P.C. WADHWA

STATE OF HARYANA & ORS

March 5, 1981

[ S. MURTAZA FAZAL ALI, A. VARADARAJAN AND

AMARENDRA NATH SEN, JJ. ]

All India Services (Conditions of Service-Residuary Matters) Rules, 1960- Rule 2{b)-Scope of-1.P.S. Officers on deputation, if entitled to get deputation allowance-Absence of provision for payment of deputation allowance in Pay and Cadre Rules, whether amounts to a bar to the receipt of deputation allowance.

Rule 2 of the All Jndia Services (Conditions of Service--Residuary Matters) Rules, 1960 empowers the Central Government to make regulations to regulate any matters relating to conditions of service of persons appointed in an All India Service for which no provision is made in the rules under the All Jndia Services Act, 1951; and until such regulations are made, such matters shall be regulated, in the case of persons serving in connection with the affairs of a State, by the rules applicable' to officers of the State Civil Service, Class I. By an order issued in 1963 the then Punjab Government ordered that officers of the State holding Class I posts would be entitled to deputation allowance at the rates mentioned in para (i) (c) (ii) of the Order. By the application of the Punjab Reorganisation Act this order became applicable to officers 'erving in the State of Haryana.

The appellant was an officer belonging to the Indian Police Service. His services were placed at the disposal off the State Electricity Board to work as a Vigilance Officer, a post which was declared equivalent in status and responsibilities to the post of Deputy Inspector General of Police, held by him under the State Government. The order of deputation passed by the Governor, while protecting the pay and other allowances received by him in the cadre post, did not however mention anything about the payment of deputation allowance to him.

The appellant claimed deputation allowance under Rule 2(b) of the Residuary Rules. But his representation had been rejected by the State Government.

He then moved the High Court for the issue of a writ; but that petition was dismissed in limine.

Before this Court the appellant contended that he had a statutory right to get deputation allowance as provided in Rule 2(b) of the Residuary Rules.

Allowing the appeal

HELD : Rule 2(b) of the Residuary Rules expressly applies to officers of All India Services on deputation. [87 GJ

P.C. WADHWA v. HARYANA (Pazal Ali, J.) 85

I. The substratum of Rule 2(b) is that an officer of the All India Services on deputation would be entitled to deputation allowance equivalent to:'.that given to Officers of the State Civil Service Class I. This Rule, read in'conjunctioniwith para (i) (c) (ii) of the Order issued by the erstwhile Punjab Government, manifestly entitles the appellant to draw deputation allowance at the rates mentioned in the Order. [87 H]

2. There is nothing in either Rule 6 of the IPS (Cadre) Rules, 1954 or in Rule 9 of the IPS (Pay) Rules, 1954 which debars an I.P.S. Officer from getting any deputation allowance when he was on deputation to any of the authorities mentioned in Rule 2(i) of the Cadre Rules. The mere absence of a provision for payment of deputation allowance in the Cadre Rules or Pay Rules cannot be interpreted to mean an absolute bar to the receipt of such deputation allowance if other rules permit such a course of action. Rule 9 of the Pay Rules only protects the salary admissible to I.P.S. Officers on deputation.

Sub-rules 1 to 6 of Rule 9 of the Pay Rules do not prohibit payment of deputation allowance to officers. What the proviso to sub-rule 6 does is that it protects the pay and allowances of an officer on deputation so that he is not adversely affected in his emoluments while on deputation. In the absence of any express rules made by the Central Government on the subject the Residuary Rules would apply. [89D-G]

3. There is no substance in the argument of the Board that since the terms of deputation sanctioned by the Governor did not speak of payment of deputation allowance to the appellant, the order of deputation should be read as a modification made by the Central Government to Rule 2(b) of the Residuary Rules.

Rule 2(b) makes an exception only if the Central Government makes an order in consultation with the State Gowrnment modifying the rules. There is no evidence to show that the Central Government consulted the State Government to take away the effect of Rule 2(b) of the Residuary Rules.

Moreover the order of the Governor cannot be construed as an order passed by the Central Government. [90E-F]

CIVIL APPELLATE JuRJSDICTION Civil Appeal No. 1475/1972.

Appeal by special lea\'.e from the Judgment and Order dated 30.3.1972 of the Punjab & Haryana High Court in Civil Writ Petition No. I 034 .of 1972.

