TMI Blog2009 (4) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... nctioned 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 No. 133/99 and after investigation filed a charge-sheet against the respondents under Sections 409, 420 and 120B of the Indian Penal Code (`IPC' for short) together with Sections 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 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. 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, Indore, in Special Case No. 1 of 2006 and for their discharge from the above-mentioned charges. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stava, learned Senior Counsel submitted that the High Court had erred both as to the role played by the 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 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. 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 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 Himansh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ister a case against the officers of the Bank, including the respondents herein, under Section 406, 409, 419 and 420 read with Section 120B IPC. Departmental action was also recommended against the Members of the Loan Committee 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 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 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 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 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 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, would be deemed to be public servants within the meaning of Section 21 of the Indian Penal Code. 19. In this regard, Mr. Srivastava referred to the decision of this Court in Govt. of Andhra Pradesh and Ors. v. P. Venku Reddy 2002) 7 SCC 631, where reference was made to the decision in Laljit Rajshi Shah and Ors.'s case (supra) and it was 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 and Anr. v. Prabhakar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere put up for sanctioning of the loans. Mr. Tankha submitted that the Loan Sanctioning Committee had to deal with innumerable loan 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 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. 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 directed at the Branch Managers of the various Branches and the concerned officers of the said Branches. 24. Mr. Tankha submitted that there was no justification whatsoever for framing of charges again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ankha submitted that in a series of 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 and Ors., which had been 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. 28. Mr. Tankha took us through the M.P. Co- operative 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 offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 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. 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. 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 Committee, they had acted inefficiently, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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