CENTRAL BUREAU OF INVESTIGATION, BANK SECURITIES & FRAUD CELL
V.
RAMESH GELLI

[2016] 132 CLA 1 (SC)
SUPREME COURT OF INDIA
Ranjan Gogoi & Prafulla C Pant, JJ
CA Nos. 1077 - 1081 of 2013 and WP(C) No. 167 of 2015
23rd February 2016

Chairman/managing director and executive director of a private bank held to be public servant for the purposes of prosecution under the Act

It is the definition of the “public servant” given in sub-clause (viii) of clause (c) of section 2 read with section 46A of the Banking Regulation Act, 1949 which holds the field for the purposes of offences under the said Act. Chairman/managing director and executive director of a private bank are therefore ‘public servant

Prevention of Corruption Act, 1988 “ Section 2(c)(viii) read with section 46A of the Banking Regulation Act, 1949 “ Public servant “ Are chairman, directors, and officers of a private bank ‘public servants; for the purpose of their prosecution in respect of offences punishable under the Act “ Whether section 46A was inserted in the Banking Regulation Act in 1957, and the expression ‘every chairman who is appointed on a whole time basis, managing director, director, auditor was substituted by an amending Act with effect from 31st January, 1994 for ‘every chairman, director, auditor “ Held, yes, as such managing director of a banking company is also deemed to be a public servant “ Whether in the present case transactions in question relate to the period subsequent to 31st January, 1994 “ Held yes [Para 17] “ Whether the object of the enactment of the Act was to make the anti-corruption law more effective and widen its coverage “ Held, yes “ Whether in view of definition of “public servant” in section 46A of the Banking Regulation Act, 1949 as amended, the managing director and executive director of a banking company operating under licence issued by the Reserve Bank were already public servants “ Held, yes, and as such they cannot be excluded from definition of ‘public servant “ Whether, therefore, over the general definition of ‘public servant given in section 21 of the Indian Penal Code it is the definition of ‘public servant given in sub-clause (viii) of clause (c) of section 2 read with section 46A Banking Regulation Act, which holds the field for the purposes of offences under the said Act “ Held, yes “ Whether for banking business what cannot be forgotten is section 46A of Banking Regulation Act, which holds the field for the purposes of offences under the said Act “ Held, yes “ Whether merely for the reason that sections 161 to 165A of Indian Penal Code have been repealed reference of section 46A of Banking Regulation Act, 1949 is not lost “ Held, yes [Para 24] “ Whether the courts below have erred in law in holding that the accused who were chairman/managing director and executive director of the Bank, respectively were not public servants for the purposes of the Act “ Held, yes “ Whether the orders impugned are liable to be set aside “ Held, yes [Para 27].

Synopsis

The Supreme Court has allowed criminal appeals filed by CBI. It has set aside the writ petition filed by the accused. It has not, however, expressed any opinion on the final merits of the case before the various trial courts in Mumbai and Delhi.

Cases referred to : Bangalore Water Supply & Sewerage Board v. A Rajappa [1978] 2 SCC 213 ; Dadi Jagannadham v. Jammulu Ramulu [2001] 7 SCC 71 ; Federal Bank Ltd. v. Sagar Thomas [2003] 10 SCC 733 ; Government of Andhra Pradesh v. P Venku Reddy [2002] 7 SCC 631 ; Housing Board of Haryana v. Haryana Housing Board Employees Union [1996] 1 SCC 195 ; Magor & St. Mellons Rural District Council v. Newport Corporation [1950] 2 All ER 1226 ; Manish Trivedi v. State of Rajasthan [2014] 14 SCC 420 ; McMillan v. Guest [1942] AC 561 ; P V Narsimha Rao v. State (CBI/SPE) [1998] 4 SC 626 ; Seaford Court Estates Ltd. v. Asher [1949] 2 All ER 155 and State of Maharashtra v. Brijlal Sadasukh Modani 2015 SCC online 1403.

