Case Note & Summary
The petitioners, M/s. Ghataprabha Sahakari Sakkare Karkhane Niyamit (a cooperative society) and its Chairman, Lakhan Laxmanrao Jarkiholi, filed two writ petitions under Articles 226 and 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 (CrPC), seeking quashing of charge sheets filed by the Central Bureau of Investigation (CBI) in two separate cases. The first charge sheet (dated 29.12.2010) pertained to CBI C.C. No. 5/2011 (renumbered as Spl. CBI C.C. No. 76/2012) involving Canara Bank, and the second charge sheet (dated 10.05.2011) pertained to CBI C.C. No. 1/2011 (renumbered as Spl. CBI C.C. No. 81/2012) involving Union Bank of India. The CBI alleged offences under Sections 120B, 420, 468, 471 of the Indian Penal Code, 1860 (IPC), and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. The petitioners contended that the prosecution was not maintainable because no valid sanction under Section 197 CrPC and Section 155(2) of the Companies Act, 1956, had been obtained. The court examined the requirement of sanction under Section 197 CrPC for public servants and held that the Chairman of a cooperative society is not a public servant within the meaning of that section. However, the court found merit in the argument regarding Section 155(2) of the Companies Act, which mandates that no prosecution for an offence under the Companies Act shall be instituted without the previous sanction of the Registrar or a shareholder. Since the charge sheets did not disclose any such sanction, the court held that the prosecution was barred by law. The court also noted that the CBI had not obtained any sanction under Section 155(2) of the Companies Act. Consequently, the court allowed the writ petitions and quashed the charge sheets, thereby terminating the criminal proceedings against the petitioners.
Headnote
A) Criminal Procedure Code - Sanction for Prosecution - Section 197 CrPC - Requirement of Sanction for Public Servants - The court considered whether the Chairman of a cooperative society, who was also a director of a company, was a public servant entitled to protection under Section 197 CrPC. Held that the Chairman of a cooperative society is not a public servant under Section 197 CrPC, but the directors of a company are not public servants. However, the court found that the prosecution against the company and its directors was not maintainable due to lack of sanction under Section 155(2) of the Companies Act, 1956. (Paras 10-15) B) Companies Act, 1956 - Sanction for Prosecution - Section 155(2) - Requirement of Sanction for Offences by Companies - The court examined whether the prosecution of a company and its directors for offences under the Companies Act requires sanction under Section 155(2). Held that no prosecution for an offence under the Companies Act shall be instituted except with the previous sanction of the Registrar or a shareholder. Since the charge sheets did not disclose any such sanction, the prosecution was quashed. (Paras 16-20) C) Criminal Procedure Code - Quashing of Charge Sheet - Section 482 CrPC - Inherent Powers of High Court - The court considered the scope of its inherent powers under Section 482 CrPC to quash criminal proceedings. Held that where the prosecution is barred by law, the High Court can exercise its inherent powers to quash the proceedings to prevent abuse of process of court. (Paras 21-25)
Issue of Consideration
Whether the charge sheets filed by CBI against the petitioners are liable to be quashed for want of valid sanction under Section 197 CrPC and Section 155(2) of the Companies Act, 1956, and whether the prosecution is maintainable in the absence of such sanction.
Final Decision
The court allowed the writ petitions and quashed the charge sheets dated 29.12.2010 and 10.05.2011 filed by CBI in CBI C.C. No.5/2011 (renumbered as Spl. CBI C.C. No.76/2012) and CBI C.C. No.1/2011 (renumbered as Spl. CBI C.C. No.81/2012) respectively.
Law Points
- Sanction for prosecution under Section 197 CrPC
- Section 155(2) of Companies Act
- 1956
- Section 120B IPC
- Section 420 IPC
- Section 468 IPC
- Section 471 IPC
- Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act
- 1988
- Quashing of charge sheet under Section 482 CrPC
- Articles 226 and 227 of Constitution of India
