S.S. Dhanoa Vs. Municipal Corporation,
Delhi & Ors [1981] INSC 114 (8 May 1981)
REDDY, O. CHINNAPPA (J) REDDY, O. CHINNAPPA
(J) SEN, A.P. (J) ISLAM, BAHARUL (J)
CITATION: 1981 AIR 1395 1981 SCR (3) 864 1981
SCC (3) 431 1981 SCALE (1)919
CITATOR INFO:
E 1986 SC1571 (56) D 1991 SC 855 (16,23)
ACT:
Public servant-Services of an Officer
belonging to the Indian Administrative Service loaned to a Cooperative
Society-Prior approval of Central Government under section 197 Cr. P.C. if
required for prosecution under Prevention of Food Adulteration Act-Officer,
whether a public servant within the meaning of clause Twelfth of section 21
I.P.C.
Penal code-Clause Twelfth of section 21-Scope
of- Services of a government servant loaned to a Cooperative Society-Government
servant if continued to be a public servant.
HEADNOTE:
The services of the appellant, a Member of
Indian Administrative Service, were placed at the disposal of the Co-operative
Store Ltd. for being appointed as the General Manager of the Super Bazaars run
by the Co-operative Store.
On a complaint being filed against the
appellant for commission of alleged offence punishable under section 7 read
with s. 16 of the Prevention of Food Adulteration Act 1954 before the
Metropolitan Magistrate Delhi the appellant contended that he was a public
servant within the meaning of clause Twelfth of section 21 of the Penal Code,
that the act complained of was done by him in the discharge of his duties as a
public servant and that since, as required by section 197, Cr. P.C., previous
sanction of the Central Government had not been obtained the court was not
competent to take cognizance of the offence.
The Magistrate rejected all these
contentions. He held that the appellant could not be regarded as a public
servant within the meaning of clause Twelfth of section 21 and that at the
relevant time he was neither in the service or pay of the Government nor was he
employed "in connection with the affairs of the Union".
The High Court, on appeal, upheld the view of
the Magistrate.
Before this Court it was contended that the
term "corporation" used in clause Twelfth of section 21 is wide
enough to include not merely a statutory corporation but also a body corporate
such as the Cooperative Stores 865 established under the State Act like the
Bombay Cooperative Societies Act, 1925 and that as General Manager he was
employed in connection with the affairs of the Union by reason of the fact that
the Central Government had advanced a huge loan to the Society for carrying on
commercial activities.
Dismissing the appeal,
HELD: The appellant does not answer any of
the essential requirements of clause Twelfth of section 21 I.P.C. He was
neither an officer in the service or pay of the Government nor of a local
authority, a corporation established by or under an Act or a Government
company. [869 D] Mere incorporation of a society under a Central or State Act
does not make a body a corporation within the meaning of clause Twelfth of
section 21. The expression "corporation" must, in the context, mean a
corporation created by the legislature and not a body or society brought into
existence by an act of a group of individuals. A cooperative society is,
therefore, not a corporation established by or under an Act of the Central or
State legislature. [870 B] Corporation in its widest sense may mean any
association of individuals entitled to act as an individual.
But that is not the sense in which it is used
in clause Twelfth of section 21. There is a well marked distinction between a
body created by a statute and a body which, after coming into existence, is
governed in accordance with the provisions of a statute. A corporation
established by or under an Act of legislature can only mean a body corporate
which owes its existence, and not merely its corporate status to the Act. An
association of persons constituting themselves into a company under the Companies
Act or a society under Societies. Registration Act owes its existence not to
the Act of legislature but to acts of parties though it may owe its status as a
body corporate to an Act of the legislature. [871 C-G] In the instant case the
Cooperative Society was a society registered under the Bombay Cooperative
Societies Act. It is not a body created by a statute but a body created by an
act of a group of individuals in accordance with the provisions of the statute.
