Insolvency Resolution Professional Not 'Public Servant' Under Prevention Of Corruption Act: Delhi High Court

The Delhi High Court has ruled that an Insolvency Resolution Professional (IRP) does not fall within the meaning of “public servant” under Section 2(c) of the Prevention of Corruption Act, 1988.

Justice Tushar Rao Gedela said that it is not necessary that all duties which are broadly defined as “public duty” would encompass within itself “public character”.

“Merely because the IP is vested with certain roles, responsibilities and duties which could partake the nature of “public duties”, it is not a necessary conclusion or a definite inference that the same are being discharged in the nature of “public character”,” the court said.

It added that the IRP was not included within the ambit of Section 232 of Insolvency and Bankruptcy Code, 2016, and thus, according to the provisions of the Code, such a professional was not considered to be a “public servant” by the legislature.

“Insolvency Professional is only a “facilitator” and has different roles to play at different stages of CIRP. In fact, the IP metamorphosizes from an IRP to an RP and thereafter as a Liquidator (as the case may be), and due to such metamorphosis, it would be prudent not to characterize the duties, even if assumed to be “public”, as in the nature of “public character”,” the court said.

Justice Gedela made the observations while quashing an FIR registered by Central Bureau of Investigation (CBI) against one Arun Mohan, who was appointed by IRP by NCLT Mumbai, for allegedly receiving bribe.

The FIR was registered under Sections 7 and 7A of the Prevention of Corruption Act, 1988, read with Section 120B of Indian Penal Code, 1860.

“In view of the above and in the considered opinion of this Court, an Insolvency Professional does not fall within the meaning of “public servant” as ascribed in any of the clauses of sub-section (c ) of section 2 of the Prevention of Corruption Act, 1988. Resultantly, the FIR..registered by the respondent no.1/CBI is quashed and set aside,” the court held.

Apart from challenging the FIR, Mohan also sought quashing of a trial court order remanding him to judicial custody for two months.

Disposing of the plea, the court said that even if the roles and duties ascribed to the IRP may be bordering or falling within “public duties”, the same would still not assume “public character”.

“It is also trite that the Courts would lean in favour of Constitutionality of the provisions of any enactment and would be loath in drawing conclusions against it, without any cogent and relevant material. Considering both the aforesaid Sections, it can be safely said that the omission in Section 232 was not inadvertent but a deliberate omission to not include IP within its ambit,” the court said.

Furthermore, Justice Gedela observed that an IRP, according to the provisions of IBC, was not considered to be a “public servant” by the legislature.

“Resultantly, the omission to include IP in section 232 IBC is not inadvertent but a thoughtful, willful and deliberate one by the Legislature, and the Courts of law being empowered to interpret the same, ought not to legislate or supply casus omissus, which in any case is prohibited,” the court said.

It added: “Whether the IP is or is not a "public servant" according to IBC or PC Act 1988 or Section 21 IPC, 1860, is purely the domain of the Legislature and if required and necessitated, the legislature may carry out necessary amendments to the legislations.”

Counsel for Petitioner: Mr. Arshdeep Singh Khurana and Ms. Tannavi Sharma, Advocates

Counsel for Respondent: Mr. Prasanta Varma, SPP for CBI with Ms. Pragrya Verma and Mr. Pankaj Kumar, Advocates; Mr. Ram Niwas Buri and Mr. Rishabh Sharma, Advocates for R-2

Title: DR. ARUN MOHAN v. CENTRAL BUREAU OF INVESTIGATION

Citation: 2023 LiveLaw (Del) 1309

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