Madras High Court | Resolution Professionals Are Public Servants Under Prevention Of Corruption Act | Court Directs IBBI To Grant Sanction, Says Duties Fall Within Administration Of Justice
Isabella Mariam
The High Court of Judicature at Madras Single Bench of Justice D. Bharatha Chakravarthy held that a Resolution Professional falls within the definition of a public servant under Section 2(c)(v), (vi), and (viii) of the Prevention of Corruption Act, 1988. The Court directed the Insolvency and Bankruptcy Board of India to consider the file submitted by the Central Bureau of Investigation for the grant of sanction on its own merits and in accordance with law. The Court further mandated that the decision be communicated within four weeks and that a Final Report be filed by the investigating agency within a further four weeks thereafter.
The petitioner filed a Criminal Original Petition seeking a direction to the respondents to investigate his complaint and to submit a chargesheet in F.I.R. No. RC0322023A0020/2023. The petitioner had earlier approached the Court by way of another petition, requesting the first respondent to register an FIR based on his complaint dated 13.08.2021. The complaint alleged serious financial discrepancies in the affairs of a company named M/s. S.L.O. Industries Limited, of which the petitioner was the former Managing Director.
On 14.11.2019, upon a petition filed under Section 7 of the Insolvency and Bankruptcy Code, the National Company Law Tribunal entrusted the management of the company to an Interim Resolution Professional. The company later went into liquidation and was taken over by the liquidator appointed on 21.01.2022. Upon assuming charge, the liquidator found vast depletion in stock and accounts, with closing stock worth about Rs. 840 crores unaccounted for. The National Company Law Tribunal, in its order dated 12.05.2023, also noted a difference of Rs. 625.25 crores in the inventory.
Considering the seriousness of these discrepancies, this Court earlier directed the first respondent to conduct a preliminary inquiry based on communications from the petitioner and the liquidator. A case was subsequently registered by the Central Bureau of Investigation in RC0322023A0020/2023, but no final report was filed, prompting the filing of the present petition.
During hearing, the Special Public Prosecutor for CBI submitted that the investigation was complete but that the matter was pending sanction from the Insolvency and Bankruptcy Board of India. It was argued that in view of the Delhi High Court’s judgment in Dr. Arun Mohan v. Central Bureau of Investigation (W.P.(Crl). No. 544 of 2020), Resolution Professionals were not considered public servants under the Prevention of Corruption Act, 1988. The matter was pending before the Hon’ble Supreme Court of India.
Subsequently, the Insolvency and Bankruptcy Board of India was impleaded as the second respondent. Counsel for the second respondent accepted that the sanction had not been considered because the issue was pending before the Supreme Court following the Delhi High Court’s decision. Counsel for the third respondent, the Resolution Professional, placed reliance on judgments including Babita Lila v. Union of India, Swiss Ribbons Pvt. Ltd. v. Union of India, Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta, and Essar Steel India Ltd. v. Satish Kumar Gupta, contending that the duties of Resolution Professionals are administrative and not public in nature, and that they serve private commercial interests.
The petitioner argued otherwise, relying on statutory provisions and the reports of the liquidator. The Court considered the divergent positions adopted by different High Courts, including the Jharkhand High Court in Sanjay Kumar Agarwal v. Union of India, which held Resolution Professionals to be public servants under the Prevention of Corruption Act. As Special Leave Petitions were pending before the Supreme Court without any interim prohibitions, the Court proceeded to decide the question.
The Court examined Section 2(c) of the Prevention of Corruption Act, 1988. Justice D. Bharatha Chakravarthy recorded: “On the face of it, it is very clear that the Resolution Professional is a person authorized by a Court of Justice to perform duties related to the administration of justice.” The Court disagreed with the Delhi High Court’s interpretation of sub-clause (v), stating: “The context and the language do not necessitate applying the principle of ejusdem generis… Further, the clause is inclusive in nature and, as a result, it will have a broad meaning to denote any duty in connection with the administration of justice.”
The Court further noted: “Resolution Professionals will also be regarded as public servants under Section 2(c)(vi), as their reports are sought by a Court of Justice or a competent public authority.” Relying on the Supreme Court’s decision in Dilip B. Jiwrajka v. Union of India, the Court quoted extensively from the duties of Resolution Professionals under Sections 18 and 99 of the Insolvency and Bankruptcy Code. It recorded: “Thus, it can be seen that third parties and consequently the Society at large, will be affected.”
The Court also referred to the statutory framework: “The Resolution Professional performs duties in connection with the administration of justice being authorised by a Court of Justice. Secondly, he is a person from whom a report is called for by a Court of Justice / a competent public authority; and thirdly, he performs a public duty.” The Court, therefore, concluded: “Resolution Professional will be a public servant within the meaning of the definition contained in Section 2(c)(v), (vi) and (viii) of the Prevention of Corruption Act, 1988.”
On arguments that the work of the Resolution Professional is administrative and guided by the Committee of Creditors, the Court stated: “Merely because the work is administrative in nature or that it is subject to supervision and with only less powers, is not the criteria. The criteria is that the position/duties should fall within the definition as contained under the Prevention of Corruption Act, 1988.”
Having considered the submissions, the Court disposed of the petition with specific directions. Justice D. Bharatha Chakravarthy ordered: “This Criminal Original Petition is disposed of by directing the second respondent to consider the file submitted by the first respondent for grant of sanction as per the provisions of the Prevention of Corruption Act, 1988 in accordance with law, consider it on its own merits and communicate the decision to the first respondent within four weeks from the date of receipt of a copy of this order and within a further period of four weeks therefrom, the Final Report shall be filed by the first respondent in accordance with law.”
Thus, the Court mandated strict timelines for both the Insolvency and Bankruptcy Board of India and the Central Bureau of Investigation to act upon the matter without delay.
Advocates Representing the Parties
For the Petitioner: Mr. S. Veeraraghavan, Advocate
For the Respondents: Mr. K. Srinivasan, Special Public Prosecutor; Mr. S. Sathiyanarayanan, Advocate; Mr. S. M. Vivekanandh, Advocate
Case Title: Anil Kumar Ojha v. The State Rep. by Inspector of Police, CBI ACB, Chennai & Ors.
Neutral Citation: 2025: MHC:1858
Case Number: Crl.O.P.No.16812 of 2025
Bench: Justice D. Bharatha Chakravarthy
