Holding

Directors of a cooperative bank, in their capacity as Chairman and Executive Officer, fall within the definition of "public servant" under Section 2(c)(ix) of the Prevention of Corruption Act, 1988, rendering the High Court's quashing of the charges erroneous.

Summary

The State of Madhya Pradesh prosecuted directors of Indore Premier Co-operative Bank for allegedly sanctioning loans without proper verification, invoking Sections 409, 418, 420, 120‑B IPC and Section 13(1)(d) read with 13(2) of the Prevention of Corruption Act, 1988. The Trial Court framed charges, but the High Court quashed them on the ground that the respondents were not "public servants". The Supreme Court held that, under the amended definition in Section 2(c)(ix) of the 1988 Act, the Chairman and Executive Officer of a cooperative bank are public servants, and the High Court had erred in setting aside the charges. It restored the charge‑sheet and directed the trial court to proceed with the trial. The Court also clarified that the Madhya Pradesh Co‑operative Societies Act does not bar the application of general criminal law in such cases.

Issues considered

Whether directors/officers of a cooperative bank qualify as "public servants" under Section 2(c)(ix) of the Prevention of Corruption Act, 1988.
Whether the High Court had jurisdiction to quash the charges framed by the trial court.
Whether the Madhya Pradesh Co‑operative Societies Act, 1960 precludes invoking the Prevention of Corruption Act and IPC provisions.
Whether the evidence disclosed a prima facie case justifying framing of charges under IPC and the PC Act.

Legislation cited

Code of Criminal Procedure, 1973s. 397, s. 401
Companies Act, 1956s. 617
Indian Penal Code, 1860s. 120-B, s. 409, s. 418, s. 420
Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2), s. 2(c)(ix)

Subjects

public servantPrevention of Corruption Actco-operative bankloan sanctioningcriminal revisioncharge framingM.P. Co-operative Societies ActcorruptionIPC 409IPC 420IPC 120-B

Judgment

[2009] 5 S.C.R. 510

A STATE OF MADHYA PRADESH
v. ~
RAMESHWAR & ORS.
(Criminal Appeal No. 647 of 2009)
APRIL 6, 2009 1
B
[ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.]

PENAL CODE, 1860/PREVENTION OF CORRUPTION
ACT, 1988:
c
S.409, 418, 420, 1208/S.13(1)(d) r/w s.13(2)

Cooperative Bank - Alleged illegality in sanctioning
loans - Trial Court directing filing of charge sheet - Set aside
by High Court on the ground that respondents could not be '
D treated as public servants and hence could not be punishable
either under the provisions of the prevention of Corruption Act,
1988 or under S.409 /PC - On appeal, Held: High Court
erroneously quashed the charges - Its orders set aside and
charges framed by the Trial Court restored - Trial Court to
E proceed with the trial.

WORDS & PHRASES:

'Public Servant' - Meaning of in the context of Prevention
of Corruption Act.
F
The Respondents were Directors of the Indore
Premier Co-operative Bank Ltd. and were also Members
of the Loan Committee. There was a complaint filed in the
Lok Adalat that they had sanctioned loans to some
G persons without verifying their eligibility. Charge sheet
was filed against the Respondents under Sections 409,
420 and 120-B IPC together with Section 13(1)(d) read with
Section 13(2) of the Prevention of Corruption Act, 1988.
Trial Court ordered framing of charges. On appeal, High
H 510
STATE OF MADHYA PRADESH v. RAMESHWAR & ORS. 511

Court set aside the order of the Trial Court. The High A
Court held that the respondents could not be treated as
public servants and they could not be punished either
under the provisions of the Prevention of Corruption Act
or under Section 409 IPC.
B
Disposing of the appeal, the Court

HELD: 1. The High Court did not, while con~idering
the definition of the expression "public servant", take into
account the fact that the decision in Laljit Rajshi Shah was
no longer applicable in view of the amended provisions c
of Section 2(c) of the Prevention of Corruption Act, 1988,
defining the said expression. Prima facie, it appears that
the Respondent Nos.1 and 3, in their capacity as the
Chairman and Executive Officer of the Bank, come within
the definition of "public servant" under Section 2(c)(ix) of D
the 1988 Act. [Para 37] (525-A-B]

State of Maharashtra vs. Laljit Rajshi Shah and others
(2000) 2 sec 699, held inapplicable.