P, C. Wadhwa in person (Appellant.)

K.G. Bhagat and R.N. Podar for Rsepondent No. I

K.K, Jain, Bishamber Lal, S.K. Gupta and P. Dayal for Respondent No. 2.

K. S. Gurumoorthy for Union of India.

The Judgment of the Court was delivered by

FAZAL Au, J.

This appeal by special leave is directed against an order dated March 30, 1972 of the Punjab and Haryana High Court dismissing the writ petition filed by the appellant in limine. ·

The facts of the case lie within a very narrow compass and may be stated thus :

The appellant was an IPS officer allotted to the Haryana State and before his services were placed at the disposal of the Haryana State Electricity Board (hereinafter referred to as the Board), he was holding a substantive rank of Deputy Inspector-General of Police and was Commandant General, Home Guards and Director, Civil Defence. On April 15, 1969 the appellant was sent on deputation and his services were placed at the disposal of the Board where he was to work as Deputy Inspector General of Police for Vigilance Work. On July 10, 1970 the post of Deputy Inspector General of Police in the Board was declared equivalent in status and responsibility to the IPS Cadre post of Deputy Inspector General of Police in order to protect the pay and salary and other allowances of the appellant which he was getting in his post before his deputation to the Board. In the Board, the appellant was designated as Vigilance Officer.

By an order dated August 14, 1970 the appellant's terms of deputation to the Board were finalized by the Haryana Government and the same were communicated to the appellant on August 26, 1970.

The terms and conditions on which the appellant was sent on deputation to the Board are contained in the order passed by the Governor of Haryana (Annexure B to SLP It would be seen that the order of the Governor, while protecting the pay and emoluments that the appellant was getting, did not mention anything about any deputation allowance being given to him. The appellant made a representation to the Central Government for payment of deputation allowance in accordance with rule 2 (b) of the All India Services (Conditions of Service-Residuary Matters) Rules, 1960 (hereinafter refefred to as the Residuary Rules) and submitted that he should be given the same deputation allowance as was admissible to the officers of the Haryana State Civil Service holding posts of Class I when they were sent on deputation to some other department or local body. The representation filed by the appellant to Central Government was rejected. The appellant then filed the writ petition before the High Court which was dismissed in limine, as indicated above.

Hence this appeal.

. 'r

P.C. WADHWA v. HARYANA (Fazctl Ali, J.) 87

After hearing the appellant in person and counsel for the parties, we are satisfied that this appeal must succeed on a short point, and we are really surprised why the High Court dismissed the writ petition in limine when the matter merited serious scrutiny and ,

deep examination. The appellant, who has argued in person, submitted that being an officer of the Indian Police Service, he was governed under All India Services Act, 1951 and Rules made therein and in so for as deputation allowance was concerned, by the Residuary Rules.

He had thus a statutory right to get deputation allowance, as provided for in Rule 2(b) of the Residuary Rules. Relevant portion of Rule 2 may be extracted thus :

"2. Power of the Central Government to provide for residuary matters.-The Central Government may, after consultation with the Governments of the States concerned, make regulations to regulate any matters relating to conditions of service of persons appointed to an All India Service, for which there is no provision in the rules made or deemed to have been made under the All India Services Act, 1951 (61 of 1951); and until such regulations are made, such matters shall be regulated :-

(a) in the case of persons serving in connection with the affairs of the Union, by the rules, regulations and orders applicable to officers of the Central Services, Class I;

(b) in the case of persons serving in connection with the Affairs of a State by the rules, regulations and orders applicable to officers of the State Civil Services, Class I, subject to such exceptions and modifications as the Central Government may, after consultation with the State GovernmeJ t concerned, by order in writing, make;" (Emphasis supplied)

It would be seen that rule 2(b) expressly applies to the appellant or for that matter to the officers of the All India Services. The substatum of the rule is that whenever any officer is sent on deputa tion, he would be entitled to a deputation allowance equivalent to that which is given to officers of the State Civil Service, Class I.

