Central Bureau of Investigation v. Ramesh Chander Diwan
Background
The respondent, a government engineer originally employed by the Punjab government but sent on deputation to serve as Executive Engineer with the Chandigarh Municipal Corporation, was accused of colluding with a private company to alter tender terms and cause the government a loss of over Rs. 13.66 crore, leading to an FIR and charges under the IPC and the Prevention of Corruption Act. After he retired, he sought discharge from the case for want of prior sanction to prosecute; the High Court agreed and discharged him on the IPC charges (though not the corruption charges) on the ground that no sanction under Section 197 CrPC had ever been obtained. The CBI and the original complainant appealed to the Supreme Court, arguing the respondent had ceased to be a "public servant" requiring such protection once he moved to the Corporation on deputation.
Decision Breakdown
The Supreme Court dismissed the appeals, holding that a government employee sent on deputation does not sever his relationship with his parent department merely by serving elsewhere. He remains a "public servant" appointed and removable by the parent government (here, Punjab) unless he is formally absorbed into the borrowing organization, which had not happened. Since the respondent's original appointment, service, and disciplinary control remained rooted in the Government of Punjab throughout his deputation to the Municipal Corporation, he retained the protection of Section 197 CrPC, meaning the CBI could not prosecute him for the IPC offences without first obtaining sanction from the appropriate government authority. The Court did, however, keep open the CBI's ability to seek sanction under the successor law (the Bharatiya Nagarik Suraksha Sanhita, 2023) if it wished to pursue the case further.
Lesson Learnt
A public servant does not lose the legal protection requiring government sanction before prosecution simply by being posted on deputation to another department or body: that protection travels with the employee unless he is formally and completely absorbed into the new organization.