Private Banks employees should be considered public servants under Prevention of Corruption Act: SC

Feb 24, 2016 16:07 IST

Supreme Court of India on 23 February 2016 ruled that the top officials and employees of private banks will be considered as public servants for the purposes of the Prevention of Corruption Act, 1988.

With this, the investigating agencies like Central Bureau of Investigation (CBI) will be able to examine frauds and scams involving private banks operating in the country.

The judgment was given by a SC bench comprising of Justices Ranjan Gogoi and Prafulla C Pant.

Main highlights of the Judgment

• The intent of Parliament to enact the Prevention of Corruption Act (PCA), 1988 was to widen the definition of 'public servant' so that the anti-corruption law can be made more effective. So far, PCA has been applied only against corrupt government officials.

• Within the meaning of the Section 46A of the Banking Regulation Act, 1949, the chairman, managing director, director, auditor, liquidator, manager or any employee of a banking company is deemed to be a public servant for the offences under Indian Penal Code (IPC).

• Merely because the parliament had said that Section 46A of Banking Regulation Act was applicable only with respect to IPC offences, operation of PCA, 1988 for the same offences could not be shut out.

• If they were public servants in connection with offences under IPC, they would be deemed to be so under PCA, 1988 as well.

• Thus, the definition of public servant given in the PCA, 1988 should be read with Section 46A of Banking Regulation Act for the purpose of offences related to corruption in the banking field.

• The judgment is not meant to obliterate all distinction between the holder of a private office and a public office.

What was the case?

The judgment of SC came during the hearing of a case pertaining to actions of two top officials of private Global Trust Bank (GTB), who were accused of abusing their position to siphon off the bank’s money.

In the said case the two officials ex-chief Ramesh Gelli and ex-MD Sridhar Subasri of the erstwhile Global Trust Bank (GTB) siphoned off 41-crore rupees. This was before GTB was merged with Oriental Bank of Commerce (OBC) in 2004.

Subsequently, on the basis of a complaint filed against them by OBC’s Chief Vigilance Officer, CBI lodged an FIR under IPC within the meaning of Banking Regulation Act.

However, the trial court and the Bombay High Court refused the CBI permission to slap charges under Section 13(1)(d) and Section 13(2) of Prevention of Corruption Act against them.

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