2. There is no bar under the M.P. Co-operative E
Societies Act, 1960, to take resort to the provisions of the
general criminal law, particularly when charges under the
Prevention of Corruption Act, 1988, are involved. (Para 38]
I [525-F]
F
Stree Atyachar Virodhi Parishad vs. Dilip Nathumal
Chordia & Anr. (1989) 1 SCC 715; Om Wati (Smt) & Anr. vs.
State, through Delhi Admn. & Ors. (2001) 4 SCC 333; Munna
Devi vs. State of Rajasthan & Anr. (2001) 9 SCC 631; Govt.
of Andhra Pradesh & Ors. Vs. P. Venku Reddy (2002) 7 SCC G
631; State of Maharashtra & Anr. vs. Prabhaka"ao & Anr.
(2002) 7 SCC 636; Indian Oil Corpn. vs. NEPC India Ltd. &
Ors. (2006) 6 SCC 736 and Nikhil Merchant vs. Central
Bureau of Investigation & Anr. 2008 (11) SCALE 379,
referred to.
H
512 SUPREME COURT REPORTS [2009] 5 S.C.R.

A 3. The High Court had in revision erroneously
quashed the charges framed against the respondents.
Consequently, the orders dated 17th March, 2007, passed
by the High Court in Crl. Revision No.1303 of 2006 and
Crl. Revision No.36 of 2007, impugned in these two
B appeals are set aside and the charges framed by the Trial •
Court against the respondents are restored. [Para 40]
[526-A-B]

4. The Trial Court shall proceed with the trial. It is
clarified that the views expressed in this judgment are
C prima facie in nature for the disposal of these appeals only
and should not influence the trial in any way. [Para 40]
[526-8-C]

Case Law Reference:
~
D (2000) 2 sec 699 distinguished Para 5

(1989) 1 sec 715 referred to Para 14

(2001) 4 sec 333 referred to Para 15

E (2001) 9 sec 631 referred to Para 16

(2002) 1 sec 631 referred to Para 19
(2002) 1 sec 636 referred to Para 19
(2006) 6 sec 736 referred to Para 24
F
2008 (11) SCALE 379 referred to Para 25

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 647 of 2009. ~-

G From the Judgment & Order dated 17.03.2007 of the High
Court of Madhya Pradesh Bench at Indore in Criminal Revision
No. 1303 of 2006.

Ravindra Srivastava, C.D. Singh, Sunny Chaudhary, Aditya
H
STATE OF MADHYA PRADESH v. RAMESHWAR & ORS. 513

Singh, K. Krishna Kumar, Chavvi Batra, Upasana Nath, A
Vairagya and Kunul Verma for the Appellant.

Vivek Tankha, Sushil Kumar Jain, Gurleen Chhabra,
.. , Anubha Singh and Pratibha Jain for the Respondent.

The Judgment of the Court was delivered by B

AlTAMAS KABIR, J. 1. Leave granted in both the special
leave petitions which are taken up for hearing and final disposal
together.

