Resolution Professional Liable to Be Prosecuted as ‘Public Servant, SC to Examine

The Supreme Court has sought a response from the Central Bureau of Investigation (CBI) regarding a plea against a ruling by the Jharkhand High Court. The High Court had determined that a resolution professional appointed under the Insolvency and Bankruptcy Code should be considered a “public servant” and can be prosecuted under the Prevention of Corruption Act.

A vacation bench of the Supreme Court, comprising Justices A S Bopanna and Prashant Kumar Mishra, issued the notice to the CBI in response to the plea challenging the High Court’s order. The petitioner, Sanjay Kumar Agarwal, filed the plea, which raises a significant legal question with widespread implications for ongoing court proceedings in India. The question at hand is whether a resolution professional appointed under the Insolvency and Bankruptcy Code qualifies as a “public servant” under the Prevention of Corruption Act and can therefore be subjected to legal proceedings and prosecution under the act.

The Jharkhand High Court had concluded that a resolution professional performs a “public duty” as defined by Section 2(b) of the Prevention of Corruption Act and is thus considered a “public servant” who can be held liable for prosecution. The high court emphasized that resolution professionals are appointed by the National Company Law Tribunal, which serves as the Adjudicating Authority for the insolvency resolution process of companies under the Insolvency and Bankruptcy Code of 2016. Due to the nature of their assignment and duties performed, which involve protecting the assets of corporate debtors, resolution professionals are considered to carry out functions that resemble public duties, falling under the definition of a “public servant” according to sections 2(c)(v) and (viii) of the Prevention of Corruption Act.