In the instant case, it appears that by virtue of the Order issued by

th~ Punjab Government on January 28/31, 1963 which also applies H to Haryana by the application of Punjab Reorganization Act, it is clear that officers of the State concerned holding Class I posts would

A be entitled to deputation allowance on certain rates mentioned in para (i) (c) (ii) of the order which runs thus :

"The deputation allowance shaU be at a uniform rate of 20 per cent of the employee's basic pay and shall be subject to a maximum of Rs. 300/- per mensem, provided that the basic pay plus the deputation allowance shall, at no time exceed Rs. 3,000/- per mensem.

This shall equally apply in cases of 'Foreign Service' where at present deputation allowance of 25 per cent of the basic pay is admissible under serial No. 40 of rule 15.1 of Punjab C.S.R. Vol. I Part I, 'Basic pay' for the above purpose shall mean the pay drawn in the scale of pay of the officiating appointment in an employee's parent cadre, provided that the officiating appointment so held was not in a tenure post and it is certified by the appointing authority that but for the deputation the employee would have continued to hold the officiating appointment indefinetely."

In other words, the maximum amount of deputation allowance under the order would not exceed a sum of Rs. 300/- per mensem.

Reading Rule 2(b) in conjunction with para (i) (c) (ii) of the order of the Punjab Government, it is manifest that the appeUant is doubtless entitled to deputation allowance at the rates mentioned in the order of the Punjab Government which fully applies to Haryana Government also. The argument advanced by the appellant therefore is unanswerable.

Mr. Bhagat, appearing for the State of Haryana, submitted that there is no provision either in Rule 6 of the JPS (Cadre) Rules, 1954 or in Rule 9 of the IPS (Pay) Rules 1954 regarding payment of deputation allowance and hence it should be held that any officer belonging to the JPS cadre was debarred from getting any deputation allowance unless there was an express provision in the said rules.

Relevant part of rule 6 of the IPS (Cadre) Rules may be extracted thus:

"Deputation of Cadre Officers. -(1) A cadre officer may, with the concurrence of the State Government or the State Governments concerned and the Central Government be deputed for service under the Central Government or another State Government or under a company, association or body of individuals, whether incorporated or not, which is wholly or substantially owned or controUed by the Central Government or by another State Government.

.,_p·

(2) A cadre officer may also be deputed for service under :- A

(i) a company, association or body of individuals, whether incorporated or not, which is wholly or substantially owned or controlled by a State Government, a Municipal Corporation or a Local Body, by the State Government on whose cadre he is borne, and

(ii)

Provided that

Provided further that no cadre officer shall be deputed under sub-rule (i) or sub rule (2) to a post carrying a prescribed pay which is less than or a pay scale, the maximum of which is less than, the basic pay he would have drawn in the cadre post but for his deputation."

We are unable to read in any of these rules any prohibition or bar to the payment of deputation allowance to an officer of the IPS Cadre on deputation to any of the authorities mentioned in rule 2(i) above.

In the instant case the appellant was sent on deputation to the Board which is a body 'Wholly or substantially owned by the State Government. The mere absence of the provision for payment of deputation allowance cannot be interpreted to mean an absolute bar to the receipt of such deputation allowance by an IPS Cadre officer, if other Rules permit such a course of action.

Similarly, Rule 9 of the IPS (Pay) Rules, 1954 contains various clau.ses which merely protect the Pay and salaries admissible to an IPS officer when sent on deputation. There is no reference to any allowance or other emoluments in the Rule, excepting pay which is clearly set out in Schedule III to those Rules. We have gone through Sub-Rules (I) to (6) of Rule 9 and are unable to find any limitation contained in these rules which could prevent the appellant from getting deputa. tion allowance.

Reliance was, however, placed on the proviso to sub-rule (6) which may be extracted thus :

"Provided that the pay allowed to an officer under this sub-rule and sub-rule (5) shall not at any time be less than what he would have drawn had he not been appointed to a post referred to in sub-rule (4)."

The dominant object of the proviso is merely to protect the the pay and salary which an IPS officer was getting when he was

sent on deputation, so that his being sent on deputation may not cause any prejudice to his career or emoluments. There being no Rules on the subject, it is manifest that in such cases the Residuary Rules would apply. We might mention that the Residuary Rules were made in 1960, about six years after the issuance of JPS (Cadre) Rules and JPS (Pay) Rules. It seems to us that the Central Government realised that, when other officers of the State Government on deputation were entitled to deputation allowance, there was no reason why this privilege should be denied to officers of the cadre of JPS. Perhaps it was with this essential object in view that Rule 2(b) of the Residuary Rules was enacted so as to enable JPS officers to get deputation allowance on .the same terms as officers of State Civil Service Class J were getting. This provision would naturally hold the field in the absence of any express Rules made by the Central Government, which have so far not been made.

