 131 of
2007 with Criminal Writ Petition No. 2400 of2008 to 2403 of2008
WITH
W. P. (CRL.) NO. 167 OF 2015
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Tushar Mehta,ASG, Rana Mukherjee, Mohan Parasaran, Siddharth
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
767
Luthra, Ranjana Narayan, T. A. Khan, B. V. Bairam Das, Arvind Kumar
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Sharma, G. Umapathy, R. Mekhala, Rakesh K. Sharma, Bina Gupta,
Viraj Gandhi, Sameer Chaudhary, Purnima Raj, Abhisaar Bairagi, Pallav
Pal it, {for M/s. Khaitan & Co.) for the appearing parties.
The Judgments of the Court were delivered by
PRAFULLA C. PANT, J. l. Appellant Central Bureau of
Investigation (C.B.I) has challenged the judgment and order dated
13.07.2009, passed by the High Court ofJudicature at Bombay whereby
Criminal Revision Application No. 131 of2007 (filed by CBI) has been
dismissed, and Criminal Writ Petition Nos. 2400, 2401, 2402 and 2403 of
2008, filed by the accused/respondent are allowed in part, and upheld
the order dated 05.02.2007 passed by the trial court i.e. Special Judge/
Additional Sessions Judge, Mumbai. The courts below have held that
cognizance cannot be taken against the accused namely Ramesh Gelli
Chairman and Managing Director, and Sridhar Subasri, Executive
Director of Global Trust Bank, on the ground that they are not public
servants.
2. Writ Petition (Criminal) No. 167of2015 has been filed before
this Court by accused Ramesh Gelli praying quashing of charge sheet
'
filed by CBI in connection with FIR No. RC BO. I I 2005/E/0003 dated
31.03.2005 relating to offences punishable under Section l 20B read with
Sections 420, 467, 468, 471 of Indian Penal Code (!PC) and offence
punishable under Section 13(2) read with Section 13( I)( d) of the
Prevention of Corruption Act, 1988 (for short "the P.C. Act, 1988"),
pending before Special Judge, CBI, Patiala House Courts, New Delhi.
3. Briefly stated prosecution case is that the Global Trust Bank
(hereinafter referred as "GTB.'') was incorporated on 29. I 0.1993 as
banking company under Companies Act, 1956. Said Bank was issued
licence dated 06.09 .1994 under Banking Regulation Act, 1949 by Reserve
Bank of India (for short "RBI"). Ramesh Gelli (writ petitioner before
this Court) was Chairman and Managing Director, and Sridhar Subasri
(writ petitioner before the High Court) was Executive Director of the
Bank. The two were also promoters of GTB. For raising their
contribution to the capital, the two accused (Ramesh Ge Iii and Sridhar
Subasri) obtained loans from various individuals and companies, including
Mis. Beautiful Group of Companies of accused Rajesh Mehta and Vijay
Mehta, and Mis. TrinityTechnomics Services Pvt. Ltd., of which accused
Vijay Mehta and his employees were directors. Mis. Beautiful Group
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of Companies opened their first account in the name of Beautiful
Diamonds Ltd. with G.T.B. in the year 1994-95. Investigation revealed
that various credit facilities were allowed to said company by Ramesh
Gelli and Sridhar Subasri, and they fraudulently instructed the branch
heads, without following norms for sanctioning the credit facilities. The
duo (Ramesh Gel Ii and Sridhar Subasri), abusing their official positions,
sanctioned higher credit limits to Mis. Beautiful Diamonds Ltd. against
regulations. According to CBI, the investigation further revealed that in
pursuance to the alleged conspiracy of the accused the funds of GTB
were diverted, and release of Rs.5.00 crores was made in the name of
Mis. Beautiful Realtors Ltd. on the request of Directors of Mis. Beautiful
Diamonds Ltd. Said amount was further transferred to already overdrawn
account ofM/s. Beautiful Diamonds Ltd. In April, 2001, Directors of
Beautiful Group of Companies in pursuance of conspiracy with other
accused submitted another application for sanction of Rs.3 .00 crores as
diamond loan in the name ofM/s. Crystal Gems. Ramesh Ge Iii, Sridhar
Subasri and other accused, who were Directors of Beautiful Group of
Companies, said to have caused total wrongful loss of about Rs.41.00
crores to GTB. The accounts of Beautiful Diamonds Ltd. and other
companies, which availed funds from GTB, should have been declared
Non Performing Assets (NPA), but accused Ramesh Gelli and Sridhar
Subasri allegedly manipulated and showed the accounts of Beautiful
Realtors Ltd. and Crystal Gems as higher profit yielding accounts. The
scam did not come to the light till 2005.
