Explainer: Whether Bank Employees are Public Servant?

The present article delves into an ambiguity in law regarding the status of bank employees. There is a contradiction in the definition of a public servant which finds place into statutes dealing with penal law. Supreme Court of India in a judgment held that employees of a bank our public servants for the purpose of

The Prevention of Corruption Act , 1988 But they are not public servants as far as Indian Penal Code is concerned. In order to take COGNIZANCE there has to be a valid sanction accorded by the competent authority.

Section 21 of the Indian Penal Code defines a public servant. It reads as follows

the words public servant denote a person falling under any of the descriptions hereinafter following, namely:-

first- 

second-every commissioned officer in the military, [naval or air] forces of India

third-every judge including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions]

fourth-every officer of a Court of Justice[including a liquidator, receiver or commissioner] whose duty it is, as such officer, to investigate or report on any matter of law or fact, or to make, authenticate, or keep any document, or to take charge or dispose of any property, or to execute any judicial process, or to administer any oath, or to interpret, or to preserve order in the court, and every person especially authorized by a Court of Justice to perform any of such duties;

fifth -every juryman, assessor, or member of a panchayat assisting a Court of Justice or public servant;

sixth-every arbitrator or other person to whom any cause or matter has been referred for decision or report by any Court of Justice, or by any other competent  public authority

seventh-every person who holds any office by virtue of which he is empowered to place or keep any person in confinement

eighth -every officer of[the government] whose duty it is, as such officer, to prevent offenses, to give information of offenses, to bring offenders to justice, or to protect the public health, safety or convenience

ninth-every officer whose duty it is as such officer, to take, receive, keep or expend any property on behalf of[the government], or to make any survey, assessment or contract on behalf of[the government] or to execute any revenue process, or to investigate, or to report, on any matter affecting the pecuniary interests of[the government], auto make, authenticate or keep any document relating to the pecuniary interests of[the government], or to prevent the infraction of any law for the protection of the pecuniary interests of[the government]

tenth-every officer whose duty it is, as such officer, to take, receive, keep or expend any property, to make any survey or assessment or to levy any rate or tax for any secular common purpose of any village, town or district, or to make, authenticate or keep any document for the ascertaining of the rights of the people of any village, town or district;

eleventh -every person who holds any office in virtue of which he is empowered to prepare, publish, maintain or revise an electoral rule or to conduct an election or part of an election

twelfth- every person-

1. in the service or pay of the government or remunerated by fees or Commission for the performance of any public duty by the government
2. in the service or pay of a local authority, a corporation established by or under central, provincial or state act or a government company as defined in section 617 of the Companies Act, 1956.

In the year 1988 a new legislation namely the prevention of corruption act, 1988 was enacted. In Section 2 (c)  public servant is defined as follows

1. any person in the service or pay of the government or remunerated by the government by fees or Commission for the performance of any public duty;
2. any person in the service or pay of a local authority;
3. any person in the service or pay of a corporation established by or under a central, provincial or state act, or an authority or a body owned or controlled or aided by the government order government company as defined in section 617 of the Companies Act, 1956;
4. any judge, including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions;
5. any person authorized by a Court of Justice to perform any duty, in connection with the administration of justice, including a liquidator, receiver or commissioner appointed by such court  ;
6. Any arbitrator or other person to whom any cause or matter has been referred for decision or by a competent public authority;
7. Any person who holds an office by virtue of which he is empowered to prepare, publish, maintain or revise an electoral roll auto conduct an election or part of an election;
8. any person who holds an office by virtue of which he is authorized or required to perform any public duty;
9. any person who is  the president, secretary or other office bearer offer registered cooperative society engaged in agriculture, industry, Trade or banking, receiving or having received any financial aid from the central government or a state government Or from any corporation established by or under a central, provincial order state act, or any authority or body owned or controlled or aided by the government or a government company as defined in section 617 of the Companies Act, 1956
10. any person who is the chairman, member or employee of any Service Commission or board, by whatever name called, or a member of any selection committee appointed by such Commission or board for the conduct of any examination or making any selection on behalf of such Commission or board;
11. any person who is a vice chancellor or member of any governing body, professor, reader, lecturer are there any other teacher or employee, by whatever designation called, of any university and any person whose services have been availed of by a university or any other public authority in connection with holding or conducting examinations;
12. any person who is an office bearer or an employee of an educational, scientific, social, cultural or other institution, in whatever manner established, receiving or having received any financial assistance from the central government or any state government, or local or other public authority.

Banking Regulation Act 1949 in section 46A postulates that a chairman, managing director, director, auditor, liquidator, manager and any other employee of a banking company is deemed to be a public servant for the purposes of chapterIX of the Indian Penal Code for the purposes of clarification it is relevant to point out that sections 161 to 165A contained in chapterIX of the Indian Penal Code have been repealed by section 31 of the prevention of corruption act 1947 and these offenses are engrafted in section 7, 8, nine, 10, 11 and 12 of the prevention of corruption act 1988. It is also relevant to point out that section 167, 168, 169, 170 and 171 continue to remain in chapter IX of the Indian Penal Code even after enactment of the prevention of corruption act 1988.

Supreme Court of India in the case of central Bureau of Investigation, bank securities and fraud cell versus Ramesh Gelli and others criminal appeal number 1077- 1081 of 2013 held that employees of a bank our public servants for the purposes of prevention of corruption act 1988.