Counsel appearing for the Board submitted before us that the letter of the. Governor dated August 14; 1970 laying down the terms of deputation of the appellant does not contain any mention of deputation allowance to be given to the appellant and should therefore be read as a modification made by the Central Government, as contemplated by clause (b) of rule 2 of the Residuary Rules. We are, however, unable to agree with this contention. In the first place, Rule 2 (b) of the Residuary Rules makes an exception only if the Central Government makes an order and that too after consultation with the State Government concerned modifying the Rule.

There is no evidence in this case to show that any order was passed by the Central Government after consulting the State Government to modify or take away the effect of rule 2(b) of the Residuary Rules. The order of the Governor of Haryana cannot by any stretch of imagination be construed as an order passed by the Central Government. For these reasons the contentions raised by the respondents must be overruled. For the reasons given above we hold that the appellant is legally entitled under the Statutory Rules as indicated above to get deputation allowance. The Board was therefore in law bound to pay the said deputation allowance to the appellant. The result is that the appeal is allowed and order of the High Court dismissing the writ petition in limine is quashed. A Writ of mandamus is issued to the Board to pay the deputation allowance to the appellant, to be calculated in terms of para (i) (c) (ii) of the order of the Punjab Government referred to in this judgment. The payment would be made for the period the appellant was on deputation to the Board. The entire amount shall be paid within three A months.

 r The appellant would be entitled to his costs, quantified

/ '

at Rs. 2,000/· which also should be paid to the appellant within three months.

P.B.R.

Appeal allowed.

P.C. WADHWA

STATE OF HARYANA & ORS

March 5, 1981

S. MURTAZA FAZAL ALI

A. VARADARAJAN

AMARENDRA NATH SEN, JJ.

Central Government

Punjab Government

Punjab Reorganisation Act

Haryana

Indian Police Service

Pazal Ali

P, C. Wadhwa

K.G. Bhagat

R.N. Podar

K.K, Jain

Bishamber Lal

S.K. Gupta

P. Dayal

K. S. Gurumoorthy

FAZAL Au

Haryana State Electricity Board

April 15, 1969

July 10, 1970

August 14, 1970

Haryana Government

August 26, 1970

Fazctl Ali

All India Services Act, 1951

All India Services Act, 1951

All India Services

January 28/31, 1963

Bhagat

State of Haryana

Schedule III to those Rules

might mention that the Residuary Rules

JPS

August 14; 1970


S.S. DHANOA

MUNICIPAL CORPORATION, DELHI & ORS.

May 8, 1981

[ 0. CHINNAPPA REDDY, A.P. SEN AND

BAHARUL ISLAM, JJ. ]

Public servant-Services of an Officer belonging to the !11dian Administrative Service loa11ed 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 withi11 the meaning of clause Twelfth of sec/ton 21, /.P.C.

Penal Code-Clause Twelfth of section 21-Scope of-Services of a government servant loaned to a Cooperative Society-Governme11t servant, if continued to be a public servant.

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 a~ 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 the 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

established under the State Act like the Bombay Cooperative Societies Act, 1925 A 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 B 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 DJ

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 BJ

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 govered 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 Fl

Nor did the fact that the Central Government had advanced a huge Joan to F 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 Joan 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

A 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 purpos~, 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 B section 21 of the Penal Code. [873 G, 874 DJ

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 520 of 1976.

Appeal by Special Leave from the judgment and order dated the I 7th September, 1975 of the Delhi High Court in Criminal Misc. (M) 212 of 1974.

D. Mukhe1jee, 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, )925 (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. I, 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

of his period of deputation, the appellant reverted as Joint Secretary A in the Ministry of Agriculture.

On October IO, 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 adulerated. 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 withs. 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 undera 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

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 ands. 197 of the Code of Criminal Procedure, 1973, which, so far as they are relevant, are as follows :

21. The words 'p!!blic 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 remu nerated 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.