2. The respondents were Directors of the Indore Premier
c
Co-operative Bank Limited and were also members of the
Loan Committee for sanctioning loans. One Harish Patil and
Kanhaiyalal Yadav lodged a complaint with the Special
./ Establishment of the Lokayukt, Madhya Pradesh at Indore,
D
alleging that the respondents had sanctioned loans amounting
to Rs.56,50,000/- in favour of 35 persons without verifying their
.... eligibility to receive such loans or the end-use of such loans and
had intentionally acted in an illegal manner to enable the said
borrowers to avail of the loans. On receiving the complaint, the
Special Establishment Lokayukt, Indore, registered Crime E
No.133/99 and after investigation filed a charge-sheet against
the respondents under Sections 409, 420 and 120-B of the
Indian Penal Code CIPC' for short) together with Sections
-I 13(1)(d) read with Section 13(2) of the Prevention of Corruption
Act, 1988 (hereinafter referred to as the 'P.C. Act'). The Trial F
Court on due consideration of the charge-sheet, found a prima
facie case against the respondents and by its order dated
""\
4.11.2006 directed framing of charges as suggested in the
charge-sheet.
G
3. Being aggrieved by the said order dated 4.11.2006,
directing framing of charges, the respondents moved in revision
before the Indore Bench of the Madhya Pradesh High Court for
setting aside the aforesaid order passed by the Special Judge,
H
514 SUPREME COURT REPORTS [2009) 5 S.C.R.

A Indore, in Special Case No.1 of 2006 and for their discharge
from the above-mentioned charges.

4. Considering the case made out by the respective
parties, the High Court came to the conclusion that admittedly
i ~
B the respondents were members of the Loan Committee and
as such members they are only required to consider the loan
cases which are put up to them by the concerned Bank
Manager for the grant of loan and it was for the Branch
Managers to verify the facts regarding entitlement for grant of
loan before submitting the same to the Loan Committee.
c Furthermore, it is only after the Executive Officer had also
verified the applications for loan that the loan cases were put
up before the Loan Committee for its sanction. In view of the
aforesaid procedure, the High Court held that it could not be
said that the Members of the Loan Committee (the respondents \-
D herein) had acted illegally and had wrongly sanctioned loans
to the concerned borrowers. The High Court also took into
consideration the fact that out of the total amount of loan which
had been sanctioned by the Loan Committee amounting to
Rs.56,50,000/- a total sum of Rs.64,69,000/- had already been
E deposited by the concerned depositors in the Bank and hence
it could not be contended that by sanctioning the loans to the
concerned borrowers the Bank had suffered any monetary loss
since the full amount of loan, together with interest, had already
been deposited by the borrowers in the Bank.
F
5. On the question of status of the respondents as "public
servants" for the purpose of prosecution under the provisions
of the Prevention of Corruption Act, 1988, the High Court
relying on the judgment of this Court in State of Maharashtra r
vs. Laljit Rajshi Shah and others ((2000) 2 SCC 699) held that
G
the respondents could not be treated as public servants and
could not, therefore, be punishable either under the provisions
of the Prevention of Corruption Act, 1988, or under Section 409
IPC.
H 6. On such finding, the High Court by its order dated 17th
- ..

STATE OF MADHYA PRADESH v. RAMESHWAR & ORS. 515
[AlTAMAS KABIR, J.]
March, 2007, allowed the Revision Petition and set aside the A
order of the Trial Court dated 4.11.2006 framing charges
against the respondents and discharged them from the said
charges under Sections 409, 418, 420 and 120-B IPC and
Section 13(1)(d) read with Section 13(2) of the P.C. Act.
~

• 7. The present appeals have been filed by the State of
B
Madhya Pradesh against the said order of the High Court.

8. Appearing for the appellant State of Madhya Pradesh,
Mr. Ravindra Srivastava, learned Senior Counsel submitted
that the High Court had erred both as to the role played by the c
respondents and also on the question of the status of the said
respondents as "public servants" for the purpose of prosecution
under the provision of the P.C. Act. Mr. Srivastava also
submitted that the High Court had travelled beyond its
jurisdiction under Sections 397 read with Section 401 Criminal D
Procedure Code in re-assessing the factual position in order
to arrive at the conclusion that the provisions, under which they
had been charged, were not supported by the materials in the
charge-sheet.
E
9. Referring to the inquiry report dated 21st January, 1999,
submitted by the District Vigilance Committee, Indore, on the
complaint of Shri Kanhaiyalal Yadav, Mr. Srivastava submitted
that it had come to light during the inquiry that the quotation of
Indore Motor and Agro Machinery, having its registered office
at 535 Scheme No.54, Indore, loans were advanced by the F
Banks to the persons named in the report for purchase of
different kinds of vehicles. However, the said firm was not
:"\. available at the address indicated. It also transpired that the
firm was managed by one Shri Himanshu Joshi, son of Shri
.., Hem Joshi, Public Contact Officer working in the Indore Premier G

• Co-operative Bank and the Current Account of the firm was with
the Kila Maidan Branch, Indore and the various Demand Drafts
were deposited in the said account and the cash was
subsequently withdrawn. It was also reported that the loans were
sanctioned with the connivance of the Bank administration for H
516 SUPREME COURT REPORTS (2009] 5 S.C.R.

