Madras High Court Holds Resolution Professionals to be Public Servants under the Prevention of Corruption Act and Directs IBBI to Consider Sanction for Prosecution: in the case of Anil Kumar Ojha v The State Rep by Inspector of Police, CBI ACB & Ors.

Case title:
Anil Kumar Ojha v The State Rep by Inspector of Police, CBI ACB & Ors.

Date of Order:
4th August, 2025

Bench:
The Hon'ble Mr.Justice D.Bharatha Chakravarthy

Parties:
Anil Kumar Ojha - Petitioner 
1. The State Rep by Inspector of Police, CBI ACB - 1st Respondent
2. The Insolvency and Bankruptcy Board of India, rep. by its Deputy General Manager – 2nd Respondent
3. Chandramouli Ramasubramaniam – 3rd Respondent

SUBJECT

The Madras High Court, in Crl.O.P.No.16812 of 2025, directed the Insolvency and Bankruptcy Board of India (IBBI) to consider granting sanction for prosecuting a Resolution Professional accused of mismanaging company funds during the insolvency resolution process, noting that the petitioner had earlier sought registration of a FIR on his complaint dated 13.08.2021

The Court further held that since the Resolution Professional was discharging duties connected with the administration of justice and performing a public duty, he would fall within the ambit of “public servant” under Section 2(c)(v), 2(c)(vi), and 2(c)(viii) of the Prevention of Corruption Act, thereby attracting the requirement of sanction for prosecution.

IMPORTANT PROVISIONS

Under the Prevention of Corruption Act, 1988, “public servant” is broadly defined in Section 2(c):

• Section 2(c)(v): Includes every officer of a court of justice, such as liquidators, receivers, or commissioners, and any person whose reports or acts the court relies upon in judicial proceedings.
• Section 2(c)(vi): Extends to persons performing duties that are integrally connected with the administration of justice, even if they are not regular court staff.
• Section 2(c)(viii): Covers any individual holding an office that requires them to discharge a public duty, i.e., any function carried out in the interest of the public or under statutory authority.

OVERVIEW

• The petitioner, the former Managing Director of M/s.S.L.O. Industries Limited, was entrusted with the company's management by the National Company Law Tribunal. The company went into liquidation and was taken over by a liquidator appointed by the Tribunal and subsequently the liquidator found that the company's inventory and stock position were depleted, and an alarming closing stock figure of around Rs.840 crores that could not be reconciled. 
• The NCLT ordered a Rs.625.25 crore inventory difference, prompting the Court to conduct a preliminary inquiry and consider the communication dated 19.01.2021, including the liquidator's communication dated 01.03.2022.  
• Contingent to cognizable offenses being found, the first respondent was directed to register a complaint and proceed. Even though a case was registered, the final report was not filed, leading to this Criminal Original Petition being filed in this court. 

ISSUES RAISED

1. Whether a Resolution Professional appointed under the Insolvency and Bankruptcy Code qualifies as a 'public servant' within the meaning of the Prevention of Corruption Act, 1988?
2. Whether the Insolvency and Bankruptcy Board of India (IBBI), as the sanctioning authority, should grant sanction for prosecution against the Resolution Professional for alleged offences?

ARGUMENTS ADVANCED BY THE PETITIONER

It was contended that there were serious discrepancies in the company’s inventory and stock as reported by the liquidator, indicating possible offences warranting investigation and prosecution, and accordingly directions for a thorough probe and filing of a final report (chargesheet) in the registered FIR were sought. 

ARGUMENTS ADVANCED BY THE RESPONDENTS

1st Respondent

• It was contended that the investigation in this case had already been completed, and the only impediment to further proceedings was the grant of sanction by the Insolvency and Bankruptcy Board of India. 
• However, the Board had withheld the file on the ground that the Delhi High Court, by its judgment dated 18.12.2023 in Dr. Arun Mohan v. CBI (W.P.(Crl). No.544/2020) had held that Resolution Professionals did not fall within the definition of “public servant” under the Prevention of Corruption Act, 1988, and since the issue had been carried to the Hon’ble Supreme Court and was pending adjudication, the Board had refrained from granting sanction. 

2nd Respondent

• The learned Counsel for the second respondent submitted that, in view of the Delhi High Court’s decision in W.P.(Crl). No.544 of 2020 and the pendency of the matter before the Hon’ble Supreme Court awaiting final adjudication, the request for sanction was not being considered. 

