Analysis of Section 168 of the Indian Penal Code

An Analysis of Section 168 of the Indian Penal Code: Public Servants Unlawfully Engaging in Trade

Introduction

Section 168 of the Indian Penal Code, 1860 (IPC) addresses the offence of a public servant unlawfully engaging in trade. This provision is designed to uphold the integrity of public service by ensuring that public servants dedicate their time and efforts to their official duties without conflicts of interest that may arise from private commercial activities. The section aims to prevent situations where a public servant's private business interests could potentially influence their official decision-making or lead to a neglect of their duties. This article undertakes a comprehensive analysis of Section 168 IPC, examining its constituent elements, judicial interpretations, and its interplay with service conduct rules and other legal provisions, drawing primarily upon the provided reference materials.

The Statutory Provision: Section 168, Indian Penal Code

Section 168 of the Indian Penal Code, 1860, states:

"Whoever, being a public servant, and being legally bound as such public servant not to engage in trade, engages in trade, shall be punished with simple imprisonment for a term which may extend to one year, or with fine, or with both."

The essential ingredients for an offence under this section are:

  • The accused must be a "public servant."
  • The public servant must be "legally bound as such public servant" not to engage in trade.
  • The public servant must have "engaged in trade."

Defining "Public Servant"

The term "public servant" is central to Section 168 IPC and is defined in Section 21 of the IPC. The judiciary has provided clarity on this definition. In State Of Ajmer (Now Rajasthan) v. Shivji Lal (1959 AIR SC 847), the Supreme Court, while examining the status of a teacher in a government-maintained railway school, referred to its earlier decision in G.A. Monterio v. The State of Ajmer (1956). It was established that the true test to determine if a person is an officer of the government involves two criteria: (i) the individual must be in the service or pay of the government, and (ii) the individual must be entrusted with the performance of any public duty. Shivji Lal was deemed a public servant based on these criteria. This definition is fundamental for the applicability of Section 168 IPC.

The case of Mahesh Prasad v. State Of Uttar Pradesh (1955 AIR 70), though primarily concerning Section 161 IPC (bribery), also dealt with an appellant employed in the Railways, reinforcing the understanding of who constitutes a public servant within the context of offences committed in an official capacity. The Allahabad High Court in Mahesh Prasad v. State Of Uttar Pradesh (1954), similarly noted that the appellant was a public servant employed in the Railway.

The "Legally Bound" Criterion

For an offence under Section 168 IPC, a public servant must be "legally bound as such public servant" not to engage in trade. This legal obligation typically arises from various sources, including specific statutes or, more commonly, government servants' conduct rules.

The Bombay High Court in Mulshankar Maganlal Vyas And Vinod Mulshankar Vyas v. Republic Of India (1950 SCC ONLINE BOM 92) directly addressed the interplay between service rules and Section 168 IPC. The Court rejected the contention that prosecution under Section 168 IPC was not sustainable because the Civil Services (Classification, Control and Appeal) Rules did not list such prosecution as a penalty. The Court held:

"...in the absence of anything in the civil services (classification, control and appeal) rules to exclude the operation of the Indian Penal Code, we cannot presume an intension on the part of the framers of the rules to exclude the said operation... a public servant who engages himself in trade, although he is legally bound not to do so, can be prosecuted under s. 168 of the Indian Penal Code."

This judgment underscores that service conduct rules, such as Rule 21 of the Bombay Civil Services Conduct, Discipline and Appeal Rules (which presumably prohibited engaging in trade), can form the basis of the "legally bound" requirement under Section 168 IPC, and the penal provision operates independently of departmental penalties.

Specific statutes can also impose this legal binding. In CHANDER SHEKHAR v. STATE OF HP AND ORS (Himachal Pradesh High Court, 2024), it was noted that Section 151 of the Panchayati Raj Act, 1994, "clearly provides that if a member or office bearer or servant of Panchayat knowingly acquires, directly or indirectly any personal share or interest in any contract or employment with, by or on behalf of a Panchayat without the sanction or permission of the prescribed authority, he/she shall be deemed to have committed offence under Section 168 of Indian Penal Code, 1860." This illustrates a direct statutory linkage creating the legal bar against engaging in certain activities, deeming them an offence under Section 168 IPC.

Early case law also supports this. In Kalagava Bapiah, In Re (1903 SCC ONLINE MAD 4), a Municipal Councillor was prosecuted under Section 168 IPC for being a partner in contracts with the Municipality, implying that his position legally bound him not to engage in such trade.

Interpretation of "Engages in Trade"

The term "engages in trade" is a critical element of Section 168 IPC and has been subject to judicial interpretation. The Supreme Court, in State Of Gujarat v. Maheshkumar Dhirajlal Thakkar (1980 SCC 2 322), provided a significant analysis. The respondent, a Tracer in the Soil Conservation Office, undertook training as an Apprentice Electrical Signal Maintainer with the Railways and received a stipend. The Court had to determine if this amounted to engaging in "trade." It observed:

"The word “trade” in its narrow popular sense means “exchange of goods for goods or for money with the object of making profits”. In its widest sense, it includes any business carried on with a view to earn profit... Further, the word takes its meaning from the context."

