Employees of private banks are public servants and can be prosecuted for...

Employees of private banks are public servants and can be prosecuted for corruption

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The Prevention of Corruption Act, 1988 was enacted by the Parliament to make the anti-corruption law more effective by expanding its horizon. Infact, the perusal of the statements of Objects and Reason of the Prevention of Corruption Bill would suggest that one of the major reason to introduce the said Bill was to widen the scope and definition of “Public Servant”.

As per Section 2 (c) of the Prevention of Corruption Act, 1988, a “Public Servant” shall include:

“(c)   Public Servant means:-

(i)      any person in the service or pay of the Government or remunerated by the Government by fees or commission for the performance of any public duty.

(ii)     any person in the service or pay of a local authority;

(iii)    any person in the service or pay of a corporation established by or under a Central, Provincial or State Act, or an authority or a body owned or controlled or aided by the Government or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);

(iv)    any Judge, including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions;

(v)     any person authorised by a court of justice to perform any duty, in connection with the administration of justice, including a liquidator, receiver or commissioner appointed by such court;

(vi)    any arbitrator or other person to whom any cause or matter has been referred for decision or report by a court of justice or by a competent public authority;

(vii)   any person who holds an office by virtue of which he is empowered to prepare, publish, maintain or revise an electoral roll or to conduct an election or part of an election;

(viii)  any person who holds an office by virtue of which he is authorised or required to perform any public duty;

(ix)    any person who is the president, secretary or other office-bearer of a registered co-operative society engaged in agriculture, industry, trade or banking, receiving or having received any financial aid from the Central Government or a State Government or from any corporation established by or under a Central, Provincial or State Act, or any authority or body owned or controlled or aided by the Government or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);

(x)     any person who is a chairman, member or employee of any Service Commission or Board, by whatever name called, or a member of any selection committee appointed by such Commission or Board for the conduct of any examination or making any selection on behalf of such Commission or Board;

(xi)    any person who is a Vice-Chancellor or member of any governing body, professor, reader, lecturer or any other teacher or employee, by whatever designation called, of any University and any person whose services have been availed of by a University or any other public authority in connection with holding or conducting examinations;”

It is pertinent to mention here that as per Section 2 (c) (viii), any person who holds an office by virtue of which he is authorised or required to perform any public duty shall be considered as “Public Servant”

The scope of “Public Duty” has been defined under Section 2 (b), which is as follows:

(b)     “Public Duty” means a duty in the discharge of which the State, the public or the community at large has an interest.

Explanation- In this clause “State” includes a corporation established by or under a Central, Provincial or State Act, or an authority or a body owned or controlled or aided by the Government or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);”

Since, Section 2 (b) of the Prevention of Corruption Act, 1988, has given broad definition to the term “Public Duty”, being inclusive in nature, quite often, the Courts are posed with the question to interpret as to whether any officer discharging his duty in the capacity of Chairman, Managing Director or Director of a Private Banking Company would come within the purview of being a “Public Servant” under Section 2 (c) of the Prevention of Corruption Act, 1988 and discharging “Public Duty” under Section 2 (b) of the Prevention of Corruption Act, 1988 and thus can be prosecuted for commission of offences under the Prevention of Corruption Act, 1988.

The said question becomes altogether more important when Section 46A of the Banking Regulation Act, 1949, categorically stipulates that the Managing Director, Director, Auditor, Liquidator, Manager and any other employee of a Banking Company shall be deemed to be a Public Servant for the purposes of Chapter IX of the Indian Penal Code, 1860 and with the enactment of the Prevention of Corruption Act, 1988, the offences under Section 161 to 165-A included in Chapter IX of the Indian Penal Code, 1860 stood deleted and were incorporated under Sections 7 to 12 of the Prevention of Corruption Act, 1988 but unfortunately, the same were not incorporated in Section 46A of the Banking Regulation Act, 1949.

Section 46A of the Banking Regulation Act, 1949 is reproduced here-in-below:

“46A. Chairman, director etc., to be public servants for the purposes of Chapter IX of the Indian Penal Code.

Every chairman who is appointed on a whole-time basis, managing director, director, auditor, liquidator, manager and any other employee of a banking company shall be deemed to be a public servant for the purposes of Chapter IX of the Indian Penal Code (45 of 1860).”

Recently, the Hon’ble Supreme Court in the case titled as “Central Bureau of Investigation, Bank Securities & Fraud Cell Vs. Ramesh Gelli & Others”, (2016) 3 SCC 788, while deciding this controversy came to a conclusion that “As such, merely for the reason that in 1994, while clarifying the word “chairman”, legislature did not substitute words “for the purposes of Prevention of Corruption Act, 1988” for the expression “for the purposes of Chapter IX of the Indian Penal Code (45 of 1860)” in Section 46A of Banking Regulation Act, 1949, it cannot be said, that the legislature had intention to make Section 46A inapplicable for the purposes of P.C. Act, 1988, by which Sections 161 to 165A of IPC were omitted, and the offences stood replaced by Sections 7 to 13 of P.C. Act, 1988.”. The Hon’ble Court also held that “there can be no dispute that before enactment of the PC Act, Section 46A of the BR Act had the effect of treating the concerned employees/office bearers of a Banking Company as public servants for the purposes of Chapter IX of the IPC by virtue of the deeming provision contained therein. The enactment of the PC Act with the clear intent to widen the definition of ‘public servant’ cannot be allowed to have the opposite effect by expressing judicial helplessness to rectify or fill up what is a clear omission in Section 46A of the BR Act. The omission to continue to extend the deeming provisions in Section 46A of the BR Act to the offences under Sections 7 to 12 of the PC Act must be understood to be clearly unintended and hence capable of admitting a judicial exercise to fill up the same. The unequivocal legislative intent to widen the definition of “public servant” by enacting the PC Act cannot be allowed to be defeated by interpreting and understanding the omission in 12 Section 46A of the BR Act to be incapable of being filled up by the court.

Thus, based on the afore-said observations of the Hon’ble Supreme Court, it can be profitably stated that on the con-joint reading of the Statements and Objects of the Prevention of Corruption Act, 1988 with Section 46 A of the Banking Regulation Act, 1988, the officers as mentioned under Section 46 A of the Banking Regulation Act, 1988 are amenable to prosecution under the provisions of the Prevention of Corruption Act, 1988 and that they are public servants.

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