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Sridhara babu.

(THIS IS IN RELATION TO KARNATAKA)

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STATE BANK OF MYSORE A/C NO: 54016942433, IFC CODE: SBMY0040557, BRANCH CODE 040557, MICR CODE 572006005, A/C HOLDER NAME - N. SRIDHARA BABU, BANK BRANCH - SSI-TUMKUR COPY RIGHT:- You must not sell or re-distribute the document or derivatives thereof. -SRIDHARA BABU.N

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WHAT THE LAW SAYS KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 SECTION 127-A. Office bearers, members and employees of co-operative societies to be public servants. Every office bearer of a co-operative society, every member of a committee and every employee of a co-operative society including sale and recovery officers shall be deemed to be public servants within the meaning of Section 21 of Indian Penal Code.

Prevention of Corruption Act, 1988. SECTION 2 (b) "public duty" means a duty in the discharge of which the State, the public or the community at large has an interest; Prevention of Corruption Act, 1988. SECTION 2 (c) "public servant" means- (viii) any person who holds an office by virtue of which he is authorised or required to perform any public duty; Prevention of Corruption Act, 1988. SECTION 7. Public servant taking gratification

other than legal remuneration in respect of an official act - Whoever, being, or expecting to be a public servant, accepts or obtains or agrees to accept or attempts to obtain from any person, for himself or for any other person, any gratification whatever, other than legal remuneration, as a motive or reward for doing or forbearing to do any official act or for showing or forbearing to show, in the exercise of his official functions, favour or disfavour to any person .. shall be punishable with imprisonment which shall be not less than six months but which may extend to five years and shall also be liable to fine.

Prevention of Corruption Act, 1988. SECTION

13. Criminal misconduct by a public

servant (1) A public servant is said to commit the offence of criminal misconduct,- .. (d) if he,(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or (ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or

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THE MEMBERS OF THE EXECUTIVE COMMITTEE AND OTHER OFFICERS AND SERVANTS OF CO-OPERATIVE SOCIETIES WERE RENDERED LIABLE TO BE PROCEEDED AGAINST UNDER SECTION 5 OF THE PREVENTION OF CORRUPTION ACT, 1947 ALSO

M.C. Gangadharappa vs State By Lingadahalli Police, 2002 CriLJ 2755, 2002 (5) KarLJ 237 The commentary on Section 21 by Ratanlal and Dhirajlal's Law of Crimes, 23rd edition at page 67 makes it clear that the explanation so added substantially widened the scope of the definition of the term 'public servant' for purposes of that section and Sections 162 to 165 and 165A by bringing in various categories of officers who were not comprehended in the definition of the said term in Section 21. Amongst the categories so included were the officers and servants of Co-operative Societies. Section 3 of the same Amendment Act of 1962 had also amended the Prevention of Corruption Act, 1947, by substituting Section 2 thereof with an amended provision under which the term 'public servant' was to be given the same meaning as had been assigned to it under the Explanation to Section 161 of the Indian Penal Code, brought in by the same Amendment Act. Thus, the members of the executive committee and other officers and servants of Co-operative Societies were rendered liable to be proceeded against under Section 5 of the Prevention of Corruption Act, 1947 also. Therefore, it is clear that the Secretary being a paid employee of the Society is a public servant as defined under the Act. This also is clear from the reading of Section 127A of the Karnataka Co-operative Societies Act, 1959, which reads: "Every office-bearer of a Co-operative Society, every member of a committee and every employee of a Co-operative Society including sale and recovery officers shall be deemed to be public servants within the meaning of Section 21 of the EPC". .. The petitioner being the Secretary having domain over the property ought to have taken all the care to see the interest of the Society is protected which is meant for the benefit of the members of the Society. Even otherwise also it is not a serious lacuna in the case of the prosecution to hold that the petitioner is not guilty of the offence. After having gone through the evidence and the judgments passed by the Court below I am fully satisfied that the Courts have rightly held that he is guilty of the offence which also does not call for interference. In the case of State of Karnataka v. Syed Mehaboob, 1999(6) Kar. L.J. 605 : ILR 2000 Kar. SN 6 it is held that the accused who was in charge of the Society as Secretary makes good the shortage detected during the audit, cannot be treated as his admission that he had misappropriated that amount. In that case also, it is clear that he was only in charge Secretary and immediately after it was detected, he paid the amount. But in this case it is not so, he was the full-fledged Secretary and he had paid the amount after a long time and only with a view to relieve from penal liability. But the fact remains that he had dishonest intention to misappropriate the amount to himself during the relevant time. It is common knowledge that the Co-operative Society is meant for the

