1998 (4) TMI 576 - SC - Indian Laws

Summary

Issues Involved:
1. Applicability of Section 197 of the Code of Criminal Procedure (CrPC) for prosecuting officers of public sector undertakings or government companies.
2. Interpretation of 'public servant' under Section 21 of the Indian Penal Code (IPC) in relation to officers of public sector undertakings and government companies.
3. Whether officers of public sector undertakings and government companies, being 'State' under Article 12 of the Constitution, are entitled to protection under Section 197 of the CrPC.

Issue-wise Detailed Analysis:

1. Applicability of Section 197 CrPC:
The primary question was whether the provisions of Section 197 of the CrPC, which require prior sanction for prosecuting certain public servants, apply to officers of public sector undertakings or government companies. Section 197 stipulates that no court shall take cognizance of an offence alleged to have been committed by a public servant while acting or purporting to act in the discharge of his official duty without prior sanction from the government.

2. Interpretation of 'Public Servant' under IPC:
The court examined the definition of 'public servant' under Section 21 of the IPC. Clauses 9 and 12 of Section 21 IPC were particularly relevant. Clause 9 includes officers whose duty involves handling government property or interests, while Clause 12 includes persons in the service or pay of the government, local authorities, or corporations established by government acts.

3. Officers of Public Sector Undertakings and Government Companies as 'State':
The court analyzed whether officers of public sector undertakings and government companies, which are considered 'State' under Article 12 of the Constitution due to deep and pervasive government control, should be treated as public servants for the purpose of Section 197 CrPC. The argument was that these officers should enjoy the same protection as government servants to avoid vexatious prosecution and to ensure they can perform their duties without fear.

Detailed Analysis:

1. Applicability of Section 197 CrPC:
The court noted that Section 197 CrPC aims to protect public servants from frivolous and vexatious prosecutions for actions taken in the discharge of their official duties. The requirement of prior sanction is intended to secure the opinion of a superior authority on the desirability of prosecuting a public servant. This protection extends to public servants both during and after their tenure in office.

2. Interpretation of 'Public Servant' under IPC:
The court referred to Section 2(Y) of the CrPC, which states that terms not defined in the CrPC but defined in the IPC shall have the same meaning. Section 21 IPC defines 'public servant' and includes officers of local authorities and corporations established by government acts. However, the court emphasized that the protection under Section 197 CrPC is not automatically available to all public servants unless they meet the specific conditions outlined in the section.

3. Officers of Public Sector Undertakings and Government Companies as 'State':
The court acknowledged that public sector undertakings and government companies, due to deep and pervasive government control, are considered 'State' under Article 12 of the Constitution. However, it concluded that these entities, being juridical persons with separate legal identities, cannot be equated with government departments for all purposes. The court cited previous decisions, such as Ajay Hasia v. Khalid Mujib Sehravadi, which recognized the distinct legal status of such entities despite their government control.

The court also referred to decisions like Dr. S. L. Agarwal v. Hindustan Steel Ltd., which held that employees of government-owned companies are not holders of civil posts under the Union and thus not entitled to protections under Article 311 of the Constitution. Similarly, in Praga Tools Corporation v. C. V. Imanual, the court held that a corporation, even if government-controlled, has a separate legal existence and cannot be treated as a government department.

Conclusion:
The court concluded that the protection under Section 197 CrPC does not extend to officers of public sector undertakings or government companies, even if these entities are considered 'State' under Article 12 of the Constitution. The court emphasized that any liberal interpretation to include such officers within the ambit of Section 197 would amount to judicial legislation, which is not permissible. The appeals were disposed of accordingly, with the court leaving open the possibility for the concerned accused to challenge the validity of the criminal proceedings on other grounds.

Final Judgment:
The protection by way of sanction under Section 197 of the CrPC is not applicable to officers of government companies or public undertakings, even when such entities are 'State' within the meaning of Article 12 of the Constitution. The court did not address other grounds challenging the maintainability of the criminal proceedings, leaving those questions open for consideration by the appropriate authority.