Dr. A.S Rao, Managin... v. Sri C.N.N Kutty And ...

1. This is a petition filed under Sec. 482 Cr. P.C to quash the proceedings in C.C 259/76 on the file of the Judicial First Class Magistrate, Hyderabad East. The accused has filed this petition.

2. According to the averments of the affidavit in support of the petition, the petitioner (accused) had been a Government Servant for 3½ decades and was appointed by the President of India as Managing Director of the Electronic Corporation of India Limited in the year 1971. He was holding the additional office of the Adviser to the Department of Atomic Energy from 1973. The Electronics corporation is a Government Company within the meaning of Sec. 617 of the Indian Companies Act and the Central Government holds, 99.997 shares out of the total number of one lakh. The Managing Director and other Directors of the Corporation are appointed by the President of India and are also removable only by the President. Their emoluments are also determined by the President. Consequently, the petitioner is a public servant within the meaning of clause (12) of Sec. 21 of the Indian Penal Code.

3. The respondent in the petition, who was the complainant in the criminal case before the lower court was an employee of the corporation working as Technical officer. The petitioner issued an order of termination of the services of the respondent in terms of the Corporations Regulations. He was one of the three officers whose services were terminated at that time. Later, the services of the respondent's son were terminated.

4. At the Annual Press Conference held on 11th April, 1976 in the premises of the Corporation, holding of such conferences being an annual feature as part of public relations policy of the Corporation, the petitioner and all the Heads of Departments of the Corporation were present. On the questions put by the press representatives about the progress made by the undertaking, the petitioner stated that they were making every sincere effort to achieve efficiency and the steps so far taken were giving encouraging results. No person's name was mentioned in connection with the measures they had taken for improving efficiency. The discussion was general and was mainly concentrated on fields of improvement in the company. The press published its reports of the conference.

5. Thereupon the respodent filed CC. No. 259/1976 on 11-4-1976 under Sec. 499 I.P.C charging that the petitioner had defamed him. However, the material placed before the Magistrate did not disclose any defamatory statements which could be attributed to the petitioner. There was no reference at all to the respondent in the reports published by him in the news papers. The petitioner did not even utter the words of corruption and inefficiency against the respondent. So, there was not even a prima facie case to take cognizance of the complaint by the learned Magistrate. Since the petitioner was a public servant, the Magistrate had no jurisdiction to take cognizance of the complaint without the previous sanction of the President of India or the Government of India. The proceedings are liable to be quashed on that ground alone.

6. The petitioner filed Cr. M.P No. 469/76 in CC. No. 259/76 before the lower court questioning the maintainability of the complaint without the sanction of the President of India or the Central Government. That petition was dismissed by the learned Magistrate on 25th January, 1977. It was dismissed on the ground that the petitioner was not a public servant. This is an erroneous view and consequently the proceedings before the lower court in C.C No. 259/76 are liable to be quashed.

7. The respondent, who was the complainant in the Criminal case, in his counter objected to the maintainability of the present petition on the ground that it is barred under Sec. 397(2) Cr. P.C since the impugned order is an interlocutory one. It is also denied that the petitioner is a public servant. The activities of the Electronics Corporation are purely commercial in character. Its nature and character are stated in the Memorandum of Association to which the petitioner was a signatory. The petitoner terminated the services of the respondent without assigning any reasons. He issued a notice challenging the temination as illegal and he intended to initiate separate proceedings. The contents of the press reports were clearly defamatory and it is the petitioner who was responsible for the same. Whether he, as complainant, has made out a prima facie case or not, only the facts as stated by him in the complaint have to be looked into. Whether the impugned publication was defamatory or not is a question of fact and it will have to be decided only after a full fledged trial. Even to the notice given by the respondent containing full allegations, the petitioner merely replied saying that the allegations contained in the notice were contrary to the facts. There was no categorical denial of the allegations made by the respondent. The petitioner was not entitled to the protection of Sec. 197 Cr. P.C The Electronics Corporation of India Limited is a company and has a separate and distinct legal entity from the Government. The activities of the Corporation have nothing to do with the affairs of the State. It was no part of the official duty of any public servant. Even supposing that the petitioner were one, it certainly did not form part of those functions to call the respondent as corrupt and inefficient. The acts complained of were not integrally connected with the duties attached to his office as to be inseparable from them It was therefore, submitted that no case has been made out to warrant the exercise of the inherent jurisdiction of this court.

