Aru, the Director of Power Corporation Ltd., a Public Sector Undertaking has been accused of misappropriation and other offences. Further, criminal prosecution was also initiated against him. Aru contends that this prose

Section 197 of the Code of Criminal Procedure, 1973 (CrPC) provides that the sanction of the appropriate government is required in order to take cognizance of any offence which is allegedly committed by a person who, at the time of commission of the offence, was employed by the Central Government or a State Government, as the case may be. The Supreme Court in Mohd. Hadi Raja and Ors. v. State of Bihar and Anr. [1998] 93 Comp Cas362 (SC) observed that the common question of law that arises in all these matters is whether sanction under section 197 of CrPC is required for prosecuting officers of public sector undertakings or Government companies. The Supreme Court held that in order to invite the requirement for sanction as contemplated under section 197 of CrPC, the accused should be such a public servant who cannot be removed from his office except by or with the sanction of the Government and the offence must have been committed while such public servant had been acting or purporting to act in the discharge of his official duties. The Supreme Court also referred to its own decision in S.S. Dhanoa v. Municipal Corporation of Delhi (1981) 3 SCC +38; AIR 1981 SC 1395 that- "it has been contended that sanction contemplated under Section 197 of CrPC must be restricted only in respect of a judge or a Magistrate or a public servant who is directly employed by the Government and not by any instrumentality or agency of the Government." Public sector undertakings, being juristic persons with a distinct legal entity stand on a different footing than the Government departments. It will not be just and proper to bring such persons within the ambit of section 197 by liberally construing the provisions of section 197. Such exercise of liberal construction will not be confined to the permissible limit of interpretation of a statute by a court of law but will amount to legislation by the court. Therefore, the Supreme Court held that the protection by way of sanction under section 197 of CrPC is not applicable to officers of Government companies or public undertakings even when such public undertakings are "State" within the meaning of Article 12 of the Constitution on account of deep and pervasive control of the Government. The Supreme Court of India has further reiterated the above position in a recent case, B.S.N.L. vs. Pramod V. Sawant (2019) In view of the above, it can be concluded that prosecution of Aru is appropriate as the Supreme Court held that the protection by way of sanction under section 197 of CrPC is not applicable to officers of Government companies or public undertakings even when such public undertakings are "State" within the meaning of Article 12 of the Constitution.