A the purchase of vehicles, but were not used for the said purpose
and the Demand Drafts were encashed with the intention of
cheating the Bank. Mr. Srivastava submitted that the tenor of
the Inquiry Report was that Shri Hem Joshi had, in his capacity
as the Public Contact Officer of the Bank, in connivance with
B the other respondents, set up a fictitious firm in the name of
his son Shri Himanshu Joshi for the purpose of encashing the
Bank Drafts which were all deposited in the account of the
purported firm in the Kila Maidan Branch, Indore.

10. Mr. Srivastava pointed out that from the statements
C made by the Managers of the different Branches of the Bank a
prima facie case was made out that not only were the rules
relating to sanctioning of loans not followed, but the grant of such
loans revealed lack of awareness and application on the part
of the respondents. He also submitted that the officers of the
D National Bank for Agricultural and Rural Development
(hereinafter referred as · NABARD') conducted an inspection
of the Indore Premier Co-operative Bank in June, 1998 and in
their Report they also raised objections with regard to the loans
which formed the subject matter of the present appeals.
E
11. Mr. Srivastava submitted that the finding of the District
Vigilance Committee was that while the Branch Managers of
the different Branches of the Bank had not complied with the
directions given with regard to the policy of sanctioning loans,
F the Chairman, and the Chief Executive Officer of the Bank, who
are the Respondent Nos. 1 and 3 herein, failed to take any
action despite the Inspection Report of NABARD, which gave
rise to the conclusion that they had also played a decisive role
in defrauding the Bank. Mr. Srivastava submitted that since the '-
G said Inquiry Report indicted all the respondents, along with
several others, it had recommended that a case be registered
under Section 420 read with Section 120-B IPC against all the
/persons named. A further recommendation was made to
register a case against the officers of the Bank, including the
respondents herein, under Section 406, 409, 419 and 420 read
H
STATE OF MADHYA PRADE.SH v. RAMESHWAR & ORS. 517
[ALTAMAS KABIR, J.)

' with Section 120-8 IPC. Departmental action was also
recommended against the Members of the Loan Committee
A

of which the Respondent No.1, Rameshwar, was the President,

~ . while the other respondents, who were all Directors of the Bank,
were members.

12. Mr. Srivastava urged that the High Court had erred in
completely absolving the respondents of any responsibility in
B

connection with the sanctioning of the loans and placing the
entire burden of the fraud perpetrated on the Branch Managers
and the Executive Officer for inadequate or improper
verification of the entitlement of the borrowers for grant of such
c
loans. Learned counsel also urged that the High Court had
erred in observing that the members of the Loan Committee
had a limited role to play for the purpose of sanctioning loans,
--(
since the ground work had already been prepared upto the level
~ of the Branch Managers who had recommended the grant of D
such loans.

13. Mr. Srivastava submitted that in going into factual
aspects of the matter, the High Court had travelled beyond its
revisional powers in coming to findings of fact, which were yet E
to be established on evidence.

14. To support his submission, Mr. Srivastava firstly referred
to a decision of this Court in Stree Atyachar Virodhi Parishad
vs. Dilip Nathuma/ Chordia & Anr. ((1989) 1 SCC 715],
F
wherein, while considering the question relating to discharge
of or framing of charges against an accused, it was held that
when the Trial Court, finding a prima facie case prefers to frame
charges against the accused, the High Court should not
interfere by probing into the sufficiency of grounds for conviction
of the accused and ordering his discharge. G

• 15. Mr. Srivastava then referred to another decision of this
Court in Om Wati (Smt) & Anr. vs. State, through Delhi Admn.
& Ors. ((2001) 4 sec 333], wherein also, while considering the
provisions of Sections 227, 228 and 401 of the Criminal H
518 SUPREME COURT REPORTS [2009] 5 S.C.R.