8. Learned Advocate-General appearing for the petitioner raised the following contentions. The petitioner is a public servant within the meaning of Sec. 21(2) of the Indian Penal Code. Therefore, no prosecution could be launched against him without previous sanction as contemplated by Sec. 197 CrP.C Secondly, the allegations contained in the complaint do not disclose that any offence in the nature of defamation had been committed. The holding of the Press Conference was in the discharge of the official duties of the petitionerand there was a reasonable and pertinent connection with the holding of the Press Conference and the duties and functions of the petitioner as Managing Director of the Corporation.

9. On the other hand, Sri C. Ramakrishna appearing for the respondent, urged that the petition was not maintainable in law in view of the bar contained in Sec. 397(2) Cr. P.C He argued that when there was a specific bar contained in the Code, the inherent power under Sec. 482 Cr P.C cannot be invoked. To find out whether there is a prima facie case for making out the offence under Sec. 499 I.PC, only the averments in the complaint will have to be looked into. If these averments are looked into a prima facie case is disclosed. The other aspects are only matters of evidence which can be gone into at the time of the trial and the final hearing of the complaint. Further, the other requirement of Sec. 197(1)(a) Cr. P.C that the accused person at the time of commission of the alleged offence was employed in connection with the affairs of the Union of the Central Government is not satisfied in this case. Neither the activities of the Electroics Corporation nor the press conference held were part of the affairs of the Union of the Central Government. Further, defaming employees of the Corporation was not part of the functions of the petitioner as Managing Director.

10. The question whether the petitioner is a public servant within the meaning of Sec. 21(12) I.P.C can easily be disposed of. In fact, Sri Ramakrishna, learned counsel for the respondent, does not dispute that the petitioner is a public servant and rightly so, in my opinion Sec. 21 states what the expression “public servant” denotes. It states as many as 12 categories. The petitioner clearly comes within the meaning of the 12th category which is “Every officer in the service or pay of a local authority or of a Corporation engaged in any trade or Industry which is established by a Central, Provincial or State Act or of a Government company as defined in Sec. 617 of the Companies Act, 1956. The first explanation to the 12th category says that persons falling under any of the above descriptions are public servants whether appointed by the Government or not. This 12th category was inserted into the section by Act 2 of 1958. The Electronic Corporation, of which the petitioner is the Managing Director, is undoubtedly a “Government Company” within the meaning of Sec. 617 of the Companies Act. That section says:—

“For the purposes of this Act, Government Company means any company in which not less than fifty-one percent of the paid-up share capital is held by the Central Government or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary of a Government company as thus defined.”

It is not disputed and is in fact admitted that the Government of India owns as many as 99.997 shares out of one lakh shares of the Corporation Consequently the corporation is certainly a Government Company. It is also not disputed that the petitioner has been appointed as the Managing Director by the President of India as per Article 71(i)(a) of the Articles of Association of the Corporation. The President also has the power to remove any Director including the Chairman and the Managing Director. Thus as Sri C. Ramakrishna has himself agreed the petitioner was a public servant when the complaint was launched and still continues to be so. There is, therefore, no doubt that the petitioner is a public servant within the meaning of sec. 197 Cr. P.C

11. Learned counsel for the respondent, however, emphasised on the other requirement of Sec. 197(i)(a) Cr. P.C viz., that the person accused of an offence should, besides being a public servant be also at the time of commision of the alleged offence employed in connection with the affairs of the Union, of the Central Government. In the submission of the learned counsel neither the running of the Electronics Corporation nor the holding of a press conference is within the ambit of the affairs of the Union or of the Central Government, so that it could be said that previous sanction for prosecuting the petitioner was necessary. Reliance was placed in support of this contention on the following three decisions. Regional Inspector, Mines v. K.K Sengupta (1) 1973 Cr. Law Journal 1671, Potharaju v. Food Inspector Kurnool (2) ILR 1976 A.P 1247 and S.S Dhanoa v. Delhi Municipality (3) 1976 Crl Law Journal; 878.

