RP Appointed under IBC is a ‘Public Servant’ u/s 2(c) of Prevention of Corruption Act 1988: HC

Case Details: Sanjay Kumar Agarwal v. Central Bureau of Investigation, Anti Corruption Bureau, Dhanbad - [2023] 149 taxmann.com 146 (Jharkhand)

Judiciary and Counsel Details

• • Gautam Kumar Choudhary, J.
  • S.D. Sanjay, Sr. Adv. & Salona Mittal, Adv. for the Petitioner.
  • P.A.S. Pati for the Respondent.

Facts of the Case

In the instant case, the petitioner argued that the Resolution Professional (RP) appointed under Section 22 of the IBC is not a public servant and therefore, is immune from criminal prosecution under the Prevention of Corruption Act, 1988 (PC Act).

However, the High Court held that the definition of “public servant” under the Prevention of Corruption Act, 1988 is very wide and is not limited to those serving under the Government or its instrumentalities and drawing salary from the public exchequer.

The High Court referred to Section 2(c)(v) of the PC Act, which lays down the functional criteria to include within its fold those discharging public duty or any duty authorized by a court of justice, in connection with the administration of justice.

The court observed that the appointment of an RP is made during the resolution process before the National Company Law Tribunal (NCLT) with its approval and the functions and obligations of Insolvency Professionals are set out under Section 208 of Insolvency & Bankruptcy Code, which are public in nature.

High Court Held

The High Court stated that the functions of an RP intimately relate to matters relating to loans extended by banks, which are investments from the public at large, and therefore, will come within the meaning of public duty as provided under Section 2(c)(viii) of the PC Act.

Therefore, the High Court held that an RP appointed under Section 22 of the IBC will be a public servant under Section 2(c)(v) and (viii) of the PC Act, and the plea that the RP was not a public servant and was immune from criminal prosecution under the PC Act was not reasonable.

In conclusion, the High Court’s decision underscores the importance of a broad interpretation of the term “public servant” under the PC Act to include those discharging public duty or any duty authorized by a court of justice, even if they are not directly employed by the government or its instrumentalities.

The decision also highlights the public nature of the functions and obligations of an RP appointed under the IBC and the need for accountability in the discharge of such duties.