The Supreme Court held that the respondent's engagement as an apprentice-trainee, even with a stipend, did not constitute engaging in "trade" within the meaning of Section 168 IPC. The purpose was to receive training for potential future employment, not to carry on trade as a means of livelihood. The Court noted, "The mere fact that he was paid a stipend during the training period as an apprentice, did not make him an employee of the Railway Administration... Even if the wider interpretation were to be put on the word “trade” in Section 168, Penal Code, the engagement of the respondent as an apprentice-trainee would not bring him within the purview of the expression “trade”."

In contrast, other factual scenarios have been considered as falling within "engaging in trade." In State (Delhi Administration) v. Anil Puri And Others (1979 SCC ONLINE DEL 124), the allegation against an Assistant Executive Engineer and a Librarian in the C.P.W.D. was that they, along with another, "floated a firm under the name and style of M/s International Book Traders for carrying on business of selling and purchasing books." While the case was decided on the point of limitation, the nature of the activity (running a book trading firm) was implicitly treated as a form of trade for the purpose of framing charges under Section 168 IPC.

Similarly, in Kalagava Bapiah, In Re (1903 SCC ONLINE MAD 4), the offence charged was "that during the term of his office as Municipal Councillor he was a partner in the year 1898 in all the contracts of Mr. Andrews, who had no capital of his own but was trading with the funds supplied to him by the defendant (and) that the said Mr. Andrews had taken up in July 1898 the contract for the supply of gravel and metal to the Ellore Municipality." This involvement in municipal contracts through a partnership was considered engaging in trade.

The case of Dr. R. Narayana v. Government Of A.P, Rep By Its Secretary, Home Department, A.P, Hyderabad And Others (2008 SCC ONLINE AP 185) involved an FIR under Section 168 IPC against a Civil Assistant Surgeon. While the judgment primarily dealt with the quashing of the FIR on procedural grounds related to cognizance and investigation, the underlying allegation likely pertained to private practice or other commercial activities deemed impermissible for a government doctor, which could be construed as "trade" depending on the specifics.

Procedural Aspects and Enforcement

Sanction for Prosecution

Prosecution of public servants often requires sanction under Section 197 of the Code of Criminal Procedure, 1973 (CrPC). In Kalagava Bapiah, In Re (1903 SCC ONLINE MAD 4), the Madras High Court discussed the nature of sanction accorded by the Government for prosecution under Section 168 IPC. It was held that the Government, in according sanction under Section 197 CrPC, "acts purely in its executive capacity and the sanction need not be based upon legal evidence." The Court clarified that it is not an appellate authority over the Government in the matter of sanction and that giving the accused an opportunity to show cause before granting sanction is at the Government's discretion.

Limitation Period

The issue of limitation for prosecuting an offence under Section 168 IPC was considered in State (Delhi Administration) v. Anil Puri And Others (1979 SCC ONLINE DEL 124). The offence under Section 168 IPC is punishable with simple imprisonment up to one year, or with fine, or with both. The Delhi High Court upheld the trial court's decision to acquit the accused because cognizance was taken after the expiry of the limitation period of one year as provided under Section 468(2)(b) of the CrPC (as it then stood for offences punishable with imprisonment for a term not exceeding one year).

Interaction with Service Conduct Rules

While service conduct rules often prohibit public servants from engaging in trade, these rules primarily govern the disciplinary aspects of employment. The Supreme Court's decision in Manohar Nathurao Samarth v. Marotrao And Others (1979 SCC 4 93), although concerning electoral disqualification and Regulation 25(4) of the LIC (Staff) Regulations, 1960 (which prohibited employees from participating in elections without permission), provides a useful analogy. The Court held that such a regulation was a disciplinary measure rather than a disqualification in the electoral sense. It distinguished between disciplinary restrictions and statutory disqualifications. This distinction is relevant: while breach of a conduct rule prohibiting trade may lead to disciplinary action, if that conduct also fulfills the ingredients of Section 168 IPC, it can lead to criminal prosecution, as affirmed in Mulshankar Maganlal Vyas.

Conclusion

Section 168 of the Indian Penal Code serves as a crucial legislative tool to maintain propriety and prevent conflicts of interest among public servants. Its application hinges on three core elements: the status of the accused as a "public servant," the existence of a legal prohibition against engaging in trade applicable to them in their official capacity, and the actual act of "engaging in trade."

Judicial pronouncements, such as State Of Ajmer v. Shivji Lal, have clarified the scope of "public servant." The "legally bound" aspect is often rooted in service conduct rules, as established in Mulshankar Maganlal Vyas, or specific statutes like the Panchayati Raj Act, as seen in CHANDER SHEKHAR v. STATE OF HP. The interpretation of "engages in trade" remains fact-dependent, with the Supreme Court in State Of Gujarat v. Maheshkumar Dhirajlal Thakkar providing key guidance that mere receipt of a stipend during training does not constitute trade, while activities like running a commercial firm (State (Delhi Administration) v. Anil Puri) or partnering in municipal contracts (Kalagava Bapiah, In Re) may fall within its ambit.

Procedural safeguards like sanction under Section 197 CrPC and the statute of limitations under Section 468 CrPC are also pertinent to prosecutions under Section 168 IPC. The continued enforcement of this provision, guided by judicial interpretation, is essential for fostering an ethical and accountable public service in India.