{I) 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 commercial activity of the Central Government and, therefore, the A 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 Proce• dure, 1973. The second is that the Cooperative Store Limited which runs the super bazaars, having been registered under s. IO 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,

 H taken in collocation of the words '!established by or under a Central, Provincial or State Act" would bring within its sweep a cooperative

A 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?

B 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. c

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 exerdsing such other powers and privileges as may be conferred on it by the Jaw of its creation just as a natural person may. (1) The following definition of corporation was given by Chief Justice Marshall in the celebrated Dartmouth College case (2) :

A corporation is an artificial being, invisibe, 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; properties, 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

(I) Corpus Juris Secundum, Vol, 18, p. 136, para 1 : Words and Phrases,

Permanent Edition, Vol. 9A, p. 420: Halsbury's Laws of England, 4th Edn, Vol. 9, p. 716 (para 1201) and p. 749 (para l245); Jowitt's Dictionary of English Law, 2nd Edn, Vol. 1, p. 474 and Black's Law Dictionary, 5th Edn. p. 307.

(2) Dartmouth College v. Woodward, N.H. 4 Wheat. .518, 636, 4 L. Edo 629 •.

is chiefly for the purpose of clothing bodies of men, in 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 eonnotation.

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. (1) It was observed :

A company incorporated under the Companies Act is F 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 (2) 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

(!) [1975] 3 SCR 619.

(2) [1975] 3 SCR 616.

A 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 com" mercial 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

_ ..

-"T .

~---

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 C 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 E 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 Govarnment. Legally speaking, the Super Bazaars are owned and managed by the Society and not by the V Central Government and, therefore, the appellant was not employed F 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 G avail. Explanation tor. 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 H Central Government or the Government of a State, shall, for the

A 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 Governinent 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.

S.S. DHANOA

MUNICIPAL CORPORATION, DELHI & ORS

May 8, 1981

0. CHINNAPPA REDDY

A.P. SEN

BAHARUL ISLAM, JJ.

section 197

Prevention of Food Adulteration Act

Penal Code

section 21

Co-operative Store Ltd.

section 7

s. 16

Metropolitan Magistrate Delhi

section 21

Penal Code

section 197

Central Government

section 21

section 21

section 21

I.P.C

section 21

section 21

Companies Act

Registration Act

section 197

section 21

Penal Code

D. Mukhe1jee

O.P. Sharma

P.R. Mridul

B.P. Mridul

B.P. Maheshwari

Suresh Sethi

SEN

Cooperative Store Ltd.

s. 21

Indian Penal Code, 1860

s. 197

Code of Criminal Procedure, 1973

Government of India

New Delhi

April 7, 1972

April 7, 1973

October IO, 1973

April 5, 1974

Municipal Corporation, Delhi

s. 7

Metropolitan Magistrate, Delhi

s. 197

Code of Criminal Procedure, 1973

October 9, 1974

s. 21

Indian Penal Code

s. 21

Indian Penal Code

Provincial or State Act

Government of a State

s. 21

Indian Penal Code

s. 197

Code of Criminal Procedure, 1973

s. 21

Indian Penal Code, 1860

Code of Criminal Procedure, 1973

Provincial or State Act

section 617

Companies Act, 1956

S. 197

Delhi

s. 197

Cooperative Store Limited

s. 23

s. 21

Indian Penal Code

s. 21

Indian Penal Code

Provincial or State Act

section 617

Companies Act, 1956

s. 21

Indian Penal Code

Provincial or State Act

s. 23

Bombay Cooperative Societies Act, 1925

Provincial or State Act

s. 21

Indian Penal Code

s. 21

Marshall

Dartmouth College

Jowitt

s. 21

Indian Penal Code

Companies Act

Societies Registration Act

Companies Act

Companies Act

Societies Registration Act

[1975] 3 SCR 619

[1975] 3 SCR 616

Oil and Natural Gas Commission

Societies Registration Act

Societies Registration Act

Bombay Cooperative Societies Act, 1925

Life Insurance Corporation of India

s. 617

Companies Act, 1956

Hindustan Steel Limited

s. 197

Code of Criminal Procedure, 1973

Union of India

Clause 6

cl. 6

Central Govarnment

V Central Government

s. 197

Code of Criminal Procedure, 1973

Central Government-

s. 21

Indian Penal Code, 1860

Prevention of Adulteration Rules, 1955

s. 19