4. On 14.08.2004 GTB merged/amalgamated with Oriental Bank
of Commerce (for brevity "OBC"). An FIR dated 31.03 .2005 in respect
ofoffences punishable under Sections 420, 467, 468, 471 !PC and under
Section 13(2) read with Section 13(1)(d) of the P.C. Act of 1988 was
registered by C.B.I on the complaint made by the ChiefVigilance Officer,
OBC, wherein the allegations were made that Ramesh Ge Iii and others,
including Directors ofM/s. World Tex Limited (for short "WTL") entered
into a criminal conspiracy to cheat GTB causing wrongful loss to the
tune of Rs.17.46 crores, and thereby earned corresponding wrongful
gain. After investigation, charge sheet was filed in said matter before
the Special Judge, CBI, Patiala House Courts, New Delhi.
5. Another First Information Report No. RC.12(E)/2005 I CBI!
BS & FC/Mumbai was registered by C.B.I. on 09.08.2005 for offences
punishable under Section 120B read with Sections 409 and 420 !PC,
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
[PRAFULLA C. PANT, J.)
initially against two employees ofGTB and two private persons Rajesh
Mehta and Prashant Mehta on the complaint dated 26.07.2005 lodged
by the Chief Vigilance Officer, OBC. It is relevant to mention here that
GTB was a private sector bank, before its amalgamation in August 2004
with OBC, a public sector bank. In the FIR No. RC I 2E/2005/CBI/B.S
& FC/Mumbai Dt. 09.08.2005, it was alleged that GTB sancti9ned and
disbursed loans by throwing all prudent banking norms to winds and thus
created a large quantum ofNon Performing Assets (NPA)jeopardizing
the interests of thousands of depositors, but painted a rosy financial picture.
These loan transactions came to the light during audit after amalgamation
ofGTB with OBC, and it was noted that two accounts, namely that of
Mis. Beautiful Diamonds Ltd. and Mis. Crystal Gems were used to
siphon out funds of the Bank. After investigation, charge sheets were
filed in this matter before Special Judge, Mumbai in respect of offences
punishable under Section I 208 read with Sections 409 and 420 !PC and
under Section 13(2) read with Section 13(1 )(d) of the P.C. Act, 1988.
However, on 05.02.2007 the Special Judge, Mumbai declined to take
cognizance ofoffence punishable under Section 13(2) read with S.3(1 )(d)
P.C Act, 1988, on the ground that accused No. I Ramesh Gelli and
accused No. 2 Sridhar Subasri were not public servants on the dates
transactions.said to have taken place, i.e. before amalgamation, and the
Special Judge directed that the charge sheet may be returned for being
submitted to appropriate Metropolitan Magistrate for taking cognizance
in respect of offences punishable under !PC, i.e. for offence other than
punishable under the P.C. Act, 1988.
6. Since the High Court of Judicature at Bombay has upheld the
order dated 05.02.2007 by the impugned order, the CBI has approached
this Court through Special Leave. Further, since W.P.(Crl.) No. 167/
2015 filed by accused Ramesh Ge Iii also involves similar question oflaw
in the case at Delhi, as such both the connected matters are being disposed
of by this common order.
7. The common question oflaw involved in these criminal appeals
and connected writ petition, filed before us, is:
Whether the Chairman, Directors and Officers of Global Trust
Bank Ltd. (a private bank before its amalgamation with the
Oriental Bank of Commerce), can be said to be public servants
for the purposes of their prosecution in respect of offences
punishable under Prevention of Corruption Act, 1988 or not?
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8. It is admitted fact that GTB was a private sector bank operating
under banking licence dated 06.09.1994, issued by RBI under Banking
Regulation Act, I 949. It is also not disputed that on 14.08.2004 GTB
merged/amalgamated with OBC. The transactions of alleged fraud,
cheating, misappropriation and corruption relate to the period between
1994 to 2001, i.e. prior to amalgamation with public sector bank (OBC).
