Employees of Government Companies Not Automatically Entitled to Sanction Protection

Source: Supreme Court

Why in News?

A bench of Justice Prashant Kumar Mishra and Justice Shree Chandrashekhar of the Supreme Court decided Jodhpur Discoms v. Lalit Soni & Anr. Etc. (2026). The Court allowed the appeal and set aside the Rajasthan High Court’s order that had discharged three Jodhpur Discom employees because no prior sanction had been obtained under Section 197 CrPC (now Section 218 BNSS). It held that employees of government companies are not automatically entitled to sanction protection.

What was the Background of Jodhpur Discoms v. Lalit Soni & Anr. Etc. (2026) Case? 

• Three employees of Jodhpur Discoms were accused of abetting electricity theft by Balim Steel Pvt. Ltd. through meter tampering. They were:  
  • an Executive Engineer, 
  • an Assistant Engineer, and 
  • a Junior Engineer. 
• The prosecution alleged that the company had made about ₹12.99 crore from the theft, and ₹8.15 crore of that was still unpaid. 
• After investigation, a charge sheet was filed, the court took cognizance of the offence, and charges were framed under the Electricity Act, 2003. 
• The employees filed revision petitions before the Rajasthan High Court. 
• The High Court allowed the petitions and set aside the cognizance order. It held that prior sanction under Section 197 CrPC had not been obtained. 
• Jodhpur Discoms then appealed to the Supreme Court. 

Question before the Supreme Court: 

• Can employees of a government company or public sector undertaking, who are deemed public servants, claim protection under Section 197 CrPC (now Section 218 BNSS) and require prior sanction before they are prosecuted?

What were the Court’s Observations? 

On the status of the employees: 

• The Court noted that the three employees were public servants under Section 169 of the Electricity Act, 2003. 
• However, they were employees of Jodhpur Discoms. The State Government had not appointed them and could not terminate them. 

On Section 197 CrPC protection: 

• The Court held that an employee of a government instrumentality does not automatically become a government servant entitled to Section 197 CrPC protection just because they are a public servant. 
• Being a “public servant” and being a person “not removable from office save by or with the sanction of the Government” are two separate things. Only the second attracts the sanction requirement under Section 197 CrPC (now Section 218 BNSS). 

On Article 12 and government companies: 

• Relying on Mohd. Hadi Raja v. State of Bihar (1998) and Punjab State Warehousing Corporation v. Bhushan Chander (2016), the Court repeated that officers of government companies and public undertakings are not entitled to Section 197 CrPC protection merely because their organisations are ‘State’ under Article 12 of the Constitution. 

On the High Court’s judgment: 

• The Court held that the very basis of the High Court’s judgment, which gave the respondents protection under Section 197 CrPC, was flawed because it went against the settled precedent of the Supreme Court. 

Decision: 

• The appeal was allowed. 
• The High Court’s orders discharging the Executive Engineer, Assistant Engineer and Junior Engineer were set aside. 
• The revision petitions were sent back to the High Court to be decided on the merits, including whether the charge sheet material justified framing charges against them.

What is Section 197 of CrPC / Section 218 of BNSS? 

About: 

• Section 197 of the Code of Criminal Procedure, 1973 has been replaced by Section 218 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which came into force on 1st July 2024. 
• The case was decided under Section 197 CrPC because the proceedings began when the CrPC was still in force. The principle applies equally to Section 218 BNSS. 
• The provision protects judges, magistrates and certain public servants from prosecution without prior sanction from the appropriate government. 
• Its purpose is to protect honest officers from frivolous or vexatious prosecution for acts done in the course of their official duties. 

Section 218(1) BNSS (earlier Section 197(1) CrPC) – Prosecution of Judges and Public Servants: 

• The protection applies when:  
  • the accused is, or was, a Judge, a Magistrate, or a public servant not removable from office save by or with the sanction of the Government, and 
  • the offence is alleged to have been committed while acting, or purporting to act, in the discharge of official duty. 
• In such cases, no court can take cognizance of the offence without previous sanction from:  
  • the Central Government, if the person is or was employed in connection with the affairs of the Union, or 
  • the State Government, if the person is or was employed in connection with the affairs of a State. 

Key Change under BNSS: 

• Section 218 BNSS adds a timeline: the sanctioning authority must decide on a request for sanction within 120 days. If it does not, sanction is deemed to have been accorded.