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C.B.I., Bank Securities & Fraud Cell v. Ramesh Gelli & Ors.

Criminal Appeal · Neutral citation not assigned (Criminal Appeal Nos. 1077-1081 of 2013)Decided 23 Feb 2016
Criminal Appeal Nos. 1077-1081 of 2013
Justice Ranjan Gogoi · Justice Prafulla C. Pant

Background

Ramesh Gelli and Sridhar Subasri were respectively the Chairman/Managing Director and an Executive Director of Global Trust Bank, a private banking company licensed by the Reserve Bank of India. The CBI sought to prosecute them under the Prevention of Corruption Act, 1988, but the Special Court and then the High Court of Bombay held that as officers of a private bank they were not "public servants" within the meaning of the PC Act, and therefore could not be tried under its provisions. The CBI appealed to the Supreme Court, and Ramesh Gelli separately filed a writ petition seeking to quash the related prosecution.

Decision Breakdown

The Supreme Court held that Section 46A of the Banking Regulation Act, 1949 deems the chairman, directors, and other officers of banking companies to be "public servants," and this deeming provision, originally written to cover offences under Chapter IX of the Indian Penal Code, must also be read to cover offences under the later Prevention of Corruption Act, 1988, since that Act replaced and widened the very same category of offences the IPC provisions used to cover. The Court reasoned that Parliament's clear intent in enacting the PC Act was to widen, not narrow, the definition of "public servant," so an interpretation that let bank officers escape its reach merely because of an oversight in cross-referencing would defeat that purpose. It accordingly held that Gelli and Subasri were public servants for PC Act purposes, set aside the High Court's and trial court's orders to the contrary, allowed the CBI's appeals, and dismissed Gelli's writ petition, while explicitly not expressing any opinion on the ultimate guilt or innocence of the accused, which remains for the trial courts to decide.

Lesson Learnt

Senior executives of a privately-run but RBI-licensed bank can be prosecuted as "public servants" under India's anti-corruption law, because the Banking Regulation Act's deeming provision extends to them, holding a position of public trust in banking carries the same accountability as holding a government post, regardless of whether the bank itself is state-owned.

Official source (sci.gov.in)View Judgment (PDF)

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