12. In Potha Raju's case (2) ILR 1976 A.P 1247 A Division Bench of this Court consisting of Kondaiah, and A.V Krishna Rao JJ held that a public servant whose service have been lent by the Govt, or any other; statuory authority to any private institution or individual whose affairs or activities are in no way connected with the Govt, is not entitled to the protection of the provisions of Sec. 197(i), In the case before the Division bench the accused were not functioning, at the time when they were alleged to have committed the offences, as public servants. They were working as Business Manager of a District Co-operative Marketting Society and Managing Director of a Super Bazar, Kurnool. They were originally public servants. Their services were lent to the co-operative Marketting society and the Super Bazar, Kurnool. Since at the time of the alleged commission of the offences they were in the services of a cooperative society and a Super Bazar, the learned Judges held that it could, not be said that they were employed in connection with the affairs of the State or the State Government. I have grave doubts as to whether this view holds good. Super Bazars and co-operative Marketting societies are organised under the auspices of the State. In the present context of a modern State no body could say that the functions of a State are confined, only to the protection of the borders of the country, maintenance of internal security, law and order alone. Whatever be the nature of the State, it is now recognized all the world over that one of it basic functions. I may even say one of its fundamental duties is to maintain adequatesupplies of essential commodities for the people of the country. In pursuance of this objective both the State as well as the Central Governments are developing public distribution systems of which co-operative societies of diverse purposes and super Bazars are integral parts. I am firmly of the view that the cooperative Marketting societies and Super Bazars are certainly parts and: parcels of the affairs of the State. In this view, I would have referred the matter to a Fuller Bench. However, the facts in Potharaju's Case (2) supra are clearly distinguishable from the facts of the case before me; Here is an officer appointed by the President directly as Managing Director of a Government company and only the President can remove him. Therefore there is no lending of his services to a private society or organisation Consequently, the facts of Potharaju's Case (2) Supra have no relevance to the present case.

13. Regional Inspector Mines v. K.K Sengupta (1) supra is a decison of a single Judge of the Madhya Pradesh High Court. There, the tearned Judge held that the accused might be a public servant but there was no material on record to show that at the time of commission of the offence he was working in connection with the affairs of the Union. The learned Judge proceeded to pointoutthatthe Bhilai Steel Plant might bea Government company but it is a separte legal entity from the Central Government. Therefore, on the material on record it was held that the accused was not in connection working with the affairs of the Union and so, no sanction for his prosecution from the Government was necessary. The concerned accused at the relevant time was the agent of an iron ore mine. From a reading of the judgment it is not quite clear why the learned Judgechose to referthe Bhilai Steel Plant and what manner the accused there was concerned with the Bhilai Steel Plant. Thelefore the reference to the Bhilai Steel Plant appears to me to be only incidental and not pertinent to the decision of the case. When that part of the observation in excluded, I have no hesitation to agree with the learned Judge when he observed that in order to insist upon prior sanction under Sec. 197 it was not sufficient if it was shown that the accused was a public servant and that further it must also be demonstrated that he was working with the affairs of the Union. So, this decision does not render much assistance to the contention of the respondent.

14. S.S Dhanoa v. Delhi Municipality (3) is a decision of a single Judge of the Delhi High Court. There, the services of a Government servant were put at the disposal of a Super Bazar. The food article taken from the Super Bazar was found to be adulterated. The Govt, servant was also impleaded as an accused. The learned Judge held that running of a Super Bazar was not one of the affairs of Union and therefore the accused person was notat the relevant time employed in connection with the affairs of the Union and he was merely working as General Manager of the Supe r Bazar and consequently no sanction envisaged under Sec. 197 Cr. P.C was necessary. With respect I cannot agree with the view taken by the learned Judge. As I have already pointed out, in my view, running of Super Bazars in order to establish a public distribution system thereby ensuring proper supplies of essential commodities to the people is clearly an affair of the Union and the State. Be that as it may, the Delhi case (4) supra is also distinguishable from the present case on the same grounds as I have distinguished Potha Raju's Case (B) Supra of this Court.