A Procedure Code, 1973, this Court, inter alia, observed that the
High Court should not ordinarily interfere with the Trial Court's
order for framing of charge unless there is glaring injustice.

B
16. Reference was lastly made to the decision of this Court
in Munna Devi vs. State of Rajasthan & Anr. [(2001) 9 SCC
631], wherein it was held that the revisional powers of the High
Court could not be exercised in a routine and casual manner
for quashing the charges framed against an accused, except
. "

where there was a legal bar or where no offence is made out
against an accused in the F.1.R.
c
17. Mr. Srivastava submitted that apart from the above, the
finding of the High Court that the respondents were not public
servants was erroneous, as they had been elected as Office
Bearers of the Co-operative Bank. He submitted that the High ...
D Court had wrongly relied upon the decision of this Court in State
of Maharashtra vs. Laljit Rajshi Shah & Ors. (supra), in which
.
the definition of "public servant" as contained in section 2 of
the Prevention of Corruption Act, 1947 was under consideration.
In the said Act, "public servant" has been defined in Section 2
E to mean "public servanf' as defined in Section 21 of the Indian
Penal Code. Mr. Srivastava urged that the definition of "public
servant" in the Prevention of Corruption Act, 1988 has been
given a much wider connotation and the limited interpretation
of the said expression in Laljit Rajshi Shah & Ors. 's case
F (supra) would not, therefore, be applicable to the facts of this
case.

18. Mr. Srivastava submitted that on account of being an
Office Bearer of a registered Co-operative Society engaged
in banking, the respondents came within the definition of "public
G servant" under Section 2( c)(ix) of the 1988 Act. He also
submitted that the High Court had failed to take note of Section
87 of the M.P. Co-operative Societies Act, 1960, which
provides that the Registrar and other officers, as well as
employees of a Co-operative Bank or a Co-operative Society, .
H would be deemed to be "public servants" within the meaning

'
I

STATE OF MADHYA PRADESH v. RAM!=SHWAR & ORS. 519
[AlTAMAS KABIR, J.]
of Section 21 of the Indian Penal Code. A
--'!'>
19. In this regard, Mr. Srivastava referred to the decision
of this Court in Govt. of Andhra Pradesh & Ors. Vs. P. Venku
Reddy [(2002) 7 sec 631], where reference was made to the
decision in Laljit Rajshi Shah & Ors. 's case (supra) and it was
B
observed that the same was distinguishable as it was based
on an interpretation of the definition of "public servant", as
defined in the 1947 Act, which restricted such definition to
cover only such "public servants" as were included in Section
21 of the Indian Penal Code. Reference was also made to
another decision of this Court in State of Maharashtra & Anr. c
vs. Prabhakarrao & Anr. [(2002) 7 SCC 636], in which the wider
definition of the expression "public servant" under Section 2 (c)
of the Prevention of Corruption Act, 1988 was held to be
applicable and not the narrow definition under Section 21 of
-..; the Indian Penal Code. D

20. Mr. Srivastava submitted that as far as the State of
j
-;tr
Madhya Pradesh was concerned, the same submissions would
also be relevant in SLP(Crl.)No.6929/07.
E
21. Replying to the submissions made on behalf of the
appellant, Mr. Vivek Tankha, learned Senior Counsel, firstly, took
us to the Charge framed against the respondents under Section
13(1 )(d) read with Section 13(2) of the Prevention of Corruption
Act, 1988 and Sections 409, 418, 420 and 120-B of the Indian
(
Penal Code. Mr. Tankha pointed out that the Charge was F
•
' ' framed against the Respondent No.1 in his capacity as
Chairman/Manager of the Indore Premier Co-operative Bank
and as a Member of the Loan Sanctioning Committee during
the period from 4th March, 1997 to 4th May, 1998, when he was
a public servant. The charge against the Respondent No.1 was G

., that in connivance with the other accused persons and on the
basis of forged documents relating to "Indore Motor and Agro
Machinery", he had, without verification of the loan applications
filed for the purpose of purchasing of vehicles by the other co-
accused, without ensuring that the margin money was H
520 SUPREME COURT REPORTS (2009] 5 S.C.R.

