Though Nationalised Bank Employees Are Public Servants, S. 197 CrPC Will Not Apply As Sanction Is Not Required For Removal From Service: SC
The Supreme Court has dismissed a Special Leave Petition by an Assitant General Manager of the State Bank of India who is alleged to have committed Bank fraud and had sought discharge from the offences under Section 120-B read with Sections 420, 468 and 471 of the Indian Penal Code claiming that there was no sanction accorded by sanctioning authority under Section 197 of the CrPC to prosecute the appellant.
The Bench of Justice B.R. Gavai and Justice J.B. Pardiwala in its Judgement reiterated that the question as to whether a Manager of Nationalised Bank can claim benefit of Section 197 of the CrPC is not res integra and held that "Although a person working in a Nationalised Bank is a public servant, yet the provisions of Section 197 of the CrPC would not be attracted at all as Section 197 is attracted only in cases where the public servant is such who is not removable from his service save by or with the sanction of the Government."
The Court explained that Section 197 of the CrPC pertains to cases where a public servant, who can only be removed from office with government approval, is accused of an offence committed while performing official duties. In such cases, the Court can't proceed without government sanction. However, it's clear that the appellant doesn't hold a position requiring government-sanctioned removal. The Court also remarked in its judgement that "To commit an offence punishable under law can never be a part of the official duty of a public servant."
Advocate D. Ramakrishna Reddy appeared for the appellant manager while the CBI was represented by Additional Solicitor General Aishwarya Bhatia and the State Bank of India was represented by the Advocate-on-Record and Standing Counsel Siddharth Sangal.
Background: The appellant serving as an Assistant General Manager, SBI, Hyderabad is alleged to have conspired with other co-accused to cheat the Bank by sanctioning a corporate loan of Rs. 22.50 crore in favour of M/s Sven Genetech Limited, Secunderabad. In view of that, the Central Bureau of Investigation (CBI) registered an FIR under the offences arising out of the IPC and Prevention of Corruption Act.
Later, SBI declined to accord sanction under Section 19 of the PC Act, to prosecute the appellant for the offences punishable under the PC Act but, somehow, reviewed its earlier order and accorded sanction. The appellant questioned the legality and validity of the order to grant sanction before the High Court. The High Court accordingly allowed the Petition by holding that the sanctioning authority once having declined to accord sanction could not have taken its earlier order in review and grant fresh sanctions to prosecute.
Resultantly, the Special Court discharged the applicant of the offences under the PC Act but, however, declined to discharge the appellant for the offences under the IPC. The appellant manager further approached the High Court stating that he should also be discharged for the offences under the IPC as there is no sanction accorded by sanctioning authority under Section 197 of the CrPC, which was dismissed on merits. Aggrieved by the same, the appellant manager approached the Apex Court.
Before the Apex Court, the Appellant submitted that he cannot now be prosecuted for the offences under IPC without valid sanction under Section 197 of the CrPC and that he came to be exonerated of all the charges in the departmental inquiry as evident from the report of the inquiry officer while on the other hand, CBI submitted that the discharge from the PC Act by itself is not sufficient to discharge the appellant even from the offences punishable under the IPC and that sanction required under Section 197 of the CrPC and the sanction required under the PC Act, 1988 stand on different footings.
Further, appearing for the State Bank of India, AoR Sangal submitted that it is incorrect on the part of the appellant to state that he has been exonerated in the departmental proceedings as the appellant was ultimately given an ‘Administrative Warning’ in respect of the charges against him. Sangal further submitted, which the Court found to be 'very important' that Section 197 of the CrPC clearly indicates that Section 197 of the CrPC is only applicable to those ‘public servants’ who are removable with the sanction of the Government and to no other ‘public servants’. Relying on the decision of this Court in the case of S.K. Miglani v. State (NCT of Delhi), reported in (2019) 6 SCC 111, it was submitted that the Manager of a Nationalised Bank though a public servant is not removable from his office save by or with the sanction of the Government and hence cannot claim protection under Section 197 of the CrPC.
After considering the submissions made, the Court held, "It is pertinent to note that the banking sector being governed by the Reserve Bank of India and considered as a limb of the State under Article 12 of the Constitution and also by virtue of Section 46A of the Banking Regulation Act, 1949, the appellant herein is deemed to be a “public servant’ for the purpose of provisions under the PC Act, 1988. However, the same cannot be extended to the IPC. Assuming for a moment that the appellant herein should be considered as a “public servant” for the IPC sanction also, the protection available under Section 197 of the CrPC is not available to the appellant herein since, the conditions in built under Section 197 of the CrPC are not fulfilled."
Further on the aspect of the absence of sanction under Section 19 PC Act would lead to discharge from offences under IPC, the Court stated: "It can be said that there can be no thumb rule that in a prosecution before the court of Special Judge, the previous sanction under Section 19 of the PC Act, 1988 would invariably be the only prerequisite."
Accordingly, the Court dismissed the SLP.
Cause Title: A. Sreenivasa Reddy v. Rakesh Sharma & Anr [CRIMINAL APPEAL NO. 2339 OF 2023]