The dispute relates as to whether the then Chairman-cum-Managing
Director and Executive Director ofGTB come under definition of'public
servant' or not, for the purposes of the P.C. Act, 1988.
9. It is vehemently argued by Shri Mohan Parasaran and Shri
Sidharth Luthra, senior advocates appearing for the accused that the
accused are not public servants, and cognizance cannot be taken against
the writ petitioner Ramesh Gelli and accused/respondent Sridhar Subasri,
who were said to be the Chairman-cum-Managing Director and Executive
Director respectively ofGTB before its amalgamation. It is further argued
that a person cannot be said to have been performing a public duty
unless he holds some public office, and in this connection it is submitted
that the accused did not hold any public office during the period offences
said to have been committed. It is also contended that since Sections
16 I to I 65A in Chapter IX of !PC are repealed by Section 3 I of P.C.
Act, 1988, Section 46A of Banking Regulation Act, 1949 is of little help
to the prosecution. Mr. Luthra, learned senior counsel, further submitted
that the relationship between the customer of a bank, and the bank is
that of a creditor and debtor, and the transactions between the two are
commercial in nature, as such, no public duty is involved.
I 0. On the other hand, Shri Tushar Mehta, learned senior counsel
for CBI argued that accused Ramesh Gelli and Sridhar Subasri were
public servants in view of definition contained in Section 2(c) of P.C.
Act, 1988. Our attention is also drawn to Section 46A of Banking
Regulation Act, 1949, which provides that a whole time Chairman,
Managing Director, or Director of a banking company shall be deemed
to be a public servant. It is also contended that a banking company as
defined under Section S(b) read with Section 3 5( A) of Banking Regulation
Act, 1949 is nothing but extended arm of Reserve Bank of India. In
support of arguments advanced on behalf of CBI, reliance is placed on
the principle oflaw laid down by this Court in Govt. of Andhra Pradesh
and Others vs. P. Venku Reddy'. Lastly, it is submitted that a private
body discharging pub I ic duty or positive obligation of public nature actually
• (2002J 7 sec 631 J
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
77 l
[PRAFULLA C. PANT, J.]
performs public function. In this connection, reference was made to the
A
observations made by this court in paragraph 18, in Federal Bank Ltd.
vs. Sagar Thomas and others'.
11. We have considered the arguments and the counter arguments
and alsci gone through the relevant case laws on the issue.
12. Before further discussion it is just and proper to examine the
object for which the Prevention of Corruption Act, 1988 was enacted by
the Parliament. The Statement of Objects and Reasons of the Bill is
reproduced below: -
"I. The bill is intended to make the existing anti-corruption laws
more effective by widening their coverage and by strengthening
the provisions.
2. The Prevention of Corruption Act, 194 7, was amended in 1964
based on the recommendations of the Santhanan Committee.
There are provisions in Chapter IX of the Indian Penal Code to
deal with public servants and those who abet them by way of
criminal misconduct. There are also provisions in the Criminal
Law Amendment Ordinance, 1944, to enable attachment of illgotten wealth obtained through corrupt means, including from
transferees of such wealth. The bill seeks to incorporate all these
provisions with modifications so as to make the provisions more
effective in combating corruption among public servants.
3. The bill, inter a/ia, envisages widening the scope of the definition
of the expression 'pub I ic servant', incorporation ofoffences under
sections 161to165A of the Indian Penal Code, enhancement of
penalties provided for these offences and incorporation of a
provision that the order of the trial court upholding the grant of
sanction for prosecution would be final if it has not already been
challenged and the trial has commenced. In order to expedite the
proceedings, provisions for day-to-day trial of cases and prohibitory
provisions with regard to grant of stay and exercise of powers of
revision or interlocutory orders have also been included.
4. Since the provisions of section 16 I A are incorporated in the
proposed legislation with an enhanced punishment, it is not
necessary to retain those sections in the Indian Penal Code.
Consequently, it is proposed to delete those sections with the
necessary saving provision.
2 (2003) 1 o sec 733
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5. The notes on clauses explain in detail the provisions of the
Bill."
