PC Act Can be Invoked against Bank Officials- Telangana High Court

Recently, the Telangana High Court granted permission to the Central Bureau of Investigation (CBI) to prosecute Ramesh Gelli, the former Chairman and Managing Director (CMD) of Global Trust Bank, and Sridhar Subasri, the Executive Director (ED), under the Prevention of Corruption (PC) Act. Justice EV Venugopal overturned a 2010 decision by a special CBI court that had discharged the accused on the grounds that they were not public servants.

The court observed that according to Sector 46A of the Banking Regulation Act, 1949, the Managing Director and Executive Director of a bank licensed by the Reserve Bank of India (RBI) are considered public servants. It also referenced a Supreme Court ruling affirming Gelli and Subasri’s status as public servants, thus subjecting them to prosecution under the PC Act.

Justice Venugopal stated, “Given the Supreme Court’s determination that the respondents are indeed public servants and fall under the PC Act’s jurisdiction, this Court sees no reason to deviate from that conclusion.”

The case, registered in 2005, accused Gelli and Subasri of colluding with others to defraud the bank and cause losses amounting to ₹10.25 crore. Although the accused were charged in 2008, the trial court discharged them in 2010, citing their ineligibility for prosecution under the PC Act. The CBI contested this decision, arguing that Gelli and Subasri met the criteria of public servants under the PC Act due to Section 46-A of the Banking Regulation Act.

Justice Venugopal concurred with the CBI’s arguments, stating that the allegations against Gelli and Subasri revolved around the misuse of their official positions involving public funds, rendering them liable for prosecution under the PC Act.

Additionally, the court noted that the Bombay High Court ruling, which the trial court had relied upon to assert that Gelli and Subasri were not public servants, was overturned by the Supreme Court in 2016.

Consequently, the High Court upheld the CBI’s petitions and overturned the trial court’s decision. Anandi, serving as Special Public Prosecutor, represented the CBI, while Senior Counsel L Ravi Chander, Advocate E Umamaheshwar Rao, and C Sharan Reddy represented the accused.