[872 F] Nor did the fact that the Central Government had advanced a huge loan
to the Society and held major shares in the total shareholding of the Society
make the Super Bazaars run by the Society an instrumentality of the State and
the appellant "employed in connection with the affairs of the Union"
within the meaning of section 197, Cr. P.C. [872 H- 873 B] The clause in the
agreement advancing the loan to the Society which provided that the General
Manager and other important incumbents of key posts shall not be appointed or
removed from their posts by the Society except with the prior approval of the
Government in writing was merely incorporated to safeguard the interests of the
Central Government. Legally the Super Bazaars were owned and managed by the
Society and not by the Central Government [873 E-F] Explanation to rule 2 (a)
of the All India Services (Conduct) Rules, 1968 which provides that a member of
the services whose services were Placed at the 866 disposal of any organisation
by the Central Government shall, for the purposes of these rules, be deemed to
be a member of the service serving in connection with the affairs of the Union
notwithstanding that his salary is drawn from sources other than the
Consolidated Fund of India serves a limited purpose, that is, "for the
purposes of these Rules".
Similarly rule 2(c) of the All India Services
(Discipline and Appeal) Rules, 1969 is for the purposes of these Rules.
These two Rules could not be pressed into
service for improving the language of clause Twelfth of section 21 of the Penal
Code. [873 G, 874 D]
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 520, of 1976.
Appeal by Special Leave from the judgment and
order dated the 17th September, 1975 of the Delhi High Court in Criminal Misc.
(M) 212 of 1974 D. Mukherjee, and O.P. Sharma for the Appellant.
P.R. Mridul, B.P. Mridul, B.P. Maheshwari and
Suresh Sethi for the Respondents.
The Judgment of the Court was delivered by
SEN, J. This appeal by special leave from a judgment of the Delhi High Court
upholding an order of the Metropolitan Magistrate, Delhi, raises a question of
some public importance. The question is as to whether the appellant, who is a
member of the Indian Administrative Service, and whose services were placed at
the disposal of the Cooperative Store Ltd., a society registered under the
Bombay Cooperative Societies Act, 1925 (hereinafter called the Society), was a
public servant within the meaning of cl.
Twelfth of s. 21 of the Indian Penal Code,
1860, for purposes of s. 197 of the Code of Criminal Procedure, 1973.
The question arises in this way.
The appellant is a member of the Indian
Administrative Service. By notification No. 27-942-Estt. 1, dated 23rd April,
1972, issued by the Government of India in the Ministry of Agriculture
(Department Agriculture), the services of the appellant, who was a Joint
Commissioner (State Liaison) in that Ministry, were placed at the disposal of
the Department for his appointment as the General Manager, Super Bazaar,
Connaught Place, New Delhi with effect from April 7, 1972, on which date he
took over charge as General Manager. At the request of the Managing Committee
of the Society, the Government of India extended the period of his deputation
for a further period of one year with effect from April 7, 1973. On completion
867 of his period of deputation, the appellant reverted as Joint Secretary in
the Ministry of Agriculture.
On October 10, 1973, the Food Inspector
purchased a sealed bottle of honey from the Super Bazaar at the INA Market. The
Public Analyst's report showed the honey to be adulterated. On April 5, 1974,
the Municipal Corporation, Delhi, filed a complaint against the appellant and
other officials of the Super Bazaar as also against the manufacturer of honey
for having committed an offence punishable under s. 7 read with s. 16 of Prevention
of Food Adulteration Act, 1954. On being summoned by the Metropolitan
Magistrate, Delhi, to appear before him as an accused, the appellant raised a
preliminary objection that the taking of cognizance of the alleged offence by
the Magistrate was barred under s. 197 of the Code of Criminal Procedure, 1973,
for want of sanction of the Central Government, since the act complained of was
nothing but an act done by him in the discharge of his duties as a public
servant.
The Metropolitan Magistrate, Delhi, by his
order dated October 9, 1974, rejected the objection, holding that the
appellant, at the time of commission of the alleged offence, was not a public
servant within the meaning of cl. Twelfth of s. 21 of the Indian Penal Code
and, therefore, he was competent to take cognizance of the alleged offence. In
coming to that conclusion, the learned Magistrate held that the services of the
appellant having been placed at the disposal of the Society, he was in foreign
service under FR 9 (7) and, therefore, could not be regarded as a public
servant within the meaning of cl. Twelfth of s. 21 of the Indian Penal Code for
two reasons, namely: (a) as the General Manager, he was not an officer in the
service or pay of the Government, and (b) while functioning as General Manager,
he was not employed in connection with the affairs of the Union. On appeal, the
High Court confirmed the view of the learned Magistrate.
