The accused persons were not public servants within the meaning of Section 21 of the Indian Penal Code and the acts allegedly amounting to an offence ascribed to the accused persons would not attract the words "acting or purporting to act in the discharge of official duty" occurring in Section 197 of the Code of 1973. Therefore, the complaint as against the accused persons was not maintainable inasmuch as the same was not preceded by sanction from the appropriate Government.

Headnote:
CRIMINAL PROCEDURE CODE - Section 197 - Sanction for prosecution - Public servant - Banking Regulation Act, 1949, Section 46-A - Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, Section 14 - Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, Section 14 - Indian Penal Code, 1860, Section 21(12)(b) - Whether the accused persons were public servants within the meaning of Section 21 of the Indian Penal Code - Whether the acts allegedly amounting to an offence ascribed to the accused persons would attract the words "acting or purporting to act in the discharge of official duty" occurring in Section 197 of the Code of 1973.
Fact of the Case:

The complainant, a businessman, was approached by the accused persons, who were high officials of the Bank of India, to participate in a transaction involving the furnishing of a Counter Performance Guarantee for a contract undertaken by Parikh Brothers, a firm in the Export-Import business. The complainant was assured that the transaction was "100% safe" and that he would be getting a commission at the rate of 2% covering the value of the entire consignment, thus fetching him an attractive profit of Rs. 3,20,000/-. The complainant executed a document titled "General Counter Guarantee" undertaking to indemnity the Bank of India against loss incurred by the neglect or failure of the Parikh Brothers to perform the contract. Pursuant to the execution of the counter-guarantee, the Kuwait Finance House communicated the terms of the L/C to Parikh Brothers as also the complainant. Later on, it transpired that Parikh Brother were not as credit, worthy as touted to be. The complainant was asked to aid Parikh Brother with a short-term advance and it was pointed out that this was necessary to guarantee some part of the commission still due to him. Complainant was made aware that getting of finance would not be difficult for him. He was entitled to receive Rs. 27,00,000/- vis-a-vis the Andheri property leased out and delivered to the Bank of India in January 1982. The sum had been withheld because a "No Objection Certificate" had not been tendered by the complainant. Accused No. 8 gave an assurance that the inability to tender the NOC would no longer be a real hurdle as he would see to it that the bank released the amount advanced. Accused No. 8 had a letter drafted which he got typed on the letter-head of the complainant. This letter purported to show a request made by the complainant for the advance of a sum of Rs. 15,00,000/- to him, the money being urgently required by him as he was executing an export order. The truth was that this was done to facilitate the advance of money by the complainant to the Parikh Brothers, at the behest and insistence of officers of the Bank. Taking advantage of the letter addressed by him, a sum of Rs. 13,50,000/- credited to his account was made available to the Parikh Brothers. The credit in favour of Parikh Brothers was made even before the final sanction of the advance to complainant. 6,000 metric tonnes of barley were shipped by Parikh Brothers to the Kuwait Supply Co and disbursements under the L/C, were made of Parikh Brothers. The suppliers also received the money meant for the remaining shipment of the remaining 2,000 metric tonnes of barley. But the documents in respect of the remaining consignment were found to be defective. As a result of this flaw, the Kuwait Finance House rejected the said documents and intimated the rejection to the Khand Bazar Branch. This branch for the first time on 2-7-1982, called upon the complainant to pay the amount advanced against the negotiation of documents together with interest. In this manner, complainant was called upon to make good a sum of Rs. 41,00,000/-. This was unwarranted, for the guarantee given by him did not make him liable for any sum in excess of Rs. 8,00,000/-. Complainant pointed out the true position to the officers of the bank, but to no avail. At the end of August 1982, accused Nos. 5 to 8 made an attempt to get three documents signed by the complainant and his father. They refused to comply as by this time their suspicions of the motivation and bona fide of the bank's officers had been thoroughly roused. With a view to get a loan against the lease of Andheri premises, complainant at the insistence of accused Nos. 5 and 6, handed over four letters of appropriation signed by him and three of his relations. It was understood that the letter gave the Khand Bazar branch a lien on the fixed deposits made by the executants of the letters. In some vital parts, the four letters were left blank. These four letters had nothing to do with the transaction between Parikh Brothers and the complainant or them and the bank etc. Therefore, it was a great surprise for the complainant to be informed in the first 10 days of October 1982, that the fixed deposits would be appropriated against the sum of Rs. 41,00,000/- which the Parikh Brothers had failed to pay the bank to reimburse it for the loss pursuant to the non-shipment of the last consignment of barley to Kuwait. Complainant's Advocates in a letter addressed to accused No. 7 made it clear that the appropriation of the fixed deposits by the bank was wrongful, illegal and mala fide. The bank did not pay heed to the protest and appropriated Rs. 38,00,000/- belonging to the complainant and his relations which monies were subject to the control of the bank. When an attempt was made to seek redress, accused No.1 declined to come to the aid of the complainant, making it clear that he would not do so as the bank was well protected with the appropriations afore-mentioned. A request to meet accused No. 3 was turned down by that Officer, the rejection being conveyed through accused No.1 It was complainant's case that all the accused had perpetrated a serious fraud upon him so as to deprive him of a sum of Rs. 38,00,000/- by the commission of serious offences such as cheating, criminal breach of trust and forgeries of valuable securities and documents. At a later stage, a document bearing the title OD-174 was sought to be made the king-pin of the liability fastened upon him. As the document stood, it gave the impression of having been executed by the complainant and his father on 17-2-1982. As a matter of fact, OD-174 was not executed on 17-2-1982 and came into existence quite some time after December 1982. The document relied upon had been touched up to support a fraudulent claim. Accused Nos. 1 to 8 were guilty of the offences of forgery with intention to cheat-the document being OD-174.
Finding of the Court:

The Court held that the accused persons were not public servants within the meaning of Section 21 of the Indian Penal Code and that the acts allegedly amounting to an offence ascribed to the accused persons would not attract the words "acting or purporting to act in the discharge of official duty" occurring in Section 197 of the Code of 1973. The Court further held that the complaint as against the accused persons was not maintainable inasmuch as the same was not preceded by sanction from the appropriate Government.
Issues: 1. Whether the accused persons were public servants within the meaning of Section 21 of the Indian Penal Code? 2. Whether the acts allegedly amounting to an offence ascribed to the accused persons would attract the words "acting or purporting to act in the discharge of official duty" occurring in Section 197 of the Code of 1973?
Ratio Decidendi: The Court held that the accused persons were not public servants within the meaning of Section 21 of the Indian Penal Code and that the acts allegedly amounting to an offence ascribed to the accused persons would not attract the words "acting or purporting to act in the discharge of official duty" occurring in Section 197 of the Code of 1973. The Court further held that the complaint as against the accused persons was not maintainable inasmuch as the same was not preceded by sanction from the appropriate Government.
Final Decision: The Court quashed and set aside the process issued against the accused persons vis-a-vis offences punishable under sections 468, 471 and 406 read with 109 and dismissed the complaint as against the accused persons. The complaint, in so far as it pertains to accused No. 8, shall proceed.

Judgment

S.M. DAUD, J.:---This petition under Article 227 and section 482 of the Criminal Procedure Code, 1973, is aimed at an order directing the issue of process against petitioners for the alleged commission of various offences punishable under the Penal Code.

2. Respondent No. 2---complainant, before the Magistrate---initiated a prosecution against the petitioner and two others for the alleged commission of offences punishable under sections 406, 420, 468 and 471 read with sections 109/120B of the Indian Penal Code. This complaint---briefly stated---is to the following effect:---

Complainant was a businessman trading in the name and style of M/s. Navinchandra Co. In his capacity as a businessman, he and his concerns were dealing with the processing of industrial diamonds, exports of cut and polished diamonds, building construction, transport and quarrying. Despite these extensive and varied interests, complainant and his concerns were ignorant of the export business and never had anything to do with Letters of Credit---hereinafter to be described as "L/Cs.". Complainant's concerns had accounts with the Bank of India's branch at Khand Bazar. In facts, the branch's premises were located in a building constructed by Somaiya Construction Co. The branch at Khand Bazar knew of complainant never being involved in transaction involving L/Cs. Accused Nos. 1 to 6 were high officials of the Bank of India. Accused No. 7 succeeded accused No. 8 as the Manager of the Khand Bazar branch. At the period figuring in this complaint accused No. 8 and 7 were the Managers of the Khand Bazar Branch with which complainant had dealings. Accused Nos. 9 and 10 were partners of a firm doing business in the name and style of Parikh Brothers. The film was in the Export-Import business. Mayur Exports of India had entered into a contract with Kuwait Supply Co. of Kuwait to sell to the latter 8,000 metric tonnes of barley. Mayur Exports assigned the contract undertaken by it to M/s. Parikh Brothers with the concurrence of Kuwait Supply Co. To facilitate the execution of the contract, Kuwait Supply Co. had to open a L/C and for that purposes utilised the services of a banking house doing business in the style of M/s. Kuwait Finance House. For the opening of the L/C through their bankers, the Kuwait Supply Co. wanted Parikh Brothers to furnish a 5% performance guarantee. The total value of the consignment was placed in the neighbourhood of Rs. 1,60,00,000/-. The 5% performance guarantee sought covered a total sum of about 8,00,000/- Parikh Brothers approached the Khand Bazar branch to provide the 5% guarantee on their behalf. The said branch was willing, but only if the suppliers could find a guarantor to cover the risk which the branch was to face. At that time, accused No.1 was the Manager of the Khand Bazar Branch. This gentleman was known to the complainant since January 1981. On February 1, 1982, accused No.1 called the complainant to the bank's premises with an offer to put some business his way. Complainant respondent and reached the office of accused No. 1 Accused No. 8 introduced him to the Parikh Brother viz., accused Nos. 9 and 10. Prior to this date, complainant was not acquainted with the Parikh Brothers, though in the year 1972 they had acquired some office premises in Navjivan Building from his construction company. Complainant was informed that Parikh Brothers had entered into a big deal for supply of barley to Kuwait Supply Co., that this was a profitable transaction; that the Khand Bazar branch was willing to furnish the 5% performance guarantee, provided complainant guarantee performance on behalf of Parikh Brothers; that Parikh Brother had a highly-rated credit-worthiness; that the contract was to be performed shortly and swiftly , that for a small risk of Rs. 8,00,000/- complainant would be getting commission at rate 2% covering the value of the entire consignment thus fetching him an attractive profit of Rs. 3,20,000/-. In other word

Click Here to Read the rest of this document