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(Emphasis supplied)
From the Statement of Objects and Reasons of the P.C. Bill it is
clear that the Act was intended to make the anti corruption law more
effective by widening its coverage. It is also clear that the Bill was
introduced to widen the scope of the definition of 'public servant'. Before
P.C. Act, 1988, it was the Prevention of Corruption Act, 1947 and Sectio~s
161to165A in Chapter IX of I PC which were governing the field of law
relating to prevention of corruption. The Parliament repealed the
Prevention of Corruption Act, 1947 and also omitted Section 161 to I 65A
of 1.P.C as provided under Sections 30 and 31 of P.C. Act, 1988. Since
a new definition of'public servant' is given under P.C. Act, 1988, it is not
necessary here to reproduce the definition of 'public servant' given in
Section 21 of !PC.
13. Section 2(c) of P.C. Act, 1988, which holds the field, defines
'public servant' 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 payofa 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
CompaniesAct, 1956;
(iv)
any Judge, including any person empowered by law to
discharge, whether by himself or as a member of any body
of persons, any adjudicatory functions;
(v)
any person authorised by a court of justice to perform any
duty, in connection with the administration of justice, including
a liquidator, receiver or commissioner appointed by such
court;
(vi)
any arbitrator or other person to whom any cause or matter
has been referred for decision or report by a court of justice
or by a competent public authority;
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELLI
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[PRAFULLA C. PANT, J.]
(vii)
any person who holds an office by virtue of which he is
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empowered to prepare, publish, maintain or revise an
electoral roll or to conduct an election or part of an election;
(viii) any person who holds an office by virtue of which he is
authorised or required to perform any public duty;
(ix)
any person who is the president, secretary or other officeB
bearer of a registered cooperative society engaged in
agriculture, industry, trade or banking, receiving or having
received any financial aid from the Central Government or
a State Government or from any corporation established
by or under a Central, Provincial or State Act, or any c
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;
(x)
any person who is a chairman, member or employee of any
Service Commission or Board, by whatever name called,
or a member of any selection committee appointed by such
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Commission or Board for the conduct of any examination
or making any selection on behalf of such Commission or
Board;
(xi)
any person who is a Vice-Chancellor or member of any
governing body, professor, reader, lecturer or any other
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teacher or employee, by whatever designation called, of
any University and any person whose services have been
availed of by a University or any other public authority in
connection with holding or conducting examinations;
(xii)
any person who is an office-bearer or an employee of an
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educational, scientific, social, cultural or other institution, in
whatever manner established, receiving or having received
any financial assistance from the Central Government or
any State Government, or local or other public authority.
Explanation I .-Persons falling under any of the above sub-clauses
are public servants, whether appointed by the Government or not.
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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."
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14. Above definition shows that under Clause (viii) contained in
Section 2(c) of P.C. Act, 1988 a person who holds an office by virtue of
which he is authorized or required to perfonn any public duty, is a public
servant. Now, for the purposes of the present case this court is required
to examine as to whether the chainnan/managing director or executive
director of a private bank operating under licence issued by RBI under
Banking Regulation Act, 1949, held/holds an office and performed I
perfonns public duty so as to attract the definition of 'public servant'
quoted above.
15. Section 2(b) of P.C. Act, 1988 defines 'public duty' as under:
"public duty" means a duty in the discharge of which the State,
the public or the community at large has an interest".
16. But, what is most relevant for the purpose of this case is
Section 46A of Banking Regulation Act, 1949, which reads as under: -
"46A. Chairman, director etc., to be public servants for the
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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
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(45of1860)."
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(Emphasis supplied)
17. Section 46A was inserted in Banking Regulation Act, 1949 by
Act No. 95156 with effect from 14.01.1957. The expression "every
chainnan who is appointed on a whole time basis, managing director,
director, auditor" was substituted by Act No. 20/94 with effect from
31.01.1994 in place of "every chainnan, director, auditor". As such
managing director of a banking company is also deemed to be a public
servant. In the present case transactions in question relate to the period
subsequent to 31.01.1994.
18. In Federal Bank Ltd. v. Sagar Tflomas and otflers (supra)
this Court has held that a private company carrying banking business as
a scheduled bank cannot be tenned as a company carrying any statutory
or public duty. However, in said case the Court was examining as to
whether writ can be issued under Article 226 of the Constitution oflndia
against a scheduled bank or not. There was no issue before the Court
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
[PRAFULLA C. PANT, J.]
relating to deeming fiction contained in Section 46A of Banking Regulation
Act, 1949 in respect of a chairman/managing director or director of a
banking company against whom a crime relating to anti-corruption was
registered.