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members and it is also a social piece of legislation. But unfortunately, the officers are involved in embezzlement and also misappropriation of funds as a result of which the very object of forming a Co-operative Society is defeated. The members who are beneficiaries are put into disastrous position. It is also not out of place to mention that the secretaries and office-bearers become enraged by their illegal acts. This case is one such example. He has misappropriated large sums of money and only because of audit report, the misappropriation was brought to light. Thereafter, he paid the amount and it is virtually admitting the guilt as stated above. Therefore, the argument of the learned Counsel for the petitioner that he is the only bread earner in the family and a lapse of 15 years would be a ground for lenient view, etc., is unsustainable.

SECTION 2C OF THE PREVENTION OF CORRUPTION ACT WAS HELD TO BE APPLICABLE AND NOT THE NARROW DEFINITION UNDER SECTION 21 OF THE INDIAN PENAL CODE. State Of M.P. vs Rameshwar & Ors. (11 ) SCC 424 2009 AIR 1820 = 2009 (5 ) SCR 510 = 2009

The judgments referred to by Mr. Tankha regarding the tendency to

convert civil disputes into criminal cases to pressurize the accused, are unimpeachable, but the same will not apply to the facts of this case where a conspiracy to cheat the Bank is alleged. .. We are, therefore, inclined to accept Mr. Srivastava's submissions tha t the High Court had in revision erroneously quashed the charges framed against the respondents. Mr. Srivastava submitted that on account of being an Office Bearer of a registered Cooperative 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 Cooperative Bank or a Co-operative Society, would be deemed to be "public servants" within the meaning of Section 21 of the Indian Penal Code. In this regard, Mr. Srivastava referred to the decision of this Court in Govt. of Andhra Pradesh & Ors. Vs. P. Venku Reddy [(2002) 7 SCC 631], where reference was made to the decision in Laljit Rajshi Shah & 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 & Anr. vs. Prabhakarrao & Anr. [(2002) 7 SCC 636], in which the wider definition of the expression "public servant" under Section 2 (c) of the

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Prevention of Corruption Act, 1988 was held to be applicable and not the narrow definition under Section 21 of the Indian Penal Code. PHILOSOPHY AND CONCEPT OF THE COOPERATIVE MOVEMENT IS IMPREGNATED WITH THE PUBLIC INTEREST Daman Singh Vs. State of Punjab, reported in AIR 1985 SC 973 The very philosophy and concept of the cooperative movement is impregnated with the public interest and the amalgamation of co-operative societies when such amalgamation is in the interest of the co-operative societies is certainly in the public interest or can only be to secure the proper management of the societies. CO- OPERATION IS A SUBSTITUTE FOR SELF-INTEREST OF INDIVIDUAL OR GROUP OF INDIVIDUALS FOR THE BENEFIT OF THE WHOLE COMMUNITY JUSTICE S.C. DHARMADHIKARI of Bombay High Court in the case of

Shri. Sadashiv Krishna Sutar, VS State of Maharashtra C.R.A.

