JUDGMENT - M.F. SALDANHA, J.:---Faced with a situation wherein the administration of Co-operative Societies was so deeply infected with dishonest and corrupt practices which were being fostered by a set of officials who, in law, were otherwise supposed to be incharge of curbing them, the State Legislature introduced in 1986, section 161 in the Maharashtra Co-operative Societies Act. This was a drastic provision which was essential if the rot was to be curbed. The office-bearers and members of the Managing Committee of a co-operative society were deemed to be public servants and the State was empowered to prosecute them for offences of corruption by treating them on par with other public servants.

2. The chronic disease that has permeated into the lifeblood of the co-operative system, is the almost universal belief that whatever available funds the society possesses should be misappropriated. At times directly, but invariably through indirect and sometimes subtle means, this activity continues with impunity and, as the investigation invariably discloses, in partnership with the officials who are being paid out of public funds to prevent such offences. Misappropriation of co-operative funds is being treated as though it is a fundamental right of all persons incharge of co-operative societies. In 1986, the Government introduced section 161 of the Co-operative Societies Act as a measure geared towards combating this malady. Under section 409 of the Indian Penal Code, the law prescribes heavy sentences for acts of criminal breach of trust committed by a public servant and by this amendment it was intended to apply section 409 of the Indian Penal Code to all cases where Co-operative funds are misappropriated and misused. Unfortunately, barring some very stray instances, no steps of any consequence were taken pursuant to that amendment. The problem has now assumed horrifying proportions and it will be essential for the State Government to immediately take some stringent steps in this regard if the intention is to save the entire Co-operative sector from total ruination.

3. Under the scheme of the Co-operative Societies Act, stringent duties are cast on the supervisory officials, apart from investing them with the requisite powers to ensure clean and proper administration of societies. Experience has unfortunately shown that the officials concerned are not only negligent in some cases but that they protect, side with and cover up for the persons who are guilty of the offences and there is little doubt about the fact that where a corrupt practice is sanctioned, permitted and condoned that it can only be for a corrupt motive. In this view, therefore, the solution lies in applying the law with equal vigour not only against the wrongdoers, namely, the office bearers of the society, but also against those who have colluded viz. the officials of the department. The present set of appeals is illustrative of how one of the oldest and most successful Co-operative societies in the area was ruined and taken into liquidation through acts of misappropriation of its funds and how long thereafter action was instituted against the office bearers, the Chairman, the Vice-Chairman and the Secretary when it was too late.

4. A complex but important issue of law has been canvassed by learned Counsel appearing on both sides in this set of appeals which undoubtedly has not arisen for the first time but presents certain angles of importance. The issues that I am called upon to decide are summarised below :

(a) Whether the three appellants who admittedly were office bearers of a Co-operative Society during the period relevant to the charges, can be categorised as public servants within the meaning of section 161 of the Maharashtra Co-operative Societies Act read with section 21 of the Indian Penal Code?

(b) Whether it was essential for the prosecuting authorities to have obtained prior sanction to prosecute the accused persons in their capacity as Public Serva

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