REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 505 OF 2006

M. Gopalakrishnan           ….Appellant  

Versus

State by Addl. S.P. CBI, B.S. & F.C., Bangalore ….Respondent

WITH  

Criminal Appeal No.274/2009 @ SLP(Crl.) No. 2687 of 2007 Criminal Appeal No. 277/2009 @ SLP(Crl.) No. 2848 of 2007 Criminal Appeal No.278/2009 @ SLP(Crl.) No. 2912 of 2007 Criminal Appeal No.279/2009 @ SLP(Crl.) No. 2913 of 2007 Criminal Appeal No.280/2009 @ SLP(Crl.) No. 2923 of 2007

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted in Special Leave Petitions.  

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2. Challenge in all  these appeals  is  to the order   passed by a learned

Single  Judge  of  the  Madras  High  Court  in  each  case  dismissing  the

application under Section 482 of the Code of Criminal Procedure, 1973 (in

short the ‘Code’). Stand of the appellant is that there was no sanction for

prosecution as contemplated under law.  

3. Background facts in a nutshell are as follows:

The respondent/complainant on credible information registered a case

against  the  appellant  and  others  for  the  alleged  commission  of  offences

punishable under Section 120B of the Indian Penal Code, 1860 (in short the

‘IPC’) read with Section 420 IPC and Sections 11, 12, and 13(2) read with

section 13(1)((d) of the Prevention of Corruption Act, 1988 (in short  the

‘PC Act’). On the basis of the First Information Report when investigation

proceeded it disclosed the commission of the offences, as aforementioned,

resulting in filing of a final report followed by taking cognizance of the case

by the court concerned.

The respective stands of the parties before the High Court were as

follows:

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The appellant filed a petition under Section 482 of the Code to quash

the proceedings since in the absence of any sanction under Section 197(1)

(a) of the Code,  the cognizance taken by the Court  is  illegal  and invalid

since he is a public servant. It is the further case of the appellant that though

he was the Chairman and Managing Director of the Company with over all

control, the sanction of credit facility was not directly connected with him

and in this view he should be absolved from all the charges. It was further

submitted  that  there  is  no  allegation  that  the  appellant  as  public  servant

obtained pecuniary advantage while holding office as public servant and in

this view the charges against him are untenable. On the above basis, it was

claimed that proceedings against him should be quashed.  

The  respondent-State  opposed  the  application  contending  that

sanction  to  prosecute  the  appellant  is  not  necessary under  the  facts  and

circumstances of the case and the same also could be decided even at the

time of the trial.   

The final report reads:

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“That  accused  M.  Gopalakrishnan  (A1)  while  functioning  as  the

Executive  Director  and  Chairman  and  Managing  Director,  Indian  Bank

connived to commit criminal misconduct by public servants by corrupt or

illegal means or by abuse of their official position as public servants or they

while holding office as public servants  without any public interest obtained

for themselves   or  for  any other  person any valuable  thing  or  pecuniary

advantage  by  recommending/sanctioning  credit  limits  without  proper

appraisal,  ignoring  banking  norms,  RBI  guidelines,  exceeding  delegated

powers,  violating board directions despite  glaring adverse features in  the

conduct  of  the  account,  without  ensuring  proper  end  use  of  funds  and

safeguarding the interest of the Bank by A1 to A4 the public servants, viz.

M. Gopalakrishnan (A1) and N. Kumaraswamy (A2) named above to accept

or obtain for themselves or for their close relatives viz. A18 to A20 named

above valuable thing without consideration from persons whom they knew

to  have  been  concerned  in  business  transacted  by  them  or  having  any

connection  with  the  official  functions  of  themselves  or  from any person

whom they knew to be interested in or related to the person so concerned

and  the  accused  R.  Ramesh  (A18),  T.S.  Jayakumar  (A19)  and  Kala

Kumaraswamy  (A20)  to  abet  the  aforesaid  offences  of  public  servants

obtaining valuable thing  without consideration from persons concerned in

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business  transaction  by  them by  accepting  Rs.15  lacs  and  Rs.5  lacs  in

demand drafts and an Ambassador Nova Car, respectively. Thus the accused

A1 to A20 committed offence punishable under Sections 120B read with

Section 420 IPC and Sections 11, 12, 13(2) read with Section 13(1)(d) of

PC Act.  

4. Thus it is seen the capacity or the position of the appellant as that of

public servant is an admitted position. In the ordinary course in order to take

cognizance  of  a  case  against  a  public  servant  subject  to  certain  other

conditions as said in Section 197 of Code a sanction is a must as held by

this Court in Mohd. Hadi Raja v. State of Bihar (AIR 1998 SC 1945). In the

above decision it is observed as follows:

“For the purpose of requirement of sanction under Section 197 of the Code the accused will be such public servant who cannot be removed from his office except by or with the sanction of the Government. Further, the accused will not only be a public servant  of  above description  but  the  offence  alleged to  have been committed   by such officer  must  have  been committed while such public servant had been acting or purporting to act in the discharge of his official duties.”

5. As far as the second part is concerned in this petition we are not very

much  concerned  since  on  that  ground  discharge  or  quashing  of  the

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proceedings was not urged. In this view, High Court held that though the

appellant is described as a public servant it has to be seen whether he comes

within the meaning of “such public servant who cannot be removed from his

office except by or with the sanction of the Government”.