“In the light of law laid down by this court as above, it is clear that object of enactment of P.C Act , 1988 was to make the anti corruption law more effective and widen its coverage. In view of definition of public servant in section 46 A of banking regulation act 1949 as amended the managing director and executive director of a banking company operating under license issued by Reserve Bank of India, were already public servant , as such cannot be excluded from the definition of public servant. We are of the view that over the general definition of public servant given in section 21 IPC , it is the definition of public servant given in the P.C.Act 1988 red with section 46 A of banking regulation act which holds the field for the purposes of offenses under the said act for banking business what cannot be forgotten is section 46A off banking regulation act 1949 and mainly for the reason that section 161 to 165A of IPC have been repealed by the P.C Act 1988 relevance of section 46A of banking regulation act 1949 is not lost”

in paragraph 26 and 27 of the judgment Supreme Court of India held as follows;

“ however, we may make it clear that in the present case the accused cannot be said to be public servant within the meaning of section 21 IPC as such offense under section 409 IPC may not get attracted , we leave it open for the trial court to take cognizance of further offenses punishable under Indian Penal Code, if the same get attracted.

Therefore, having considered the submissions made before us, and after going through the papers on record, and further keeping in mind that statement of objects and reasons of the bill relating to the prevention of corruption act, 1988 read with section 46A of banking regulation act, 1949, we are of the opinion that the courts below have erred in law in holding that accused Ramesh Gelli and Sridhar Subasri, who were chairman / managing director and executive director of GTB  respectively, were not public servants for the purposes of prevention of corruption act 1988.”

This judgment is followed by a recent judgment delivered in criminal appeal number 2339 of 2023 A. Sreenivasa Reddy  VERSUS Rakesh sharma and others . In this case Supreme Court of India framed the following questions of law;

1. The appellant, serving in his capacity as an assistant general manager, State Bank of India, overseas bank, is removable from his office save by or with the sanction of the government so as to make section 197 of the CRPC applicable ?
2. Is it permissible for the special court CBI to proceed against the appellant for the offenses punishable under the IPC despite the fact dirty sanction under section 19 of the PC act, 1988 to prosecute the appellant for the offenses under the PC act 1988 is not on record as the same came to be declined?

Supreme Court of India answered the first question as follows :

“it is pertinent to note that the banking sector being governed by the Reserve Bank of India and considered as a limb of the state under article 12 of the constitution of India and also by virtue of section 46 A of the banking regulation act, 1949, the appellant here in is deemed to be a public servant for the purpose of provisions under the PC act 1988. However, the same cannot be extended to the IPC. As yuming for a moment that the appellant here in should be considered as a public servant for the IPC sanction also, the protection available under section 197 of the CRPC is not available to the appellant herein since, the conditions in built under section 197 of the CRPC are not fulfilled”

as far as the second question is concerned Supreme Court of India answered the same as follows;

“thus, although in the present case, the appellant has been discharged from the offenses punishable under the PC act 1988 yet for the IPC offenses he can be proceeded further in accordance with law.

If the offenses on the charge of which, the public servant is expected to be put on trial include the offenses other than those punishable under the PC act 1988 that is to say under the general law(i.e IPC) the court is bound to examine, at the time of cognizance and also, if necessary, at subsequent stages(as the case progresses) as to whether there is a necessity of sanction under section 197 of the CRPC. There is a material difference between the statutory requirements of section 19 of the PC act 1988 on one hand and section 197 of the CRPC on the other. In the prosecution for the offences exclusively under the PC act 1988 sanction is mandatory qua the public servant that necessity(or otherwise) of sanction under section 197 of the CRPC depends on the factual aspect. The test in the latter case is of the Nexus between the act of Commission or omission and the official duty of the public servant. To commit an offense punishable under law can never be a part of the official duty of a public servant. It is too simplistic an approach to adopt and to reject the necessity of sanction and the section 197 of the CRPC on such reasoning. The “safe and sure” Test, is to ascertain if the omission or neglect to commit the act complained of would have made the public servant answerable for the charge of dereliction of his official duty.  He may have acted in excess of his duty but if there is a reasonable connection between the impugned act and the performance of the official duty the protective umbrella of section 197 of the CRPC cannot be denied so long as the discharge of official duty is not used as a cloak for illicit acts.”

Before concluding Supreme Court of India made certain extremely important observations viz

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“ the object behind the enactment of section 19 of the PC act 1988 is to protect the public servants from frivolous prosecutions. Take a case wherein, the sanctioning authority at the time of declining to accord sanction under section 19 of the PC act 1988 observes that sanction is being declined because the prosecution against the accused could be termed as frivolous or vexatious. Then, in such circumstances what would be its effect on the trial so far as the IPC offenses are concerned? Could it be said that the prosecution for the offences under the PC act, 1988 is frivolous but the same would not be for the offences under the IPC?

What we have highlighted maybe examined by this court in some other litigation at an appropriate time”

To sum up, after studying and analyzing the various facets of law as enshrined in prevention of corruption act, banking regulation act , CRPC and IPC and various judgments of constitutional courts the law as it stands today for the employees of bank is as follows:

1. employees of a bank are public servants only as far as prevention of corruption act is concerned.
2. Since they are public servants hence a sanction is required as it is mandatory under section 19 of the prevention of corruption act.
3. Employees of a bank are not public servant as far as IPC is concerned.
4. Section 197 CRPC would not be attractive because of what Supreme Court of India has held “Protection available under section 197 of the CRPC is not available to the appellant herein since, the conditions in built under section 197 of the CRPC are not fulfilled”
5. last but not the least Supreme Court of India has opened a window in the case of A Sreenivasa Reddy by holding that if sanction is refused under section 19 of the prevention of corruption act 1988 as the sanctioning authority came to a conclusion that prosecution is frivolous or vexatious then what would be its effect on the trial as far as IPC offenses are concerned is an issue which may be examined by the Supreme Court of India in some future litigation at an appropriate time.

Article by Mr Rishad Murtaza

Advocate, Supreme Court of India