PETITIONER:
S.S. DHANOA
Vs.
RESPONDENT:
MUNICIPAL CORPORATION, DELHI & ORS.
DATE OF JUDGMENT08/05/1981
BENCH:
REDDY, O. CHINNAPPA (J)
BENCH:
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 tho 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]
JUDGMENT:
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. Some times
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
manufacture’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.
875