15. The requirements of Sec. 197 have been repeatedly laid down by several Courts. There is no dispute about those ingredients. The debats before me relates only to the requirement that the person should be, at the time of the commission of the alleged offence, employed in connection with the affairs of the Union, of the Central Government, before he insists on the prior sanction of the Government for his prosecution. Clause (a) of Sec. 197(1) relates to the affairs of the Union, of the Central Government and clause (b) relates to the affairs of a State, of the State Government. The Dictionary meaning of the word “affair” is “that which is to be done; business;……”. Understood in that light, the affaris of the Union and the Central Government on the one hand and of a State and the State Government on the other hand have been ever widening in their scops and content as time passes on. The modern State, be it the Central Government or the State Govt., is deeply concerned with the social, economic and industrial progress of the country and its people. In fact the Constitution of India proclaims in its preamble that one of its basic objectives is to secure to all the citizens justice, social, economic and political. That objective is reiterated and the State is enjoined under Articles 38 and 39 to promote the welfare of the people, by securing and protecting as effectively as it may a social order in which justice, social economic and political, shall inform ail the institutions of the national life. Clause (b) of Art. 39 declares that the State shall direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and clause (c) further declares that the State shall endeavour to see that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. Not only in order to achieve economic growth through scientific and technological processes, but also to achieve an egalitarian economic system, the Central and the State Govts, have entered the field of industry, trade and commerce and that activity of the State is called “public sector”. All the public sector undertakings, be they Corporations brought into existence under different enactments or Govt, companies brought into existence under the Companies Act, are endeavours of the Central and State Govts, to achieve these objectives of the Constitution. In my opinion, it would be defeating the very basic functions of a modern State and also defeating the fundamental conception of our Constitution if these public sector corporations and Government companies are excluded from the purview of the affairs of the Central Government or the State Government. Take for instance, the Electronics Corporation of India with which I am now concerned) It is of universal knowledge, and there cannot be any dispute about it, that the development of elctronics is very essential for the growth of not merely industral activity but also of several other activities of the State and the amenities provided by it. The more modern the electronic system is made, the more effective and the more quicker would be the progress of the country and the services rendered by the State to the people. That is why the Central Government floated the company ie., the Electronics Corporation of India contributing to all theone lakh shares therein excepting a paltry three. Besides contributing practically the entirety of the capital the Central Government has all the control over the corporation. The President appoints the Chairman, Managing Director and other Directors of the Corporation and he alone removes them. Therefore, the function of the Electronics Corporation, in my considered view, is part of the affairs of the Union, of the Central Government. So, when the petitioner before me functions as Managing Director of such a Corporation, he is participating as a public servant in the affairsof the Union, of the Central Government. I therefore, repel the contention advanced by Sri, C. Ramakrishna on behalf of the respondent in this behalf.

16. Then it is said that holding a press conference is not part of the functions of the petitioner who is the Managing Director of the Corporation. Public relations are an essential part of the functions of the management of a public corporation. After all what the Govenment invested in the Corporation is the money of the people of this country. The people are entitled to know what is happening with such institutions. The petitioner, while holding the press conference, was discharging an important aspect of his official functions.

17. Thus I find that all the requirements of Sec. 197(1)(a) Cr. P.C are satisfied in the case of the petitioner before me. It must then follow that prior sanction is necessary for his prosecution. It is not in dispute that such sanction was neither sought nor obtained. Therefore, the Lower Court acted illegally in taking congnizance of the offence.

18. However, there is another objection raised by Sri C. Ramakrishna, learned counsel for the resgpondent, to the maintainability of the present petition. That objection is founded on Sec. 397(2) which lays down that powers of revision conferred by sub-sec. (1) of that section shall not be exercised in relation to any interlocutory order passed in any appeal, enquiry, trial or other proceedings. Learned Counsel relied on the decisions of Channakesav Reddy, J, dated 18-3-1976 in Crl. R.C 630/75, Punnayya J in D. Paskaly v. The State (SPE) Hyderabad (4) 1977 MLJ (Crl) 202 and Chinnappa Reddy J in B. Seshagiri Rao v. T.V Sarma (5) 1976 (1) Andhra Weekly Reporter 328. I am not prepared to accede to the very premise on the basis of which this argument has been built up viz., that the order of the Lower Court was an interlocutory order. I am unable to see how the order of the Lower Court holding that the prosecution was not vitiated by the absence of prior sanction under Sec. 197 Cr. P.C is an interlocutory order. Had the application of the present petitioner before it been allowed, it would have put an end to the case itself. The order of the Lower Court has not dealt with any interim or interlocutory matters but has adjudicated upon the propriety of the prosecution and the rights of the parties. I am not, therefore, prepared to uphold the contention that the order of the Lower Courtis an interlocutory order within the meaning of Sec. 397(2) Cr. P.C That apart, what is before me is an independent petition under Sec. 482 Cr. P.C In this view the decision cited by the learned counsel are of no value to him. I hold that the present petition is maintainable. I am even inclined to go a step further and hold that a regular revision petition is maintainable against the order of the Lower Court under Sec. 397(1). However, for the purpose of the present case, I need not go to that extent.

19. Since I have held that the very prosecution was not maintainable in the absence of prior sanction, it is not necessary for me to go into the other questions.

20. In the result this petition is allowed and all the proceedings in C.C No. 259/76 on the file of the Judicial First Class Magistrate. Hyderabad East are quashed.