The short question that falls for our
determination in this appeal is whether a member of the Indian Administrative
service, whose services are placed at the disposal of an organisation which is
neither a local authority, nor a corporation established by or under a Central,
Provincial or State Act, nor a Government Company, by the Central Government or
the Government of a State, can be treated to be a 'public servant' within the
meaning of cl. Twelfth of s. 21 of the Indian Penal Code for purposes of s. 197
of 868 the Code of Criminal Procedure, 1973. The answer to the question turns
on the construction of cl. Twelfth of s. 21 of the Indian Penal Code, 1860 and
s. 197 of the Code of Criminal Procedure, 1973, which, so far as they are
relevant, are as follows:
21. The words 'public servant' denote a
person falling under any of the descriptions hereinafter following, namely:-
Twelfth: Every person- (a) in the service or pay of the Government or
remunerated by fees or commission for the performance of any public duty by the
Government;
(b) in the service or pay of a local
authority, a corporation established by or under a Central, Provincial or State
Act or a Government company as defined in section 617 of the Companies Act,
1956.
S. 197 Prosecution of Judges and public
servants.
(1) When any person who is or was a Judge or
Magistrate or a public servant not removable from his office save by or with
the sanction of the Government is accused of any offence alleged to have been
committed by him while acting or purporting to act in the discharge of his
official duty, no Court shall take cognizance of such offence except with the
previous sanction:- (a) in the case of a person who is employed or, as the case
may be, was at the time of commission of the alleged offence employed, in
connection with the affairs of the Union, of the Central Government;
In support of the appeal, learned counsel for
the appellant has urged two grounds. The first is that the chain of
Departmental Stores known as Super Bazaar at Connaught Place, New Delhi,
together with 12 other super bazaars in the metropolitan city of Delhi,
including the one at the INA market, is nothing but a com- 869 mercial activity
of the Central Government and, therefore, the appellant was, at the time of
the, commission of the alleged offence, employed in connection with the affairs
of the Union. That being so, the prosecution could not be launched without
sanction from the Central Government under s. 197 of the Code of Criminal
Procedure, 1973. The second is that the Cooperative Store Limited which runs
the super bazaars, having been registered under s. 10 of the Bombay Cooperative
Societies Act, 1925, was a body corporate by virtue of s. 23 of that Act and,
therefore, the appellant was a public servant within the meaning of cl. Twelfth
of s.
21 of the Indian Penal Code. It is said that
although the appellant may not be covered by sub-cl. (a), he falls within the
ambit of sub-cl. (b) of cl. Twelfth. We find it difficult to accept these
submissions.
Clause Twelfth of s. 21 of the Indian Penal
Code protects two classes of public servants, viz., (a) every person in the
service or pay of the Government or remunerated by fees or commission for the
performance of any public duty by the Government, and (b) every person in the
service or pay of a local authority, a corporation established by or under a
Central, Provincial or State Act or a Government company as defined in section
617 of the Companies Act, 1956. The appellant does not answer any of these
descriptions. During his period of deputation, he was not an officer in the
service or pay of the Government, nor was he in the service of a local
authority, a corporation established by or under an Act or a Government
company. It is, however, urged that the expression 'corporation' appearing in
sub-cl. (b) of cl. Twelfth of s. 21 of the Indian Penal Code is wide enough to
include not only a corporation established by or under a Central, Provincial or
State Act, but also a body corporate. The submission proceeds on the basis of
s. 23 of the Bombay Cooperative Societies Act, 1925, which reads:
23. The registration of a society shall
render it a body corporate by the name under which it is registered, with
perpetual succession and a common seal, and with power to hold property, to
enter into contracts, to institute and defend suits and other legal proceedings
and to do all things necessary for the purposes of its constitution.
Clause Twelfth does not use the words
"body corporate", and the question is whether the expression
"corporation" contained therein, taken in collocation of the words
"established by or under a Central, Provincial or State Act" would
bring within its sweep a cooperative 870 society. Indubitably, the Cooperative
Store Limited is not a corporation established by a Central or State Act. The
crux of the matter is whether the word 'under' occurring in cl. Twelfth of s.
