Insolvency Professionals are not public servants under Prevention of Corruption Act: Delhi High Court

The Delhi High Court has held that an Insolvency Professional (IP) or Resolution Professional (RP) cannot be held to be a "public servant" under the Prevention of Corruption Act, 1988 (PC Act) [Dr Arun Mohan v. Central Bureau of Investigation]. .Justice Tushar Rao Gedela rejected arguments by the Central Bureau of Investigation (CBI) that the duties of an insolvency professional under the Insolvency and Bankruptcy Code (IBC) must be read as “public duties” that encompass a “public character” in consonance with the definition of “public servant” under the PC Act.The Court observed that merely because an IP or RP is vested with certain roles, responsibilities and duties which were in the nature of “public duties”, it does not necessarily mean that the same are of “public character."“With the ever-evolving laws and roles and duties cast upon various individuals under such enactments, the responsibilities of individuals and in some cases, institutions may have overlapping character and may be intertwined with 'public duty' but that by itself would not be a legally determined benchmark to categorise all such individuals or institutions, as the case may be, as “public servants” for the purposes of Section 21 IPC (Indian Penal Code) or Section 2(c) PC Act, 1988. That too, when the Legislature appears to have deliberately omitted such individual or institution from such ambit,” the Court held. .The Court further noted that the omission to include an IP in Section 232 (which says that members, officers, etc. of the Insolvency and Bankruptcy Board of India/ IBBI are "public servants") of the IBC was not inadvertent.Rather, the Court held that such an omission is a thoughtful, wilful and deliberate one by the legislature.“The Legislature, in its wisdom, thought it fit and prudent not to include IP as 'public servant' and such non-inclusion was a willful and deliberate omission,” the Court held..The Court came to these conclusions while dealing with a plea filed by one Arun Mohan, who had urged the Court to quash an FIR registered against him by the CBI.Mohan was appointed as the Interim Resolution Professional (IRP) of a firm named FR Tech Innovations Private Limited. It was alleged that Mohan, in connivance with co-accused Paresh Kumar, hatched a conspiracy to extort money from the complainant and demanded a sum of ₹5 lakh as a bribe to hush up certain irregularities allegedly found in certain documents. On these allegations, the complainant approached the CBI with a complaint under the PC Act.Mohan then approached the High Court arguing that IRPs or IPs appointed under the IBC are not public servants for the purposes of the PC Act and, therefore, the FIR in question was void ab initio..The Court agreed with these arguments and quashed the FIR registered by the CBI.“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 bearing No… dated 11.01.2020 registered by the respondent no.1/CBI is quashed and set aside," the Court held. .Advocates Arshdeep Singh Khurana and Tannavi Sharma appeared for petitioner.The CBI was represented by Special Public Prosecutor (SPP) Prasant Varma as well as Advocates Pragrya Verma and Pankaj Kumar.Advocates Ram Niwas Buri and Rishabh Sharma appeared for the complainant..[Read Judgment]