Supreme Court says corruption law applicable on top private bankers, too

The Supreme Court has ruled that a whole-time chairman, managing director or director of a company would be deemed to be a public servant and the Prevention of Corruption Act would apply on them.

Section 46A of the Banking Regulation Act made this clear and the provision "cannot be left meaningless."

The court clarified the law while setting aside a contrary view expressed by the Bombay High Court in a case involving the top brass of the erstwhile Global Trust Bank (GTB), which merged with Oriental Bank of Commerce in 2004.

The courts had taken the view that the accused - Ramesh Gelli, chairman and managing director of GTB, and Sridhar Subasri, executive director - were not public servants when they headed the private bank. A judge declined to take cognisance of the corruption charges against them. They, however, maintained the offences of cheating and conspiracy under the Indian Penal Code.

The Central Bureau of Investigation (CBI) appealed to the Supreme Court against this view and insisted that they were public servants and corruption charges could be slapped against them. The Bench agreed and gave an expanded definition of the term public servant to include executives of private banks, too. They wrote separate but concurring judgments.

The court pointed out that the "objects and reasons" of the Prevention of Corruption Act envisaged "widening the scope of the definition of the expression public servant". Later amendments to the penal code and the corruption law emphasised this trend.