A deposited as per the rules and without obtaining security,
sanctioned the loans in contravention of the Bank Rules and
issued the cheque/drafts of such loans to the applicants directly
who withdrew the amount without purchasing the vehicles,
resulting in misappropriation of Rs.56,50,000/-. Accordingly, the
B Respondent No.1 was purported to have committed the
offence punishable under the above-mentioned provisions of
-
the Prevention of Corruption Act, 1988 and the Indian Penal
code. Similar charges were framed against the other
respondents.
c 22. Mr. Tankha submitted that from the Inquiry Report of
the District Vigilance Committee it would be quite apparent that
it was the Branch Managers of the different Branches of the
Bank who had failed to comply with the procedure relating to
grant and sanction of loans and that all the lapses which were
D attempted to be foisted on the respondents by Mr. Srivastava
during the course of his submissions, were required to be

·-
fulfilled at the Branches before proposals were put up for
sanctioning of the loans. Mr. Tankha submitted that the Loan
Sanctioning Committee had to deal with innumerable loan
E applications and it was not possible for the said Committee to
scrutinize each application to ensure whether all the conditions :
for grant of loan had been satisfied. Mr. Tankha, in fact, urged '
that in the Inquiry Report, the only allegation made against the
respondents herein was that they had not taken any action
F despite the Inspection Report of NABARD and it was only a
presumption that as a result thereof a conclusion must be drawn
that the Chairman of the Bank and the Chief Executive Officer
had also played a main role in the fraud committed upon the
Bank.
G
23. Mr. Tankha submitted that apart from the above, the
only other allegation against the respondents in the Inquiry
Report was that the members of the Loan Committee had failed
to perform their duties efficiently. He submitted that the
allegations pointed out by Mr. Srivastava had really been
H
- (

STATE OF MADHYA PRADESH v. RAMESHWAR & ORS. 521
[AlTAMAS KABIR, J.]

directed at the Branch Managers of the various Branches and A
< the concerned officers of the said Branches.
~

24. Mr. Tankha submitted that there was no justification
whatsoever for framing of charges against the respondents
) herein, either under the provisions of the Indian Penal Code or B
under the provisions of the Prevention of Corruption Act, 1988.
He urged that if any irregularity had been committed by the
Respondents in sanctioning the loans, there was sufficient
scope for action to have been taken against them under the
M.P. Co-operative Societies Act instead of taking recourse to
the criminal process to apply pressure in respect of a dispute,
c
which was basically civil in nature. Referring to the decision of
this Court in Indian Oil Corpn. vs. NEPC India Ltd. 7 Ors.
((2006) 6 SCC 736], Mr. Tankha relied on the observations
made by this Court in holding that it was necessary to take
notice of a growing tendency in business circles to convert D
purely civil disputes into criminal cases and at the stage of an
application under Section 482 Cr.P.C. all that was required to
be seen was whether necessary allegations existed in the
complaint to make out an offence as alleged.
E
25. Further, reference was made to the decision of this
Court in Nikhil Merchant vs. Central Bureau of Investigation
& Anr. (2008 (11) SCALE 379], where, while taking recourse
to Article 142 of the Constitution, it was observed that the
..
'
{ dispute involved in the case had overtones of a civil dispute F
with certain criminal facets. Mr. Tankha submitted that similar
was the position in the present case, where the dispute was
mainly of a civil nature, which had been given a criminal twist
to bring it within the scope of the Indian Penal code and also
the Prevention of Corruption Act, 1988. G

A
26. Mr. Tankha also referred to the decision of this Court
' in Manoj Sharma vs. State & Ors. (MANU/SC/8122/2008),
where the question which fell for determination was whether the
First Information Report for offences which were not
compoundable, could be quashed either under Section 482 H
522 SUPREME COURT REPORTS (2009] 5 S.C.R.