21 of the Indian Penal Code makes a difference. Does the mere act of
incorporation of a body or society under a Central or a State Act make it a
corporation within the meaning of cl. Twelfth of s. 21? In our opinion, the
expression 'corporation' must, in the context, mean a corporation created by
the Legislature and not a body or society brought into existence by an act of a
group of individuals. A cooperative society is, therefore, not a corporation
established by or under an Act of the Central or State Legislature.
A corporation is an artificial being created
by law having a legal entity entirely separate and distinct from the
individuals who compose it with the capacity of continuous existence and
succession, notwithstanding changes in its membership. In addition, it
possesses the capacity as such legal entity of taking, holding and conveying
property, entering into contracts, suing and being sued, and exercising such
other powers and privileges as may be conferred on it by the law of its
creation just as a natural person may. The following definition of corporation
was given by Chief Justice Marshall in the celebrated Dartmouth College case :
A corporation is an artificial being,
invisible, intangible, and existing only in contemplation of law.
Being the mere creature of law, it possesses
only these properties which the charter of its creation, confers upon it,
either expressly or as incidental to its very existence. These are such as are
supposed best calculated to effect the object for which it was created. Among
the most important are immortality, and, if the expression may be allowed, individuality;
proper ties, by which a perpetual succession of many persons are considered as
the same, and may act as a single individual. They enable a corporation to
manage its own affairs, and to hold property, without the perplexing
intricacies, the hazardous and endless necessity, of perpetual conveyances for
the purpose of transmitting it from hand to hand. It 871 is chiefly for the
purpose of clothing bodies of men, in A succession, with these qualities and
capacities, that corporations were invented, and are in use. By these means, a
perpetual succession of individuals are capable of acting for the promotion of
the particular object, like one immortal being.
The term 'corporation' is, therefore, wide
enough to include private corporations. But, in the context of cl. Twelfth of
s. 21 of the Indian Penal Code, the expression 'corporation' must be given a
narrow legal connotation.
Corporation, in its widest sense, may mean
any association of individuals entitled to act as an individual.
But that certainly is not the sense in which
it is used here. Corporation established by or under an Act of Legislature can
only mean a body corporate which owes its existence, and not merely its corporate
status, to the Act.
For example, a Municipality, a Zilla Parishad
or a Gram Panchayat owes its existence and status to an Act of Legislature. on
the other hand, an association of persons constituting themselves into a
Company under the Companies Act or a Society under the Societies Registration
Act owes its existence not to the Act of Legislature but to acts of parties
though, it may owe its status as a body corporate to an Act of Legislature.
There is a distinction between a corporation
established by or under an Act and a body incorporated under an Act. The
distinction was brought out by this Court in Sukhdev Singh & ors. v.
Bhagatram Sardar Singh Raghuvanshi & ors. It was observed:
A company incorporated under the Companies
Act is not created by the Companies Act but comes into existence in accordance
with the provisions of the Act.
There is thus a well-marked distinction
between a body created by a statute and a body which, after coming into
existence, is governed in accordance with the provisions of a statute. In
Sabhajit Tewary v. Union of India and ors the question arose whether the
Council of Scientific and Industrial Research which was a society registered
under the Societies Registration Act, was a statutory body. It was 872 urged
that because the Council of Scientific and Industrial Research had government
nominees as the President of the body and derived guidance and financial aid
from the Government, it was a statutory body. Repelling the contention, the
Court observed:
The Society does not have a statutory
character like the Oil and Natural Gas Commission, or the Life Insurance
Corporation or Industrial Finance Corporation. It is a society incorporated in
accordance with the provisions of the Societies Registration Act.
The fact that the Prime Minister is the
President or that the Government appoints nominees to the Governing Body or
that the Government may terminate the membership will not establish anything
more than the fact that the Government takes special care that the promotion,
guidance and co-operation of scientific and industrial research, the
institution and financing of specific researches, establishment or development
and assistance to special institutions or departments of the existing
institutions for scientific study of problems affecting particular industry in
a trade, the utilisation of the result of the researches conducted under the
auspices of the Council towards the development of industries in the country
are carried out in a responsible manner.
Whatever has been said with regard to the
Council of Scientific and Industrial Research, which was a society registered
under the Societies Registration Act, equally applies to the Cooperative Store
Limited, which is a society registered under the Bombay Cooperative Societies
Act, 1925.