19. In a recent case of State of Maharashtra & ors. v. Brijla/
Sadasukh Modani', this Court has observed as under: -
"21. As we notice, the High Court has really been swayed by the
concept of Article 12 of the Constitution, the provisions contained
in the 1949 Act and in a mercurial manner taking note of the fact
that the multi-state society is not controlled or aided by the
Government has arrived at the conclusion. In our considered
opinion, even any grant or any aid at the time of establishment of
the society or in any construction or in any structural concept or
any aspect would be an aid. We are inclined to think so as the
term 'aid' has not been defined. A sprinkle of aid to the society
will also bring an employee within the definition of 'public servant'.
The concept in entirety has to be observed in the backdrop of
corruption ....... "
20. Jn P. V. Narasimlia Rao vs. State (CBI/SPE)', this Court
has explained the word "office" in following manner: -
"61. ........ The word "office" is normally understood to mean "a
position to which certain duties are attached, especially a place of
trust, authority or service under constituted authority". (See:
OXford Shorter English Dictionary, 3rd Edn., p. 1362.) In
McMillan v. Guest (1942 AC 561) Lord Wright has said:
"The word 'office' is of indefinite content. Its various meanings
cover four columns of the New English Dictionary, but I take
as the most relevant for purposes of this case the following:
'A position or place to which certain duties are attached, -
especially one of a more or less public character.'"
In the same case Lord Atkin gave the following meaning:
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" ... an offi'ce or employment which was subsisting, permanent,
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substantive position, which had an existence independent of
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the person who filled it, which went on and was filled in
succession by successive holders."
'2015 sec Online sc 1403
'(1998)4SCC626
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In Statesman (PJ Ltd. v. H.R. Deb (AIR 1968 SC 1495) and
Mahadeo v. Shantibhai [(1969) 2 SCR 422] this Court has
adopted the meaning given by Lord Wright when it said:
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"An office means no more than a position to which certain
duties are attached."
21. Attention of this court is drawn on behalf of the accused to
the case of Housinf( Board of Haryana v. Haryana Housing Board
Employees' Union and others-', wherein this Court has held that when
particular words pertaining to a class of genus are followed by general
words, the latter, namely, the general words are construed as limited to
the things of the same kind as those-specified, and this is known as the
rule of ejusdem generis reflecting an attempt to reconcile incompatibility
between the specified and general words. This case is of little help to
the accused in the present case as managing director and director are
specifically mentioned in Section 46A of Banking Regulation Act, 1949.
22. In Manis/1 Trivedi v. State of Rajasthm16, which pertains to
a case registered against a councillor under Prevention of Corruption
Act. 1988, this Court, while interpreting the word "public servant", made
following observations: -
"14. Section 87 of the Rajasthan Municipalities Act, 1959 makes
every Member to be public servant within the meaning of Section
21 of the Penal Code, 1860 and the same reads as follows:
"87. Members, etc. to be deemed public servants.--( I) Every
member, officer or servant, and every lessee of the levy of
any municipal tax, and every servant or other employee of any
such lessee shall be deemed to be a public servant within the
meaning of Section 21 of the Penal Code, 1860 (Central Act
45of1860).
(2) The word 'Government• in the definition of 'legal
remuneration' in Section 161 of that Code shall, forthe purposes
of sub-section (I) of this section, be deemed to include a
Municipal Board."
From a plain reading of the aforesaid provision it is evident that by
the aforesaid section the legislature has created a fiction that every
Member shall be deemed to be a public servant within the meaning
5 (1996) I SCC95
'' (2014)14SCC420
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
[PRAFULLA C. PANT, J.]
of Section 21 of the Penal Code. It is well settled that the legislature
is competent to create a legal fiction. A deeming provision is
enacted for the purpose of assuming the existence ofa fact which
does not really exist. When the legislature creates a legal fiction,
the court has to ascertain for what purpose the fiction is created
and after ascertaining this. to assume all those facts and
consequences which are incidental or inevitable corollaries for
giving effect to the fiction. In our opinion, the legislature, while
enacting Section 87 has, thus, created a legal fiction for the purpose
of assumihg that the Members, otherwise, may not be public
servants within the meaning of Section 21 of the Penal Code but
shall be assumed to be so in view of the legal fiction so created.
