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TMI Blog1998 (4) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty no Courts shall take cognizance of such offence except with the previous sanction. (a) in the case of a person who is employed or as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government. (b) in the case of a person who is employed or as the case may be, was at the time of commission of the alleged offence employed, in connection with the affair of a State, of the State Government: Provided that where the alleged offence was committed by a person referred to in Clause (b) during the period while a proclamation issued under Clause (1) of Article 350 of the Constitution was in force in a State Clause (b) will apply as if for the expression State Government occurring there, the expression Central Government were substituted. (2) No Court shall take cognizance of any offence alleged to have been committed by any member of the Armed Forces of the Union while acting or purportin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a given case, the concerned officer of the public sector undertaking or the government company being State under Article 12 of the Construction is removable from office by or with the sanction of the government and such officer is alleged to have committed an offence by his action which can be construed as action taken while acting or purporting to act in the discharge of his official duties, whether for prosecuting such officer, sanction under Section 197 of the CrPC is warranted or not. 6. It may be stated here that considering the importance of the question, notice was given to the learned Attorney General for his opinion as to the requirement of sanction under Section 197(1) of the CrPC in the case of officers of public sector undertakings or the government companies. 7. Mr. Altaf Ahmad, learned Additional Solicitor General appeared for the learned Attorney General and has submitted that the officials of the public sector undertakings and the government companies which are State within the meaning of article 12 of the Constitution will enjoy the same protection as available to a public servant under Section 197 of the CrPC, although the officials of the public sector unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement with professional skills and on business principles and it is blissfully free from departmental rigidity, slow motion procedure and hierarchy of officers. It has also been held in Ajay Hasia's case that so far the said instrumentalities are concerned, the true owner is the State, real operator is the State and the effective controllorate is the state and the accountability for its action to the community and to Parliament is of the State. This court has further indicated that it is undoubtedly true that the corporation is a distinct juristic entity with a corporate structure of its own and it carries on its functions on business principles with a certain amount of autonomy which is necessary as well as useful from the point of view of effective business management but behind the formal ownership which is case in the corporate mould, the reality is very much the deeply pervasive presence of the government. Therefore, in reality, the government acts through the instrumentality or agency of the corporation. Therefore, where the corporation is an instrumentality or agency of the government, it must be subjected to the same limitation in the field of constitutional law as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the government. 12. The learned counsel have also submitted that since such public undertakings and government companies are third arm of the government, for the purpose of sanction under Section 197 of the CrPC, the officers of such public undertakings must be placed at par with the government servants because such officers in fact, discharge the duties and functions of the State government. 13. In this connection, reliance has been made to the decision of this Court in C. V. Raman v. Management of Bank of India and another, (1988)IILLJ423aSC . In the said case, the employees of the State Bank and the nationalised banks contended that such banks cannot be treated to be owned by the Central Government and the expression 'Under the Central Government appearing in the shops and Establishments Act would only mean under complete control of the Central Government in the sense of being owned by the Central Government. This Court, however, did not accept such contention by indicating that Article 12 of the Constitution occurs in Part III of the Constitution which deals with the fundamental rights. Therefore, the decisions in the case dealing with Article 12 of the Constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he duties and functions intended to be performed by the government through the contrivance of corporate structure, get the desired protection under Section 197 of the Code of Criminal procedure. 15. Such contentions have, however, been seriously disputed by Shri Sanyal, learned senior counsel appearing for the State of Bihar and also Mr. Jain, learned senior counsel appearing for the prosecuting agency. It is contended by them that even though some of the public undertakings and the government companies may be treated as instrumentalities or agencies of the State in view of deep and pervasive control of the government but it cannot be held that they are employed in connection with the affairs of the Union or the State. A department directly run by the government has always been placed on a different footing and the employees of the public undertaking and the government company even when they are instrumentalities or agencies of the State, have never been treated at per with the government servants. In this connection, reference has been made to the decision of this Court in Dr. S. L. Agarwal. The General Manager, Hindustan Steel Ltd., (1970)IILLJ499SC . The Constitution Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be held to be a department or establishment of the government of all cases. Another decision of this Court in S.S. Dhanu v. Municipal Corporation, Delhi, [1981] 3 SCC 438, was placed for the consideration of this Court. In the said case, an I.A.S. Officer was sent on deputation to a government owned registered co-operative society and was appointed as General Manager of Super Bazar. The question arose whether for an offence alleged against such officer the protection under Section 197 of the CrPC was available to such officer. It has been held in the said case that while the said officer was on deputation and discharging the functions as General manager of Super Bazar, he could not be held to have discharged the functions under the state for which sanction under Section 197 of the CrPC is called for. 19. It has been contended that sanction contemplated under Section 197 of the CrPC must be restricted only in respect of a Judge or a Magistrate or a Public Servant who is directly employed by the government and not by any instrumentality or agency of the government. When the Legislature has declined to render the same protection as available to public servant contemplated under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the government or to execute any revenue process or to investigate or to report on any matter affecting the pecuniary interests of the government or to make, authenticate or keep any document relating to the pecuniary interests of the government or to prevent the infraction of any law for the protection of the pecuniary interests of the government. Twelth - Every person- (a) in the service or pay of the government or remunerated by fees or commission for the performance of any public duty by the government; (b) 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 91 of 1956. 22. Although the instrumentality or agency with a corporate veil, for all intents and purposes may be held to be a third arm of the government and such instrumentality discharges the duties and functions which the State intends to do as indicated in Ajay Hasia 's case (supra), such instrumentality or agency is none the less juridical person having a separate legal entity. Therefore, such instrumentality must be held to have an independent status dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent department but in all its facets, public undertaking has not been equated with the department run directly by the government. It was on this account that the Surgeon appointed in Hindustan Steel Works Ltd. has not been equated with the government servant for the purpose of applicability of Article 311 of the Constitution. In Praga Tool's case (supra), even though Praga Tools was held to be an instrumentality or agency of the State, it has been indicated by this Court that Praga Tools Corporation had a separate legal existence and being a juridical person cannot be held to be a government concern, run by or under the authority of the government. Similar view was taken by the Patna High Court in Sindhri Fertilizer's case (supra) by indicating that even though the said concern was completely owned by the President of India who could also issue directions and the Directors were to be appointed by the President of India, in the eye of law, the company was a separate legal entity and had a separate legal existence. Such decision of Patna High Court has been approved by this Court. In Dhonoa's case (supra), an IAS officer when on deputation to a public undertaking having d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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