REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICITON

CRIMINAL APPEAL NO. 61 OF 2002

Reserve Bank of India & Anr. …Appellants

Versus

State rep. by M.R. Bhavsar, Bombay … Respondent

(With Crl. Appeal No.62 of 2002)

JUDGMENT

Dr. ARIJIT PASAYAT, J.

1. Challenge  in  these  appeals  is  to  the  judgment  of  the

learned Single Judge of the Bombay High Court, dismissing

the applications filed questioning issuance of process and also

prosecution by  which they  are  sought  to  be  prosecuted  for

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alleged contravention of provisions of Section 7 of the Contract

Labour  (Regulation  and  Abolition)  Act,  1970  (in  short  the

‘Act’).  The  appellant  in  Criminal  Appeal  no.62/2002  is

Principal of the College of Agricultural Banking, Pune (in short

‘the College’), which is run by the Reserve Bank of India (in

short ‘RBI’), the appellant in criminal appeal no.61/2002. The

Labour  Enforcement  Officer  (Central)  issued  show-cause

notice alleging that there was violation of the provisions of the

Act thereby attracting prosecution. The appellants in Criminal

Appeal no.61/2002 took the stand before the High Court that

the Act does not apply to the RBI and/or the college because

neither can be treated to be an establishment under the act.

The High Court did not accept the stand and held that there

was no scope of exercising power in terms of Section 482 of

the Code of Criminal Procedure, 1973 (in short ‘the Code’) or

Article  226 of  the Constitution of  India,  1950 (in short ‘the

Constitution’).  The High Court found that the appellants are

not  prosecuted  as  an  industry  but  as  a  government

department/office  and,  therefore,  can  be  treated  to  be  an

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establishment under the Act.  Accordingly, the petitions were

dismissed.

2. Learned  counsel  for  the  appellants  submitted  that  the

High Court has failed to notice that neither the RBI nor the

College can be treated to be an establishment as it is neither a

governmental department nor an office.  

3. Learned  counsel  for  the  respondent  submitted  that

whether it is a governmental department or office has to be

adjudicated in the trial  and the High Court was justified in

rejecting the petitions filed in terms of Section 482 of the Code

and Article 226 of the Constitution.

4. RBI is constituted under the Reserve Bank of India Act,

1934 (in short ‘RBI Act’).  In the introduction of RBI Act it is

stated as follows:

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“To regulate the issue of Bank notes and for  the  keeping  of  reserves  with  a  view  to securing  monetary  stability  in  British  India and  generally  to  operate  the  currency  and credit system of the country to its advantage it was  found  expedient  to  constitute  a  Reserve Bank of India.  Accordingly, the Reserve Bank of  India  Bill  was  introduced  in  the Legislature.”

5. The preamble to the Act reads as follows:

“An Act to Constitute a Reserve Bank of India

WHEREAS it is expedient to constitute a Reserve Bank for India to regulate the issue of Bank notes and the keeping of reserves with a view  to  securing  monetary  stability  in  India and  generally  to  operate  the  currency  and credit system of the country of its advantage;

AND  WHEREAS  in  the  present disorganization of the monetary systems of the world it is not possible to determine what will be  suitable  as  a  permanent  basis  for  the Indian monetary system;

BUT WHEREAS it  is  expedient  to make temporary  provision  on  the  basis  of  the existing  monetary  system,  and  to  leave  the

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question of the monetary standard best suited to  India  to  be  considered  when  the international  monetary  position  has  become sufficiently clear and stable to make it possible to frame permanent measures;

It is hereby enacted as follows:-“   

6. Section 2(aii) of the RBI Act defines the “Bank” to mean

Reserve Bank of India constituted by the Act.  The expression

“establishment”  is  defined  in  Section  2(e)  of  The  Contract

Labour  (Regulation  and  Abolition)  Act,  1970  and  reads  as

follows:

“establishment” means -

(i) any  office  or  department  of  the Government or a local authority, or

(ii) any  place  where  any  industry,  trade, business,  manufacture  or  occupation  is carried on;”

7. A bare reading of the provisions makes the position clear

that the Act applies  to an establishment which is either an

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office or department of the Government or local authority in

terms of Section 2(e)(i).  It is not the case of the respondent

that Section 2(e)(ii) has application to the facts of the case.  It

is only based on Section 2(e)(i). The High Court proceeded on

an erroneous basis that RBI is an office or department of the

Government.   This  conclusion  is  clearly  contrary  to  the

scheme of the RBI Act.

8. That being the position, the prosecution initiated on the

basis of the complaints filed cannot be maintained.  Impugned

judgments  of  the  High  Court  are  quashed,  so  also  the

proceedings initiated on the basis of the complaints filed.  

9. The appeals are accordingly allowed.

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

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

New Delhi: September 30, 2008

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