Appearances : Tushar Mehta, ASG, Rana Mukherjee, Mohan Parasaran, Siddharth Luthra, senior advocates (Ms. Ranjana Narayan, T A Khan, B V Balram Das, Arvind Kumar Sharma, G Umapathy, Ms. R Mekhala, Rakesh K Sharma, Ms. Bina Gupta, Viraj Gandhi, Sameer Chaudhary, Ms. Purnima Raj, Abhisaar Bairagi & Pallav Palit with them) for the Appearing Parties.

JUDGMENT

Gogoi, J

I have had the privilege of going through the judgment of my learned brother Prafulla C Pant, J. Though I am in full agreement with the conclusions reached by my learned brother, I would like to give my own reasons for the same.
The question arising has to be answered firstly within the four corners of the definition of “public servant” as contained in section 2(c) of the Prevention of Corruption Act, 1988 (‘the PC Act ), particularly, those contained in section 2(c)(viii), which is extracted below.
‘2. Definitions. “ In this Act, unless the context otherwise requires, “

(c) “Public Servant” means, “”¦.
1. viii. any person who holds an office by virtue of which he is authorised or required to perform any public duty ;”¦.
While understanding the true purport and effect of the aforesaid provision of the PC Act, the meaning of the expression ‘office appearing therein as well as “public duty” which is defined by section 2(b) has also to be understood.
A reference to section 2(b) of the PC Act which defines “public duty” may at this stage be appropriate to be made.

‘2. (b) “public duty” means a duty in discharge of which the State, the public or the community at large has an interest.”

Explanation : In this clause “State” includes 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) ;
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 authorise him to perform such duty is the sine qua non of the definition of the public servant contained in Section 2(c)(viii) of the PC Act. The expressions ‘office and ‘public duty appearing in the relevant part of the PC Act would therefore require a close understanding.
In P V Narasimha Rao v. State (CBI/SPE) [1998] 4 SCC 626 the meaning of the expression ‘office appearing in the relevant provision of the PC Act has been understood as “a position or place to which certain duties are attached specially one of a more or less public character.” Following the views expressed by Lord Atkin in McMillan v. Guest [1942] AC 561, this court had approved the meaning of the expression ‘office to be referable to a position which has existence independent of the person who fills up the same and which is required to be filled up in succession by successive holders.
While there can be no manner of doubt that 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, inter alia, envisages widening of the scope of the 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 contemporary 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 which, in my considered view, ought to be maintained. Therefore, according to me, 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.
Coming to the next limb of the case, namely, the applicability of the provisions of Section 46A of the Banking Regulation Act, 1949 (‘the BR Act ) what is to be found is that a chairman appointed on a whole time basis, managing director, director, auditor, liquidator, manager and any other employee of a banking company is deemed to be a public servant for the purposes of Chapter IX of the Indian Penal Code. 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 come within the purview of the aforesaid section 46A.
Sections 161 to 165A contained in Chapter IX of the Indian Penal Code have been repealed by section 31 of the Prevention of Corruption Act, 1947 and the said offences have been engrafted in sections 7, 8, 9, 10, 11 and 12 of the Prevention of Corruption Act, 1988. Section 166 (as originally enacted), section 167 (with amendment), sections 168, 169, 170 and 171 (as originally enacted) continue to remain in Chapter IX of the Indian Penal Code even after enactment of the Prevention of Corruption Act, 1988.
By virtue of section 46A of the BR Act office bearers/employees of a Banking Company (including a private banking company) were “public servants” for the purposes of Chapter IX of the IPC with the enactment of the PC Act the offences under sections 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 aforesaid provisions from Chapter IX of the IPC 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. Be that as it may, 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 IPC 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. The following opinion of Lord Denning in Seaford Court Estates Ltd. v. Asher [1949] 2 All ER 155 noticed and approved by this court may be taken note of :

‘The English language is not an instrument of mathematical precision. Our literature would be much the poorer if it were ....He (The Judge) must set to work in the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it, and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give “force and life” to the intention of the Legislature.... A judge should ask himself the question, how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases.