NO. 353

OF 2012

DECIDED ON 6 TH MAY, 2013. Therefore, the co-operative movement is a socio economic and moral movement. In that, General Public has a definite place and its participation is but natural. There are not just members' interest involved in the Co-operative Societies. The Hon'ble Supreme Court holds that the very philosophy and concept of the co-operative movement is impregnated with the public interest. (See para 10 at page 979 of the Judgment of the Hon'ble Supreme Court in the case of Daman Singh Vs. State of Punjab, reported in AIR 1985 SC 973). Co- operation is a substitute for self-interest of individual or group of individuals for the benefit of the whole community. The Co-operative Societies undertake agricultural and non-agricultural members or depositors are interested in the working and functioning of a Co-operative Bank or its liquidation and winding up. There are persons like the Complainant, who deal with the Co- operative Banks or Societies and whose funds and properties are utilized by such Entities. When they complain that persons who are appointed as officers during the course of winding up and liquidation proceedings of the Societies', commit acts which is a criminal misconduct and indulge in bribery and corruption, then, the P.C. Act, 1988 and its mechanism must be made available for dealing with the grievances and complaints of such persons. Once the constitutional perspective is borne in mind, then, the position of a Co-operative Society is not confined to local limits, nor its functioning and working restricted to few persons. There is a definite stake of the Society and the community at large in the working and functioning of such societies. Therefore, the Applicant was discharging a public duty.

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EVERY HOLDER OF A PUBLIC OFFICE BY VIRTUE OF WHICH HE ACTS ON BEHALF OF THE STATE OR PUBLIC BODY IS ULTIMATELY ACCOUNTABLE TO THE PEOPLE 2011 SC Noida Entrepreneurs Assocn. vs N O I D A & Ors 2011 AIR 2112 = 2011 (8 ) SCR 25 = 2011 (6 ) SCC 508 The State or the public authority which holds the property for the public or which has been assigned the duty of grant of largesse etc., acts as a trustee and, therefore, has to act fairly and reasonably. Every holder of a public office by virtue of which he acts on behalf of the State or public body is ultimately accountable to the people in whom the sovereignty vests. As such, all powers so vested in him are meant to be exercised for public good and promoting the public interest. Every holder of a public office is a trustee. Power is to be exercised strictly adhering to the statutory provisions and fact-situation of a case. "Public Authorities cannot play fast and loose with the powers vested in them". A decision taken in arbitrary manner contradicts the principle of legitimate expectation. An Authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred. In this context, "in good faith" means "for legitimate reasons". It must be exercised bona fide for the purpose and for none other. (Vide: Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR 1952 SC 16; Sirsi Municipality v. Ceceila Kom Francis Tellis, AIR 1973 SC 855; The State of Punjab & Anr. v. Gurdial Singh & Ors., AIR 1980 SC 319; The Collector (Distt. Magistrate) Allahabad & Anr. v. Raja Ram Jaiswal, AIR 1985 SC 1622; Delhi Administration (Now NCT of Delhi) v. Manohar Lal, (2002) 7 SCC 222; and N.D. Jayal & Anr. v. Union of India & Ors., AIR 2004 SC 867). DEFINITION OF 'PUBLIC SERVANT' TO ACHIEVE THE PURPOSE OF PUNISHING AND CURBING GROWING CORRUPTION IN GOVERNMENT AND SEMI-GOVERNMENT DEPARTMENTS In construing definition of 'public servant' Clause (c) of Section 2 of the 1988 Act, the court is required to adopt a purposive approach as would give effect to the intention of legislature. In that view Statement of Objects and Reasons contained in the Bill leading to the passing of the Act can be taken of assistance of. It gives the background in which the legislation was enacted. The present Act, with much wider definition of 'public servant', was brought in force to purify administration. When the legislature has used such comprehensive definition of 'public servant' to achieve the purpose of punishing and curbing growing corruption in government and semi-government departments, it would be appropriate not to limit the contents of definition clause by construction which would be against the spirit of the statute. The definition of 'public servant', therefore, deserves a wide construction. [see : State of Madhya Pradesh v. Shri Ram Singh (AIR 2000 SC 873).]

