Resolution professional a public servant, comes under Prevention of Corruption Act: Jharkhand HC
The assignment of and duty performed by a resolution professional are in the nature of public duty and therefore, will come within the meaning of public servant both under sections 2 (c) (v) & (viii) of the Prevention of Corruption Act, pronounced the Jharkhand High Court recently.
According to the high court, the appointment of resolution professional is made by the National Company Law Tribunal (NCLT), which is the Adjudicating Authority for the insolvency resolution process of the companies under the I & B Code, 2016, and that a resolution professional has a key role to play in the insolvency resolution process and to protect the assets of the corporate debtors.
The court further said that functions and obligations of Insolvency Professionals, as set out under Section 208 of I&B Code, which are public in nature. “These functions intimately relate to matters relating to loans extended by the banks which is investments from public at large and therefore will come within the meaning of public duty as provided under Section 2-C(viii) of the Prevention of Corruption Act (PC Act).
The court further said that it is true that a resolution professional does not figure among the officers enumerated under Section 232 of I&B Code deemed to be a public servant within the meaning under section 21 of the IPC. “Those who are deemed to be a public servant enjoy certain immunities from criminal prosecution for IPC offences under section 197 of Cr.P.C, as the cognizance cannot be taken without the previous sanction of the Central or State Government as the case may be. But this does not refer to, any immunity from criminal prosecution for offences committed under the PC Act,” the court said.
About the case
The Jharkhand High Court was hearing a plea filed by insolvency professional Sanjay Kumar Agarwal, who was charged with demanding bribe of Rs 2 lakh a month from the promoters of corporate debtor Adi Ispat (P) Limited for showing leniency in insolvency proceedings.
The complaint was discreetly verified, and insolvency professional was caught read handed on 11 February 2020 in the presence of independent witnesses accepting the illegal gratification from the complainant.
The insolvency petitioner had filed instant petition for quashing of the FIR on the premise that Section 7 of PC Act will not apply to this petitioner as a ‘Resolution Professional’ is not a public servant within the meaning of Section 2(C) of the Prevention of Corruption Act or under Section 21 of the IPC.
The petitioner had argued that he is neither public servant nor he is appointed by any Court or is performing any public duty. The appointment process of resolution professional is provided under Section 22 of the Code, 2016 under which he is appointed by the committee of the creditors. The duty which has been detailed in Section 25 are not in the nature of public duty as contemplated under Section 2(c)(viii).
However, the Jharkhand High Court rejected the petitioner’s plea that criminal proceedings against him are quashed.
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