1988 (11) TMI 332 - HC - Companies Law

Summary

Issues Involved:
1. Whether employees of nationalised banks are "public servants" within the meaning of clause (12)(b) of section 21 of the Indian Penal Code (IPC).

Issue-wise Detailed Analysis:

1. Whether employees of nationalised banks are "public servants" within the meaning of clause (12)(b) of section 21 of the Indian Penal Code (IPC):

The primary legal question addressed in this judgment is whether employees of nationalised banks qualify as "public servants" under clause (12)(b) of section 21 of the IPC. The judgment arose from criminal revision applications filed by the Central Bureau of Investigation (CBI) against the discharge of accused persons by the Special Judge, Greater Bombay, who had concluded that employees of nationalised banks could not be regarded as "public servants" under the IPC.

Background:
The accused, including a branch manager of the Indian Overseas Bank, were charged with criminal conspiracy, cheating, forgery, and criminal misconduct under various sections of the IPC and the Prevention of Corruption Act, 1947. The Special Judge had discharged the accused, relying on a prior judgment (N. Vaghul v. State of Maharashtra) which held that employees of nationalised banks are not "public servants" under the IPC.

Contention and Analysis:
The respondents argued that the judgment in N. Vaghul's case was final and precluded further examination. However, the court found that the observations in N. Vaghul were obiter dicta and not a conclusive determination of the issue.

Legal Provisions and Interpretation:
The court examined several legal provisions:
- Section 21(12)(b) of the IPC: Defines "public servant" to include persons 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.
- Section 46A of the Banking Regulation Act, 1949: States that employees of a banking company are deemed "public servants" for the purposes of Chapter IX of the IPC.
- Section 14 of the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980: Extends the definition of "public servant" to employees of nationalised banks for the purposes of Chapter IX of the IPC.

Supreme Court Precedent:
The court referenced the Supreme Court's decision in State of Madhya Pradesh v. M. V. Narasimhan, which advocated for a liberal interpretation of the Prevention of Corruption Act to include an extended meaning of "public servant."

Conclusion:
The court concluded that a harmonious reading of the relevant provisions indicates that employees of nationalised banks are "public servants" within the meaning of section 21(12)(b) of the IPC. This interpretation aligns with the purpose of the Prevention of Corruption Act and avoids absurd results, ensuring that bank employees involved in corruption can be prosecuted under both the IPC and the Prevention of Corruption Act.

Judgment:
The court held that employees of nationalised banks are "public servants" under section 21(12)(b) of the IPC. Consequently, the criminal revision applications were allowed, and the orders discharging the accused were quashed and set aside. The rules in each criminal revision application were made absolute.