Brief Facts
- The appellant, who was an Assistant General Manager at the State Bank of India, Overseas Bank (Bank), Hyderabad, is accused of conspiring to cheat the bank by sanctioning a corporate loan of Rs 22.50 crores for M/s Sven Genetech Ltd., which allegedly diverted the funds for personal benefits and to clear old debts.
- The Central Bureau Investigation (CBI) registered a first information report (FIR) against the appellant and other co-accused for offenses under Sections 120-B, 420, 468, and 471 of the IPC, and under Section 13(2) of the Prevention of Corruption Act, 1988.
- Initially, the Chief General Manager (MCG-I) of SBI declined to sanction prosecution under the PC Act, 1988, but later reversed this decision and granted sanction.
- The appellant challenged the grant of sanction before the High Court, which initially allowed the writ petition and quashed the sanction. The CBI appealed this decision, but the intra-court appeal failed, affirming the High Court’s decision.
- Subsequently, the appellant filed a discharge application before the Special Court under Section 239 of the CrPC, seeking discharge from prosecution due to lack of sanction.
- The Special Court discharged the appellant from prosecution under the PC Act, 1988, citing the High Court’s order. However, it declined to discharge him for offenses under the IPC, relying on the Supreme Court’s decision in Parkash Singh Badal v. State of Punjab (2007) 1 SCC 1
- The appellant then filed a petition before the High Court seeking discharge from the entire prosecution, but the High Court rejected the petition, citing the serious and specific allegations against him and directing the Special Judge to dispose of the case within three months.
Issues
- Whether the appellant, serving in his capacity as an Assistant General Manager, State Bank of India, Overseas Bank, is removable from his office save by or with the sanction of the Government so as to make Section 197 CrPC applicable?
- Is it permissible for the Special Court (CBI) to proceed against the appellant for the offences punishable under IPC despite the fact that the sanction under Section 19 of the PC Act, 1988 to prosecute the appellant for the offences under the PC Act, 1988, is not on record as the same came to be declined?
Held
- The Apex Court upheld the order of the High Court and the proceedings against the accused for the offences under the IPC was allowed to be continued as protection under section 197 IPC was not available to the Appellant. It is also held that the proceedings under IPC can continue independently, irrespective of the denial of sanction under section 19 of the PC Act for the offences punishable under the PC Act.
- The appellant was serving as an Assistant General Manager, State Bank of India, Overseas Bank at Hyderabad. State Bank of India is a Nationalized Bank. Although a person working in a Nationalized 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. It is not disputed that the appellant is not holding a post where he could not be removed from service except by or with the sanction of the Government. In this view of the matter, even if it is alleged that the appellant herein is a public servant, still the provisions of Section 197 of the CrPC are not attracted at all.
- The offences under the IPC and offences under the PC Act, 1988 are different and distinct. What is important to consider is whether the offences for one reason or the other punishable under the IPC are also required to be approved in relation to the offences punishable under the PC Act, 1988.
- It is important to draw a distinction between an order of sanction required for prosecuting a person for commission of an offence under the IPC and an order of sanction required for commission of an offence under the PC Act, 1988.
- The judgment emphasizes that the requirement for previous sanction under Section 19 of the PC Act, 1988 is not the sole prerequisite in prosecutions before the Court of Special Judge. If the charges against the public servant include offenses under the general law, such as the IPC, the court must assess whether sanction under Section 197 CrPC is necessary. The key criterion in applying Section 197 CrPC is the “nexus” between the act in question and the official duty of the public servant. Merely committing an offense cannot be deemed part of official duty. The court must ascertain if there is a “reasonable connection” between the act and the performance of official duty, ensuring that official duty is not misused to shield illicit acts.
Relevant Para No.
45, 54, 55, 59