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THE EXPLANATION (1) TO SECTION 2(C) STATES THAT PERSONS FALLING UNDER ANY CLASS ARE PUBLIC SERVANTS WHETHER APPOINTED BY THE GOVERNMENT OR NOT THE HON'BLE MR.JUSTICE B.V.PINTO OF THE HIGH COURT OF KARNATAKA in the case of Sri Siddappa Shivaputrappa ... vs The State Of Karnataka Decided on 24 January, 2013 . For application of Prevention of Corruption Act, 1988, a person need not be a Government Servant. Section 2(c) of the Prevention of Corruption Act, 1988 explains 12 classes of persons who are called as public servant and the explanation (1) to Section 2(c) states that persons falling under any class are public servants whether appointed by the Government or not. In my view, having regard to the exhaustive definition of 'public servant' under the Prevention of Corruption Act, 1988 even a private person entrusted with public duties who is required to perform the public duties is a public servant and would be covered within the meaning of Prevention of Corruption Act, 1988. The accused in this case was performing a public function and was entrusted with duty to receive money and do the work of public and therefore, it cannot be said that the accused has been erroneously prosecuted in this case. LICENSED SURVEYOR APPOINTED UNDER SECTION 18(A) OF THE KARNATAKA LAND REVENUE ACT IS A PUBLIC SERVANT THE HON'BLE MR. JUSTICE SUBHASH B ADI OF THE HIGH COURT OF KARNATAKA in the case of A M Mahadevamurthy vs State Of Karnataka on 15 June, 2012 The only contention that is raised by the petitioner is that he is a licensed surveyor, he is not a public servant within the meaning of Section 2(c) of the Prevention of Corruption Act, 1988, and hence the same is not applicable. This Court in an identical circumstances i.e., in Crl. P.No.3372/2011 dated 19.07.2011 has held that the licensed surveyor appointed under Section 18(A) of the Karnataka Land Revenue Act is a public servant within the meaning of Sub Clause(i) and (viii) of clause (c) of Section 2 of the Provision of Corruption Act and the provisions of the said Act are applicable. LICENSED SURVEYOR IS THE GOVERNMENT SERVANT FOR THE PURPOSE OF SECTION 2(C)(VIII) OF THE PC ACT THE HON'BLE MR. JUSTICE L.NARAYANA SWAMY of THE HIGH COURT OF KARNATAKA in the case of Sri Vijaykumar S/O Shankarappa vs State Of Karnataka Decided on 23 July, 2012 Division Bench of this Court in N.Earesh V/s State of Karnataka in Crl.Petition No. 10853/2011, on a divergent opinion in Crl.Petition No. 15283/2011 and Crl.No. 3372/2011, the question as to whether the licensed surveyor is the Government servant for the purpose of Section 2(c)(viii) of the PC Act, was referred to the Division Bench. The Division Bench in Crl.Petition No. 10853/2011 has held that the License surveyor

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appointed under Section 18-A of the LR Act, is a public servant and defined under Section 2(c) of the PC Act and the reference was answered accordingly. OPPOSITE VIEW IN MAHARASHTRA CASE APPLYING MAHARASHTRA CO-OP SOC ACT HELD THEY ARE NOT PUBLIC SERVANTS State Of Maharashtra And Etc. vs Laljit Tejshi Shah And Others, 1994 CriLJ 1813, we hold that officers of Co-operative Societies as contained in S. 2(20) of the Maharashtra Cooperative Societies Act would not, by virtue of S. 161 of the Maharashtra Co-operative Societies Act, become 'public servants' within the definition of the said term under S. 21 of the Indian Penal Code. What follows is that, respondents/accused, who are officers of Cooperative Societies, by virtue of S. 161 of the Maharashtra Co-operative Societies Act, would not become 'public servants', within the meaning of S. 21 of the Indian Penal Code as also under S. 2 of the Prevention of Corruption Act. The respondent accused will, therefore, not be liable to be prosecuted, for offences under Ss. 409 of the Indian Penal Code and Ss. 5(1)(c) and 5(1)(d) read with S. 5(2) of the Prevention of Corruption Act.

