Deputation Does Not Dissolve Public‑Servant Status: Supreme Court Clarifies Mandatory Sanction under Section 197 CrPC

1. Introduction

The Supreme Court’s decision in Central Bureau of Investigation v. Ramesh Chander Diwan (2025 INSC 539) settles a recurring controversy: does a government officer, sent on deputation to another body, lose protection under Section 197 of the Code of Criminal Procedure, 1973 (CrPC)?

At the heart of the dispute was Mr. Ramesh Chander Diwan, an Executive Engineer initially appointed by the Government of Punjab and later deputed to the Municipal Corporation, Chandigarh. The Central Bureau of Investigation (CBI) prosecuted him for conspiracy and cheating under the Indian Penal Code (IPC) and for offences under the Prevention of Corruption Act, 1988 (PC Act). The Special Court framed charges without prior sanction from the competent authority. The High Court, however, discharged him from IPC offences because no sanction had been obtained under Section 197 CrPC, holding that his deputation did not alter his status as a public servant removable only by the Governor of Punjab.

The CBI and the original complainant appealed. Dipankar Datta, J., writing for the Bench, dismissed the appeals and endorsed the High Court’s reasoning, thereby laying down a clear precedent on the interplay between deputation and the requirement of sanction for prosecution.

2. Summary of the Judgment

Issue: Whether a public servant on deputation remains entitled to the protection of Section 197 CrPC (sanction for prosecution) in respect of acts committed during deputation.
Holding: Yes. An officer appointed by, and ultimately removable by, the Central/State Government continues to be a “public servant” under Section 21 IPC and cannot be prosecuted for acts “while acting or purporting to act in discharge of official duty” without prior sanction, even when he is serving on deputation.
Result: The Supreme Court upheld the discharge of Mr. Diwan on IPC charges for want of sanction. The CBI’s liberty to seek sanction under the CrPC (not the BNSS) was reserved.
Connected Findings:
- The amended Section 19 PC Act (post‑2018) requiring sanction for retired officials is prospective; hence High Court rightly refused discharge on PC Act counts.
- Provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) do not automatically apply to pending matters; repeal clause mandates continuation under CrPC.

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

The judgment traverses a long line of cases distinguishing public‑sector employees from deputed government servants:

S.S. Dhanoa v. Municipal Corporation Delhi (1981) – Held IAS officer deputed to a co‑operative society not a “public servant” for Section 197. Court distinguished it as the borrowing organisation was neither a statutory corporation nor a local authority.
Mohd. Hadi Raja v. State of Bihar (1998) – Public‑sector company employees cannot claim Section 197 protection. Cited to show the principle that status turns on appointing/removing authority, not on work nature alone.
N.K. Sharma v. Abhimanyu (2005) – No sanction for Managing Director of a co‑operative society; salary not paid by Government. Court distinguished on facts.
Punjab State Warehousing Corporation v. Bhushan Chander (2016) and BSNL v. Pramod V. Sawant (2019) – Reaffirmed that employees of statutory corporations/companies are outside Section 197 unless their appointing/removal authority is Government.
State of Kerala v. V. Padmanabhan Nair (1999) – No sanction needed once the accused ceases to be a public servant on date of cognizance. Clarified prospectivity question for PC Act offences.
Inspector Of Police v. Battenapatla Venkata Ratnam (2015) – Section 197 should not shield corruption. Cited to underscore public‑interest rationale.
State of Punjab v. Inder Singh (1997) and Umapati Choudhary v. State of Bihar (1999) – Leading expositions on meaning and incidents of deputation.
A. Sreenivasa Reddy v. Rakesh Sharma (2023) – Protection applies only where Government is the appointing/removal authority; endorsed and applied.

The Court synthesized these authorities to assert a single governing test: Who can lawfully dismiss/remove the officer? If it is the Government, Section 197 applies. None of the cited cases altered that core principle; rather, they underscored factual differences when protection was denied.

3.2 Legal Reasoning Adopted

Statutory Matrix
- Section 197 CrPC bars courts from taking cognizance of offences alleged against a “public servant” for acts in official duty without previous sanction.
- “Public servant” is defined only in Section 21 IPC; clause Twelfth makes anyone “in the service or pay of Government” a public servant.
Concept of Deputation
- Deputation is temporary placement; there is no severance of the employment link with the lending department.
- Disciplinary control usually lies with the parent (appointing) authority unless expressly transferred.
Application to Facts
- Mr. Diwan was appointed by the Government of Punjab; the Governor alone could dismiss/remove him (Article 311).
- Orders extending his deputation were issued by the Governor, confirming continued State control.
- No evidence of absorption into Municipal Corporation, Chandigarh; accordingly, he remained a public servant under clause Twelfth, Section 21 IPC.
Consequent Necessity of Sanction
- Because the alleged IPC offences arose out of or were connected with changes in tender conditions—acts committed in official capacity—Section 197 was attracted.
- Absence of sanction rendered the Special Court’s cognizance invalid; High Court’s discharge order was therefore correct.
BNSS Consideration
- Though the Bharatiya Nagarik Suraksha Sanhita, 2023 repeals CrPC prospectively, pending proceedings continue under CrPC (Section 531 BNSS).
- CBI’s request to rely on BNSS deemed‑sanction provisions (Section 218) was rejected; liberty given only to seek sanction under extant CrPC.

3.3 Potential Impact of the Decision

Investigative Agencies: Must verify the service status and appointing authority of any public servant on deputation before filing charge‑sheets. Failure will risk wholesale discharge.
Administrative Departments: Lending governments may need to put in place quick sanction protocols to avoid procedural bottlenecks in corruption cases.
Borrowing Organisations: Will recognise their limited disciplinary reach over deputed officers; concurrent jurisdiction clauses, if needed, must be expressly stipulated.
Courts: Provides a ready test for future discharge applications where deputation is involved—a likely frequent scenario given India’s extensive inter‑governmental staffing.
Legislative Landscape: While BNSS endeavours to streamline sanction through a “deemed sanction” device, its inapplicability to pending matters makes this judgment immediately relevant for a significant backlog of cases.

4. Complex Concepts Simplified

Deputation: A temporary assignment where an employee works in another organisation but remains on the rolls—and under the control—of the parent employer.
Section 197 CrPC: A legal shield requiring the Government’s permission (sanction) before a court can try a public servant for alleged misconduct linked to official duties. The aim is to protect honest officers from frivolous litigation.
Public Servant (Section 21 IPC): Includes any individual who serves or is paid by Government, or certain local/statutory bodies. Importantly, the definition is imported into all statutes that rely on the phrase, including CrPC.
Sanction v. Cognizance: “Sanction” is the administrative approval; “cognizance” is the judicial act of taking notice of an offence. Courts cannot take cognizance unless sanction exists where mandated.
BNSS 2023: The Bharatiya Nagarik Suraksha Sanhita, enacted to replace the CrPC prospectively. Though it introduces deemed‑sanction rules, pre‑existing prosecutions continue under the old Code.

5. Conclusion

The Supreme Court’s ruling re‑affirms a foundational, deceptively simple rule: the identity of the appointing/removal authority determines “public servant” status for Section 197 purposes, not the location of posting. Deputation, by its very nature, cannot dissolve the officer’s constitutional and legal bond with the parent government.

By dismissing CBI’s appeals, the Court has cautioned investigators to respect statutory safeguards even while fighting corruption, reinforcing that procedural compliance is a substantive guarantee of fairness. The judgment will serve as a vital checkpoint for future litigation involving deputation, sanction and the transition from the CrPC era into the BNSS regime.