Supreme Court to Determine Whether Resolution Professional is a ‘Public Servant’ Under Prevention of Corruption Act

Supreme Court to Determine Whether Resolution Professional is a ‘Public Servant’ Under Prevention of Corruption Act

The Supreme Court by its vacation bench comprising of Justices AS Bopanna and Prashant Kumar Mishra issued notice in a plea which challenged the ruling of the Jharkhand High Court that a Resolution Professional (RP) will be considered a ‘public servant’ under Section 2(c)(v) and Section 2(c)(viii) of the Prevention of Corruption Act, 1988 (PC Act).

The bench issued notice to the respondents in the Special Leave Petition as well as the interim relief sought therein.

In the original suit, the High Court had observed that the RP performs ‘public duty’ within the meaning of Section 2(b) of the PC Act and hence is a ‘public servant’ liable to be prosecuted under the PC Act.

The High Court had passed the impugned judgment while rejecting the petition praying for quashing of the entire criminal proceeding instituted against an Insolvency Professional, as well as the FIR registered for the offence under Section 7 (public servant taking gratification other than legal remuneration in respect of the official act) of the PC Act.

The Single Judge, Justice Gautam Kumar Choudhary had clarified that the meaning of ‘public servant’ under Section 2(c) of the PC Act is not limited to those serving under the Government or its instrumentalities and drawing salary from the public exchequer.

The judge enunciated that the nature of assignment and duty to be performed would determine if one is to be considered as a ‘public servant’ or not.

The judge was of the considered view that in case of Resolution Professional perform functions similar to ‘public duty’. He also noted that though the Insolvency and Bankruptcy Code, 2016 (IBC) is a self-contained code, if a Resolution Professional is guilty of accepting bribes in order to favor a party the PC Act would be applicable.

The SLP before the Apex Court was moved by an Advocate on Record, Vaibhav Niti, who contended that the RP neither performs ‘public duty’ nor holds an office by virtue of which he is authorized or required to perform ‘public duty.’ It was vehemently asserted that the nature of duty of the RP is voluntary and contractual.

The petitioner submitted that the Corporate Insolvency Resolution Process (CIRP) initiated by the RP is an ‘assignment’, a professional service, for which a ‘profession fee’ is paid to the RP.

Additionally, through the petition, it was brought on record before the bench that the present issue is pending adjudication before various High Courts and sought the Apex Court’s interference as the interpretation of the status of the RP appointed by the Committee of Creditors under Section 22(3)(a) the IBC would have far reaching consequences.