In Magor & St. Mellons Rural District Council v. Newport Corporation [1950] 2 All ER 1226 the learned judge restated the above principles in a somewhat different form to the following effect :

“We sit here to find out the intention of Parliament and of Ministers and carry it out, and we do this better by filling in the gaps and making sense of the enactment than by opening it up to destructive analysis.”
Though the above observations of Lord Denning had invited sharp criticism in his own country we find reference to the same and implicit approval thereof in the judicial quest to define the expression “industry” in Bangalore Water Supply & Sewerage Board v. A Rajappa [1978] 2 SCC 213. Paragraphs 147 and 148 of the opinion of Chief Justice M H Beg in Bangalore Water Supply & Sewerage Board (supra), which are quoted below, would clearly indicate the acceptance of this court referred to earlier :

‘147. My learned Brother has relied on what was considered in England a somewhat unorthodox method of construction in Seaford Court Estates Ltd. v. Asher [(1949) 2 ALL ER 155, 164], where Lord Denning, LJ, said :

When a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament “ and then he must supplement the written words so as to give ‘force and life to the intention of Legislature. A Judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A Judge must not alter the material of which the Act is woven, but he can and should iron out the creases.

When this case went up to the House of Lords it appears that the Law Lords disapproved of the bold effort of Lord Denning to make ambiguous legislation more comprehensible. Lord Simonds found it to be “a naked usurpation of the legislative function under the thin disguise of interpretation”. Lord Morton (with whom Lord Goddard entirely agreed) observed : “These heroics are out of place” and Lord Tucker said “Your Lordships would be acting in a legislative rather than a judicial capacity if the view put forward by Denning, LJ, were to prevail.”

148. Perhaps, with the passage of time, what may be described as the extension of a method resembling the “arm-chair rule” in the construction of wills. Judges can more frankly step into the shoes of the Legislature where an enactment leaves its own intentions in much too nebulous or uncertain a state. In M Pentiah v. Muddala Veeramallappa [(1961) 2 SCR 295], Sarkar, J, approved of the reasoning, set out above, adopted by Lord Denning. And, I must say that, in a case where the definition of “industry” is left in the state in which we find it, the situation perhaps calls for some judicial heroics to cope with the difficulties raised. (emphasis supplied)
There are other judicial precedents for the view that I have preferred to take and reach the same eventual conclusion that my learned brother Prafulla C Pant, J has reached. I would like to refer to only one of them specifically, namely, the decision of a Constitution Bench of this court in Dadi Jagannadham v. Jammulu Ramulu [2001] 7 SCC 71.
Order XXI, rule 89 read with rule 92(2) of the CPC provided for filing of an application to set aside a sale. Such an application was required to be made after deposit of the amounts specified within 30 days from the date of the sale. While the said provision did not undergo any amendment, article 127 of the Limitation Act, 1963 providing a time limit of 30 days for filing of the application to set aside the sale was amended and the time was extended from 30 days to 60 days. Taking note of the objects and reasons for the amendment of the Limitation Act, namely, that the period needed to be enlarged from 30 to 60 days as the period of 30 days was considered to be too short, a Constitution Bench of this court in Dadi Jagannadham (supra) harmonised the situation by understanding Order XXI rule 89 to be casting an obligation on the court to set aside the sale if the application for setting aside along with deposit is made within 30 days. However, if such an application along with the deposit is made after 30 days but before the period of 60 days as contemplated by article 127 of the Limitation Act, 1963, (as amended) the court would still have the discretion to set aside the same. The period of 30 days in order 21, rule 89/92(2), CPC referred to hereinabove was subsequently (by Act 22 of 2002) amended to 60 days also.
Turing to the case in hand there can be no dispute that before enactment of the PC Act, section 46A of the BR Act had the effect of treating the concerned employees/office bearers of a Banking Company as public servants for the purposes of Chapter IX of the IPC by virtue of the deeming provision contained therein. 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 of the BR Act. The omission to continue to extend the deeming provisions in section 46A of the BR Act 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.
In the above view of the matter, I also arrive at the same conclusion as my learned Brother Prafulla C Pant, J has reached, namely, that the accused respondents are public servants for the purpose of the PC Act by virtue of the provisions of section 46A of the Banking Regulation Act, 1949 and the prosecutions launched against the accused respondents are maintainable in law. Consequently, the criminal appeals filed by the CBI are allowed and Writ Petition (Criminal) No. 167 of 2015 is dismissed