In view of the aforesaid, there is no escape from the conclusion
that the appellant is a public servant within the meaning of Section
21 of the Penal Code.
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16. Under the scheme of the Rajasthan Municipalities Act it is
evident that the appellant happens to be a Councillor and a
Member of the Board. Further in view oflanguage of Section 87
of the Rajasthan Municipalities Act. he is a public servant within
the meaning of Section 21 of the Penal Code. Had this been a
case of prosecution under the Prevention of Corruption Act, I 94 7
then this would have been the end of the matter. Section 2 of this
Act defines "public servant" to mean public servant as defined
under Section 21 of the Penal Code. However, under the Prevention
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of Corruption Act, 1988, with which we are concerned in the
present appeal, the term "public servant" has been defined under
Section 2(c) thereof. In our opinion, prosecution under this Act
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can take place only of such persons, who come within the definition
of public servant therein. The definition of"public servant" under
the Prevention of Corruption Act. 194 7 and Section 2 I of the
Penal Code is of no consequence. The appellant is sought to be
prosecuted under the Prevention of Corruption Act, 1988 and, .
hence, to determine his status it would be necessary to look into
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its interpretation under Section 2(c) thereof. read with the
provisions of the Rajasthan Municipalities Act.
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19. The present Act (the 1988 Act) envisages widening of the
scope of the definition of the expression "public servant". It was
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brought in force to purify pub I ic administration. The legislature
has used a comprehensive definition of"public servant" to achieve
the purpose of punishing and curbing corruption among public
servants. Hence, it would be inappropriate to limit the contents of
the definition.clause by a construction which would be against the
spirit of the statute. Bearing in mind this principle, when we consider
the case of the appellant, we have no doubt that he is a Pl!blic
servant within the meaning of Section 2(c) of the Act. Clause
(viii) of Section 2(c) of the present Act makes any person, who
holds an office by virtue of which he is authorised or required to
perform any public duty, to be a public servant. The word "office"
is of indefinite connotation and, in the present context, it would
mean a position or place to which certain duties are attached and
has an existence which is independent of the persons who fill it.
Councillors and Members of the Board are positions which exist
under the Rajasthan Municipalities Act. It is independent of the
person who fills it. They perform various duties which are in the
field of public duty. From the conspectus of what we have observed
above, it is evident that appellant is a public servant within Section
2(c)(viii) of the Prevention of Corruption Act, 1988."
(Emphasis supplied)
23. At the end it is relevant to mention that in the case of Govt. of
A.P. and others v. Venku Reddy (supra), in which while interpreting
word 'public servant' this court has made following observations:
"12. In construing the definition of"public servant" in clause (c)
of Section 2 of the 1988 Act, the court is required to adopt a
purposive approach as would give effect to the intention of the
legislature. In that view the Statement ~f ONects and Reasons
contained in the Bill leading to the passing of the Act can be taken
assistance of. It gives the background in which the legislation
was enacted. The present Act, with a mu.ch wider definition of
"public servant", was brought in force to purify public
administration. When the legislature has used such a
comprehensive definition of "public servant" to achieve the
purpose of punishing and curbing growing corruption in government
and semi-government departments, it would be appropriate not to
limit the contents of the definition clause by construction which
would be against the spirit of the statute. The definition of"public
CBI, BANK SECURITIES & FRAUD CELL v. RAMESH GELL!
779
[PRAFULLA C. PANT, J.]
servant", therefore, deserves a wide construction. (See State of A
MP. v. Shri Ram Singh (2000) 5 SCC 88)"
24. In the light oflaw laid down by this court as above, it is clear
that object of enactment of P.C. Act, 1988, was to make the anti
corruption law more effective and widen its coverage. In view of definition
of public servant in Section 46A of Banking Regulation Act, 1949 as
amended the Managing Director and Executive Director of a Banking
Company operating under licence issued by Reserve Bank Of India,
were already public servants, as such they cannot be excluded from
definition of 'public servant'.