It is not a statutory body because it is not
created by a statute. It is a body created by an act of a group of individuals
in accordance with the provisions of a statute.
The Super Bazaar at Connaught Place together
with its 12 branches in Delhi, is not an instrumentality of the State.
In a welfare State like ours, there is
greater participation by Government in various commercial activities. Sometimes
the Government directly engages itself in such commercial activities by
acquiring a monopoly in trade in the public interest. Or it may, by an Act of
Legislature, establish statutory corporations like the State Trading
Corporation, Life Insurance Corporation of India, the Industrial Finance
Corporation, the Oil and Natural Gas Commission etc., or it may set up
Government companies under s. 617 of the Companies Act, 1956, like the
Hindustan Steel Limited etc.
By no stretch of imagination, could it be
said that the appellant was employed in connection with the 873 affairs of the
Union within the meaning of s. 197 of the Code of Criminal Procedure, 1973. The
Super Bazaars are not owned by the Central Government. They are owned and
managed by the Cooperative Store Limited. Pursuant to an agreement executed
between the Cooperative Store Limited and the Union of India, the Central
Government has advanced a loan of Rs.
40,00,000/- to the Society for establishment
and management of the Super Bazaars, and the Central Government also holds more
than 97% shares in the total share-holding of the Society. Clause 6 of the
Agreement provides:
That the incumbents of supervisory and other
key posts including those of General Manager, Deputy General Manager, Finance
Manager, Asst. General Manager, Purchase Manager, Sales Manager and Accounts
Manager, by whatever other designation they may be known shall not be appointed
or removed from their posts by the Debtor except with the prior approval of the
Creditor in writing.
The Super Bazaar at Connaught Place and at
various other places are run by the Cooperative Store Limited under the control
of the Ministry of Agriculture (Department of Cooperation). The incumbents of
supervisory and other key posts including that of the General Manager cannot be
appointed or removed without the prior approval of the Central Government. The
whole purpose of cl. 6 of the Agreement in the matter of appointment of General
Manager and other incumbents holding key posts is to safeguard interests of the
Central Government. Legally speaking, the Super Bazaars are owned and managed
by the Society and not by the Central Government and, therefore, the appellant
was not employed in connection with the affairs of the Union within the meaning
of s. 197 of the Code of Criminal Procedure, 1973.
Explanation to r. 2 (a) of the All India
Services (Conduct) Rules, 1968 and r. 2 (c) of the All India Services
(Discipline and Appeal) Rules, 1969, on which reliance was placed, can be of no
avail. Explanation to r. 2 (a) enlarges the meaning of the expression
"serving in connection with the affairs of the Union or in connection with
the affairs of the State". It provides that a member of the Service whose
services are placed at the disposal of a company, corporation or other
organisation or a local authority by the Central Government or the Government
of a State. shall.
for the 874 purpose of those rules, be deemed
to be a member of the Service serving in connection with the affairs of the
Union or in connection with the affairs of the State, as the case may be,
notwithstanding that his salary is drawn from the sources other than the
Consolidated Fund of India or the Consolidated Fund of that State. The legal
fiction contained in Explanation to r. 2 (a), is for a limited purpose. This is
evident by the use of the words "for purposes of these rules". Rule 2
(c) of the All India Services (Discipline and Appeal) Rules, 1969 defines
Government to mean (i) in the case of a member of the Service serving in
connection with the affairs of a State, or who is deputed for service in any
company, association or body of individuals whether incorporated or not, which
is wholly or substantially owned or controlled by the Government of a State, or
in a local authority set up by an Act of Legislature of a State, the Government
of that State; and (ii) in any other case, the Central Government. That again
is for purposes of these rules. These provisions cannot be pressed into service
for improving upon the language of cl. Twelfth of s. 21 of the Indian Penal
Code, 1860.
Before parting with the case, we would like
to advert to one aspect. It is common ground that the honey in question was
sold in a sealed container bearing the manufacturer’s warranty as to quality as
required under r.
12-A of the Prevention of Adulteration Rules,
1955. That being so, the learned Magistrate shall first determine whether or
not the appellant was protected under s. 19 (2) of the Prevention of Food
Adulteration Act, 1954.
Subject to this observation, the appeal fails
and is dismissed. There shall be no order as to costs.
P.B.R. Appeal dismissed.
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