The Supreme Court has clarified that employees of government companies and public sector undertakings do not automatically enjoy protection under Section 197 of the Code of Criminal Procedure (CrPC) from prosecution without prior sanction.
A bench comprising Justice Prashant Kumar Mishra and Justice Shree Chandrashekhar held that being designated as a public servant is not sufficient to claim immunity from criminal proceedings. Employees of government instrumentalities must independently satisfy the legal requirements for protection under the provision.
The ruling came while setting aside a Rajasthan High Court order that had discharged three employees of Jodhpur Discom from charges under the Electricity Act, 2003, on the ground that prior sanction for prosecution had not been obtained.
Electricity theft allegations
The case concerned allegations that three Jodhpur Discom officials had facilitated electricity theft by Balim Steel Pvt. Ltd. through manipulation of electricity meters.
According to the prosecution, the alleged electricity theft enabled the company to derive benefits worth approximately ₹12.99 crore, of which ₹8.15 crore remained unpaid.
Following the investigation, a chargesheet was filed and charges were framed against the accused officials. However, the employees approached the Rajasthan High Court, challenging the cognizance taken against them.
The High Court accepted their plea, holding that prosecution could not proceed without prior sanction under Section 197 CrPC.
Jodhpur Discom subsequently challenged the decision before the Supreme Court.
Public servant status does not guarantee immunity
Setting aside the High Court’s decision, the Supreme Court pointed out that although the employees were recognised as public servants under Section 169 of the Electricity Act, they were employees of Jodhpur Discom.
The Court noted that they were neither appointed by the State Government nor subject to termination by it. Their status as employees of a government-controlled company, therefore, did not automatically bring them within the protective ambit of Section 197 CrPC.
The bench relied on its earlier decisions in Mohd. Hadi Raja v. State of Bihar (1998) and Punjab State Warehousing Corporation v. Bhushan Chander (2016), reiterating that employees of government companies and public sector undertakings cannot claim protection merely because their organisations fall within the meaning of ‘State’ under Article 12 of the Constitution.
The Court observed that the Rajasthan High Court’s decision rested on a legally flawed understanding of the provision.
“The very basis of the impugned judgment rendered by the High Court in favour of the respondents…giving them protection under Section 197 of Cr.P.C, is flawed being contrary to the settled judicial precedent of this Court,” the bench observed.
Matter sent back to High Court
The Supreme Court set aside the orders discharging the Executive Engineer, Assistant Engineer and Junior Engineer.
Their revision petitions have been remitted to the Rajasthan High Court for fresh consideration on merits. The High Court will now examine whether the material collected in the chargesheet is sufficient to justify the framing of charges against the three officials.
The Supreme Court’s ruling makes clear that employment in a government company, by itself, cannot be used as a shield against criminal prosecution.