3rd Respondent

• The learned Counsel for the third respondent, relied on the Supreme Court judgment in Babita Lila v. Union of India (Crl.A.No.824 of 2016), particularly paragraphs 61 and 62, to argue that the definition of “public servant” in penal laws cannot be expansively construed and only those expressly covered by the statute can be included. 
• A reading of Sections 232 and 233 of the Insolvency and Bankruptcy Code makes it clear that while the Board and its officials are deemed public servants, Resolution Professionals have been consciously excluded; moreover, the Code grants them protection for actions taken in good faith, and in this context, the Delhi High Court’s judgment reflects the correct view. 
• Reliance was placed on the Supreme Court’s judgment in Swiss Ribbons Pvt. Ltd. v. Union of India, which clarified that the RP’s role is administrative and distinct from a public function; further reliance was placed on Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors., to argue that the IBC process serves private commercial interests with no element of public duty, and on Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors., to show that the framework is centered on commercial reorganization under the supervision of the Committee of Creditors’ commercial wisdom. 
• Furthermore, Section 319 defines “Insolvency Professional,” meaning that apart from enrolment in the panel, there are no statutory attributes attaching to the RP, and hence, their professional services cannot bring them within the ambit of “public servant.” 

JUDGEMENT ANALYSIS

1. A Resolution Professional is clearly a person authorized by a Court of Justice to perform duties connected with the administration of justice. The phrase “any duty in connection with the administration of justice” is broad and not confined to powers like selling properties; hence, the principle of ejusdem generis does not apply. As the clause is inclusive in nature, the narrower view taken by the Delhi High Court in Dr. Arun Mohan v SBI was disagreed with. 
2. Furthermore, under Section 2(c)(vi), since the Company Law Tribunal or a Court considers and relies on the Resolution Professional’s report, and such reports are specifically sought though not decisive, Resolution Professionals would also fall within the scope of “public servants.” 
3. The Supreme Court, while examining Section 18 in paragraph 48 of Dilip B. Jiwrajka Vs. Union of India and Ors, outlined the wide-ranging duties of an interim Resolution Professional, including collecting financial and operational information of the corporate debtor, collating claims of creditors, constituting the committee of creditors, managing and monitoring assets and operations, filing information with the utility, and taking control and custody of assets. Under Section 20, the interim Resolution Professional is also mandated to protect and preserve the value of the corporate debtor’s property and ensure it continues as a going concern. Thus, their actions directly impact third parties and, consequently, society at large. 
4. In the same case, it was noted that the Resolution Professional is required to examine the application to ensure compliance with Sections 94 and 95, verify that the applicant has furnished the information mandated under sub-section (4), and thereafter submit a report containing recorded reasons. 
5. Thus, the judgment makes it clear that the Resolution Professional, being authorized by a Court of Justice, performs duties in connection with the administration of justice, is a person from whom a report is called for by a Court or competent authority, and discharges a public duty. Accordingly, a Resolution Professional falls within the ambit of “public servant” under Section 2(c)(v), (vi), and (viii) of the Prevention of Corruption Act, 1988, and the second respondent is therefore liable to consider the file submitted by the first respondent for grant of sanction on its own merits and in accordance with law. 
6. The third respondent’s contention that the Resolution Professional’s role is merely administrative and supervised by the Committee of Creditors is immaterial, as the test is whether the duties fall within the Prevention of Corruption Act, 1988. Even with limited powers, the work is in connection with the administration of justice. In view of the judgment in Dilip B. Jiwarajka (supra), the argument is rejected and it is held that a Resolution Professional is a public servant under the Act. 

CONCLUSION

• As a result, the Criminal Original Petition was disposed and the court directed the second respondent to consider the file for sanction under the Prevention of Corruption Act, 1988, on its merits and in accordance with law. They were also asked to communicate its decision within four weeks, and first respondent was ordered to file the Final Report within a further four weeks. 

FAQs

Q: Why did the Court hold that a Resolution Professional is a public servant under the Prevention of Corruption Act?
A: The Court held that a Resolution Professional is authorized by a Court of Justice, performs duties in connection with the administration of justice, and submits reports specifically sought by the Tribunal or Court. Their functions directly impact third parties and society at large. Hence, they fall under Section 2(c)(v), (vi), and (viii) of the Act.

Q: How did the Court address the argument that the Resolution Professional’s role is only administrative?
A: The Court rejected this contention, stating that the test is not whether the duties are administrative or supervised but whether they fall within the Prevention of Corruption Act. Even with limited powers, the Resolution Professional’s work is integrally connected with the administration of justice. Therefore, they qualify as a public servant under the Act.