Telangana High Court allows prosecution of private sector bank officials under PC Act, says they are public servants

The Telangana High Court recently permitted the Central Bureau of Investigation (CBI) to prosecute the erstwhile Global Trust Bank’s Chairman and Managing Director (CMD) Ramesh Gelli and Executive Director (ED) Sridhar Subasri in a case under the Prevention of Corruption (PC) Act [Central Bureau of Investigation v. Ramesh Gelli]..Justice EV Venugopal set aside a special CBI court’s 2010 order discharging the accused under provisions of the PC Act on the ground that they were not public servants.The Court noted that Sector 46A of the Banking Regulation Act, 1949 states that the Managing Director and the Executive Director of a bank operating under a licence issued by the Reserve Bank of India (RBI), are public servants. .It also relied upon a Supreme Court ruling in which Gelli and Subasri were held to be public servants and thus liable to be prosecuted under the PC Act.“When the core issue i.e. whether the respondents are public servants or not is decided by the Hon’ble Apex Court holding that they are public servants and they also come under the purview of the PC Act, this Court is not inclined to take any different view on this aspect,” Justice Venugopal said..In the case registered in 2005, the CBI had accused Gelli and Subasri of conspiring with others to cheat the bank and cause losses worth ₹10.25 crore to it.The accused were chargesheeted in 2008. However, the trial court discharged the accused in 2010, holding that they cannot be prosecuted under the PC Act. The special CBI court had relied upon a Bombay High Court ruling favouring Gelli and Subasri in this regard.The CBI then challenged the trial court order before the High Court, contending that Gelli and Subasri fulfil the definition of public servants under the PC Act since Section 46-A of the Banking Regulation Act declares that the CMD and the ED are to be considered public servants. .Justice Venugopal agreed with the contentions made by CBI and noted that the allegations levelled against Gelli and Subasri are that they misused their official position while they were entrusted with public money.“Hence, they are liable to be prosecuted for the offences covered under the provisions of PC Act,” the Court said..The single-judge also noted that the Bombay High Court ruling, on the basis of which the trial court had held that Gelli and Subasri were not public servants, was overruled by the Supreme Court in 2016.Accordingly, the Court allowed the petitions filed by CBI and set aside the order passed by the trial court..Special Public Prosecutor Anandi represented the CBI.Senior Counsel L Ravi Chander, Advocate E Umamaheshwar Rao and C Sharan Reddy represented the respondents (accused)..[Read Judgment]