6. As revealed  by the records  the  appellant  was appointed  as  per  the

Notification dated 8.12.1988 as Managing Director of the Indian Bank from

the  date  of  his  taking  the  charge  to  be  the  Chairman  of  the  Board  of

Directors  of  the  Indian  Bank  with  effect  from  the  same  date.  This

notification  says  that  the  Central  Government  after  consultation  with  the

Reserve Bank of India had appointed the appellant.  On this basis learned

counsel for the appellant submitted that the appointment of the appellant as

Managing Director-cum-the Chairman of the Board of Directors was only

by the Central Government and the Central Government alone should have

power to remove him from the service thereby taking the accused within the

ambit of Section 197 of Code.

7. Nationalised  Banks  (Management  and  Miscellaneous  Provisions)

Scheme 1970 defines “Chairman” under Rule 5(1) as follows:

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“Chairman  (1)  the  Central  Government  shall,  after consultation with the Reserve Bank appoint  one of the Directors to be the Chairman of the Board.”

8. According to Rule 7 of the Scheme:-

“The  Central  Government  may, after  consultation  with the Reserve Bank appoint the same person to hold, at the same  time  both  the  office  of  the  Chairman  and  the Managing Director”.

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

reads:

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

10. In the same manner, Section 8(4) reads:-

“The Central Government may, if it is satisfied that it is expedient in the interests of the nationalized bank so to

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do,  remove  a  whole  time  Director  including  the Managing Director from office.”

11. The above provisions are relied on to say that appellant is a public

servant removable only by the Central Government.  

12. The  above  provisions  as  well  as  the  notification  relied  on  by  the

appellant would indicate as if he was appointed by the Central Government,

thereby  impliedly  saying  that  he  could  be  removed  only  by  the  Central

Government. If this position is correct then the sanction contemplated under

Section 197 of Code should come to the aid of the appellant and if there is

no sanction, taking cognizance of the case may be against the provisions of

the law.  

13. The  learned  counsel  for  the  respondent  submitted  that  under  the

Banking  Regulation  Act,  1949  the  Chairman  of  a  Banking  Company  is

appointed only by the Reserve Bank of India and the Reserve Bank of India

alone is the competent authority to remove the Chairman and in this view

though the appellant is described as a public servant he will not come within

the phrasing  contemplated under  Section  197 of  Code requiring sanction

since the Central Government is not concerned for his removal.  

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14. Section 10(bb) of the Banking Regulation Act says:

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

15. Section 36(AA) empowers the Reserve Bank to remove Managerial

and other persons from office including any Chairman and Director which

reads as follows:

“Where the Reserve Bank is satisfied that in the public interest  or  for  preventing  the  affairs  of  a  Banking Company being conducted in a manner detrimental to the interests  of  the  depositors  or  for  securing  the  proper management of any Banking Company, it is necessary so to do, the Reserve Bank may for reasons to be recorded in  writing  by  order  remove  from  office  within  effect from such  date  as  may  be  specified  in  the  order  any Chairman, Director, Chief Executive Officer by whatever name called or other officer or employee of the Banking Company.”

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16. Banking Regulation Act, 1949 shall prevail over the Scheme which

was formulated under Section 9 of the Banking Companies (Acquisition and

Transfer  of  Undertakings)  Act,  1970.  This  Scheme cannot  have the over

riding effect against the Banking Regulation Act. In this view the appellant

cannot  claim that he is  a public servant  coming within the meaning of a

‘public servant’ not removable from his office, save by or with the sanction

of  the  Government.  In  view of  the  specific  provisions  available  for  the

removable of the Chairman under the Banking Regulation Act it is prima

facie clear that the appellant will not come within the scope of Section 197

of Code. It was submitted by learned counsel for the respondent before the

High Court the question of requirement of sanction for prosecution can be

left open to be examined during the trial  by giving an opportunity to the

defence to prove the same.   

17. Learned counsel for the respondent relied on a decision of this Court

in  P.K. Pradhan v.  State of Sikkim (2001 SCC (Crl.) 1234) wherein it  is

observed as follows:

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“Question  of  requirement  of  sanction  for  prosecution could  be  raised  at  any  time  after  cognizance  of  the offence is taken, may be even at the time of conclusion of trial or after conviction.”

It is also observed that:

“The claim of the accused that the act alleged was done reasonably  and  not  in  pretended  course  of  his  official duty  can  be  examined  during  the  trial  by  giving  an opportunity to the defence to prove it. In such cases, the question of sanction can be left open to be decided in the main judgment after conclusion of trial.”

18. On the basis of the above conclusions the claim of the accused that he

should be discharged for want of sanction is not acceptable at present and

the matter should be left open to be decided later on.   

19. The  High  Court  held  that  the  question  whether  the  appellant  is

removable from service by the Reserve Bank or the Central Government is

really  an  academic  interest  because  it  is  yet  to  be  established  that  the

impugned acts were done by the appellant in position of  his official duty.  

20. In  Parkash Singh Badal v.  State of Punjab (2007 (1) SCC 1) it was

noted as follows:

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“The offence of cheating under Section 420 or for that matter offences relatable to Sections 467, 468, 471 and 120B can  by  no  stretch  of  imagination  by  their  very  nature  be regarded as having been committed by any public servant while acting or purporting to act in discharge of official duty.  In such cases,  official  status  only  provides  an  opportunity  for commission of the offence.”  

21. Above being the position, the High Court’s view does not suffer from

infirmity to warrant interference. The appeals fail and are dismissed.  

…………………………..……….J. (Dr. ARIJIT PASAYAT)

……………………………………J. (Dr.  MUKUNDAKAM SHARMA)

New Delhi, February 11, 2009      

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