A Cr.P.C. or under Article 226 of the Constitution when the
l
accused and the complainant had compromised and settled
~
the matter between themselves. Mr. Tankha submitted that this
Court had set aside the order upon holding that once a dispute
of a civil nature between private parties, had been settled, the
B more pragmatic view would be to exercise powers under
Section 482 Cr.P.C. or Article 226 of the Constitution to bring
and end to such litigation.

27. As to the question whether the respondents were public
servants ·,or not, Mr. Tankha submitted that in a series of
c decisions this Court had held that certain officers discharging
public functions had been held not to be public servants, except
for purposes confined to the enactments under which they
perform their functions. In this regard, Mr. Tankha also referred
to the decision in Laljit Rajshi Shah & Ors., which had been ;.
D referred to by Mr. Srivastava, wherein it had been held that the
Chairman and Members of the Managing Committee were not
public servants but were deemed to be public servants under
the M.P. Co-operative Societies Act, but not for any other
purpose.
E
28. Mr. Tankha took us through the M.P. Co-operative

F
Societies Act, 1960, in support of his submissions. He
submitted that the said Act was a complete self-contained
Code by itself and provided for different eventualities relating
to the administration of Co-operative Societies. Referring to
-
...
Section 74 of the Act, Mr. Tankha submitted that Clause (d)
thereof is the remedy contemplated in respect of an offence
alleged to have been committed of the instant type. Further-
more, Section 75 provided for penalties to be inflicted in case
of a proven offence and Section 76 also provided that offences
G
under the Act were triable by a Magistrate of the 1st Class.
('

29. As to the definition of "public servant" in Section 2(c)(ix)
of the Prevention of Corruption Act, 1988, it was submitted that
the same should be read in two parts and that the definition of
H "public servant" in the said provision in respect of a Co-
) STATE OF MADHYA PRADESH v. RAMESHWAR & ORS. 523
[AlTAMAS KABIR, J.]
operative Society would be covered by the first part and not A
by the second part.

30. Mr. Tankha submitted that the charges against the
respondents were without any foundation, as would be clear
)
from the Inquiry Report of the District Vigilance Committee
B
which laid the responsibility for grant of the loans to the 35
persons at the door of the Branch offices and had only included
the respondents within the scope of the charge for their alleged
failure of not having taken action on the report of NABARD and
also in not having discharged their duties efficiently. Mr. Tankha
submitted that the same were not sufficient to maintain the c
charges against the respondents under Sections 409, 418, 420
and 120-B IPC read with Sections 13(1)(d) and 13(2) of the
<.. Prevention of Corruption Act, 1988 and the High Court had
-I quite rightly quashed the charges against the respondents.
D
31. As to SLP(Crl.)No.6929/07, Mr. Tankha submitted that
the same was in regard to a hospital loan of Rs.2 lacs, which
had been advanced and had also been repaid with interest on
10th July, 2008. Mr. Tankha submitted that in both the cases,
the principal amount of the several loans together with interest E
had been repaid and consequently, the very foundation of the
charges were nonest and the prosecution was liable to be
quashed.

32. In addition to Mr. Tankha's submissions, Mr. Sushi!
Kumar Jain, who appeared for some of the respondents, F.
submitted that unless there was a criminal intent disclosed in
the charge-sheet, no charge either under Section 406 or
Section 409 would lie. He also urged that in order to invoke
the provisions of the Prevention of Corruption Act the accused
would have to be a public servant and the property alleged to G
A •
have been misappropriated, must have been entrusted to him
while he was a public servant. He urged that the charge-sheet
did not contain any allegation that the loan advanced by the
Society was out of any fund or contribution received from the
State. Accordingly, the question of misappropriation of any H
524 SUPREME COURT REPORTS [2009] 5 S.C.R.