In the case of "Pralhad Shambhurao Newale v. State of Maharashtra", 1988 Mah LJ 161, Tated, J., had an occasion to examine the scope of section 161 of the Co-operative Societies Act in relation to the provisions of Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act, 1947. Reference was also made to Section 2(20) of the Co-operative Societies Act. The learned Judge also examined the position arising under the relevant Entries in VIIth Schedule of the Constitution. He also considered the effect of clause (3) of Article 246 of the Constitution. He also examined the argument, as to whether the provisions of Section 161 are repugnant to the provisions of Section 21 of the Indian Penal Code and as such were void. He took the view that inasmuch as the subject of co-operative societies falls in State List and the criminal law falls in Entry I of the Concurrent List and as the subjects covered by the two entries do not fall in the Concurrent List, the question of repugnancy does not arise, and the provisions of clause (2) of Article 254 of the Constitution of India are also not attracted. Tated, J. has noted that, offences dealt with under the Maharashtra Co-operative Societies Act are in respect of the affairs of the cooperative societies. He has further noted that, the Indian Penal Code which is a Central legislature falling in Entry no. 1 of the Concurrent List deals with the offences in general. The provisions relating to the offences dealt with in the Maharashtra Co-operative Societies Act are not repugnant to the provisions contained in the Indian Penal Code. If the two laws were to occupy different areas though under the same field or to apply for different periods or deal with different subjects no conflict can arise and therefore there will be no repugnancy. Tated, J. negatived the contention that the provisions of Section 161 of the

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Maharashtra Co-operative Societies Act, 1960 which have the effect of adding the provision of Section 21 of the Indian Penal Code are void on account of repugnancy. According to him, by no stretch of imagination can it be said that the provisions of Section 21 of the Indian Penal Code cannot be amended and extended to some other categories of servants or officers. Tated, J. further proceeded to observe : "It may be mentioned that Section 21 I.P.C. was amended by Criminal Law Amendment (II) Act, 1958, and thereby clause (12) was added. That law is an ever growing subject and, therefore, it has to be amended from time to time, taking into consideration the requirements of the society at the time. Consequently, because Section 161 of the Maharashtra Co-operative Societies Act adds to the list of the public servants mentioned in Section 21 I.P.C., it cannot be said that it is bad on account of repugnancy."

WHICH ARE THE MATTERS THAT CANNOT BE INVESTIGATED BY LOKAYUKTA 2013 SC RADHAKRISHNAN, K.S. (J) LOKUR, MADAN B. (J) of Supreme Court of India in the 2013 (2 ) JT 65 = 2013 (1 ) SCALE 255 The

case of JUSTICE CHANDRASHEKARAIAH (RETD.) VS JANEKERE C. KRISHNA & ORS. ETC. Reported in 2013 AIR 726 = Karnataka Lokayukta Act, 1984 has, .. clearly delineated which are the matters to be investigated by the Lokayukta and Upa Lokayukta. They have no authority to investigate on a complaint involving a grievance in respect of any action specified in the Second Schedule of the Act, which are as follows: a) Action taken for the purpose of powers investigating crimes relating to the security of the State. b) Action taken in the exercise of powers in relation to determining whether a matter shall go to a Court or not. c) Action taken in matters which arise out of the terms of a contract governing purely commercial relations of the administration with customers or suppliers, except where the complaint alleges harassment or gross delay in meeting contractual obligations. d) Action taken in respect of appointments, removals, pay, discipline, superannuation or other matters relating to conditions of service of public servants but not including action relating to claims for pension, gratuity, provident fund or to any claims which arise on retirement, removal or termination of service. e) Grant of honours and awards.

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CONCLUSION:- The office bearers and employees of co-operative society who deliberately keep silence in enforcing acts and rules for recovery of debts, who makes favour to defaulters in the matter of recovery without any valid reasons will be committing oofences under section 7 & 13 of the prevention of corruption act. Under Section 2(c)(viii) they come within the definition of public servant, since he is the person who holds suchoffice by virtue of which he is authorized or required to perform any public duty;" As per the definition, public duty under section 2(b) would mean a duty in discharge of which public or community has an interest. In other words As per section 2 (c)(viii) any person who holds an office by virtue of which he is authorized or required to perform any public duty would come within the purview of definition of "public servant" and would be amenable to the rigours of P.C. Act and enquiry / investigation by Lokayukta.

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