A amount received by the public servant in his capacity as a public
servant did not arise.

33. Mr. Jain reiterated the other submissions made by Mr.
Tankha that the respondents had no conscious knowledge of
B the ineligibility of the borrowers to apply for and receive the
loans and that the loans had been sanctioned on the basis of
the recommendations and proposals put up by the Branch
office.

34. Mr. Jain also submitted that the allegations against the
C respondents were misconceived and the remedy in respect of
the lapses, if any, lay not under the general criminal process,
but under the provisions of the M. P. Co-Operative Societies Act,
1960, itself.

D 35. Having considered the submissions made on behalf
of the respective parties and the various decisions cited in
support thereof, we are unable to agree with the views
expressed by the High Court in the order impugned in these
appeals.

E 36. While it is no doubt true that in the Inquiry Report of
the District Vigilance Committee the role attributed to the
respondents in sanctioning loans was shown to be purely
managerial where the groundwork had been completed by the
Branch offices and that as members of the Loan Sanctioning >
F Committee, they had acted inefficiently, it has also been
suggested that the Chairman and the Executive Officer of the
Bank had connived with the other accused in defrauding the
Bank. In the Inquiry Report it was stated that the respondents
had in conspiracy with Shri Hem Joshi, the Public Contact
G Officer of the Bank, whose son, Himanshu Joshi, maintained a
current account of a fictitious firm - Indore Motor and Agro ,,
Machinery in the Kila Maidan Branch of the Bank at Indore
encashed the various Demand Drafts issued on account of the
loans, by using the said account without purchase of any vehicle
H for which the loans had been sanctiuned.
STATE OF MADHYAPRADESH v. RAMESHWAR & ORS. 525
[ALTAMAS KABIR, J.]
)
37. The High Court also did not, while considering the A
definition of the expression "public servant", take into account
the fact that the decision in Laljit Rajshi Shah & Ors. 's case
(supra) was no longer applicable in view of the amended
provisions of Section 2(c) of the Prevention of Corruption Act,
1988, defining the said expression. Prima facie, it appears to B
>
us that the Respondent Nos.1 and 3, in their capacity as the
Chairman and Executive Officer of the Bank, come within the
definition of "public servant" under Section 2(c)(ix) of the 1988
Act, which reads as follows:-

"public servant" means - any person who is the President,
c
Secretary or other office-bearer of a registered co-
operative 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
..J any corporation established by or under a Central, D
Provincial or 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 (1 of 1956)."
E
38. Mr. Tankha's submissions, which were echoed by Mr.
Jain, that the M.P. Co-operative Societies Act, 1960 was a
/
complete Code in itself and the remedy of the prosecuting
agency lay not under the criminal process but within the ambit
of Sections 74 to 76 thereof, cannot also be accepted, in view F
'' of the fact that there is no bar under the M.P. Co-operative
"' Societies Act, 1960, to take resort to the provisions of the
general criminal law, particularly when charges under the
Prevention of Corruption Act, 1988, are involved.

39. The judgments referred to by Mr. Tankha regarding the G
tendency to convert civil disputes into criminal cases to
~ pressurize the accused, are unimpeachable, but the same will
not apply to the facts of this case where a conspiracy to cheat
the Bank is alleged.
H
526 SUPREME COURT REPORTS (2009] 5 S.C.R.

A 40. We are, therefore, inclined to accept Mr. Srivastava's
submissions that the High Court had in revision erroneously
quashed the charges framed against the respondents.
Consequently, the orders dated 17th March, 2007, passed by
the High Court in Crl. Revision No.1303 of 2006 and Crl.
B Revision No.36 of 2007, impugned in these two appeals are
set aside and the charges framed by the Trial Court against
the respondents are restored. The appeals are, accordingly,
disposed of with a direction to the Trial Court to proceed with
the trial. We make it clear that the views expressed in this
c judgment are prima facie in nature for the disposal of these
appeals only and should not influence the trial in any way.

G.N. Appeal disposed of

. ;