DR. ARUN MOHAN Vs. CENTRAL BUREAU OF INVESTIGATION
CWP 544 of 2020
Fact:
1.The petitioner was approached by Mr. Karan Lalwani, Financial Creditor of FR Tech Innovations Private Limited (CD) for proposing the name of the petitioner as IRP in the company petition to be filed by the Financial Creditor under Section 7 of IBC, 2016 in the NCLT, Mumbai Bench by the FR Tech Innovations Private Limited.
2.The petitioner received an intimation from Financial Creditor through e-mail along with a copy of the order dated 14.11.2019 passed by the NCLT. Petitioner as an IRP inter-alia issued public announcement and invited claims from the Claimants/Creditors along with the documentary evidence in support thereof. The petitioner received eight claims in total for an amount of Rs. 2,12,08,445/- from the claimants/creditors under various categories till 13.12.2019 being last date for submission of claims
3.Petitioner in his capacity as IRP collated and verified the claims received by him from Creditors/Claimants under various categories including the claim of Mrs. Namrata Bugalia, wife of the complainant in the above said RC case. Mrs. Namrata Bugalia, wife of the complainant, allegedly submitted the forged and fabricated documents in support of her claim including a copy of the unstamped acknowledgement and inventions agreement dated 06.03.2017 shown to have been executed on 03.03.2017, which according to petitioner seems to be a forged and fabricated.
4.Petitioner sent reminder e-mails to all the Claimants/Creditors including Mrs. Namrata Bugalia, wife of the complainant, requiring them to further submit the requisite documents and information as desired by the petitioner through email dated 14.12.2019 in order to enable the petitioner as IRP to finalize the list of creditors/claimants.
5.COC was constituted with only one FC and petitioner was appointed as the RP. Petitioner during discussion on telephone on 30.12.2019, the petitioner conveyed the complainant that he had been appointed as RP by CoC in its first meeting held on 28.12.2019. The petitioner also informed the complainant that the CoC had decided to recover Rs.15.20 Lacs from the wife of the complainant along with interest as she had received these amounts on the basis of forged and fabricated documents.
6.Instead of responding to the Demand Notice dated 07.01.2020 and to pre-empt any legal action against his wife, the complainant filed a false and fabricated complaint against the petitioner with SP, CBI, Delhi under PC Act. The complainant is stated to have concealed the receipt of Demand Notice from the petitioner on 07.01.2020 as also his conduct of misappropriation of Rs 15.20 Lacs from the CD, on the basis of forged and fabricated documents. The respondent No.1 registered the FIR vide RC-DAI-2020-A-001 under Section 7 and 7A of the PC Act, read with Section 120B of IPC against the petitioner and Sh. Paresh Kumar.
7.Respondent No.1 arrested Sh. Paresh Kumar claiming that he had received a sum of Rs 3.5 Lacs from the complainant. The petitioner was separately arrested from CBI office. During the alleged verification conducted between the lodging of the complaint and registering the FIR, the respondent No.1 did not inquire into the alleged claims raised by the complainant from the Corporate Debtor. On 14.01.2020, the impugned order of judicial remand for 2 weeks was passed by learned Special Judge PC Act on the conclusion that petitioner is a Public Servant as per Section 2(c) of the PC Act, 1988. That on 25.01.2020, the petitioner was released on bail by the learned Special Judge, New Delhi
Issue: Whether the RP or IRP falls under the ambit of Public Servant ?
Arguments:
Petitioner:
1.Counsel submitted that observations made against the petitioner by learned Special Judge, passed in the impugned order without any legal basis and wholly based upon the surmises and conjectures of the learned Special Judge while
interpreting the provisions of the IBC alongwith PC Act.
2.Counsel emphasized upon the appointment, fees, tenure, duties and responsibilities of the IRP/RP under the IBC and tried to demonstrate how the IRP/RP does not fall under the category of “Public Servant”, as envisaged under the law and thus, the non-applicability of PC Act over such IRP/RPs. It was further submitted that the duties of the IRP are limited to those enumerated under the IBC. They are only required to follow the directions of Committee of Creditors and have no powers to take any decisions without the approval of the CoC. These duties only deal with the management of the insolvency of the corporate debtor and not with any issue of administration of justice.
3.Counsel submitted that PC Act, 1988 provides an exclusive definition of public servant under Section 2(c). As criminal statutes must be read strictly and all ambiguities must be resolved in favour of the accused, there is no possibility of the inclusion of any person not listed under Section 2(c) being included as a public servant.
4.It was further submitted that Section 2 of the PC Act does not include the terms ‘Insolvency Professional’, ‘Interim Resolution Professional’ or ‘Resolution Professional’. This is despite the fact that Parliament chose to amend certain provisions of PC Act in 2018, 2 years after the introduction of the IBC in 2016. Notably, the Fourth definition of public servant under Section 21 of IPC is nearly identical to Section 2(c)(v) of PC Act and the Sixth definition under Section 21 of IPC is identical to Section 2(c)(vi) of PC Act. Therefore, if an IRP is not a public servant within the meaning of Section 21 (Fourth and Sixth), an IRP cannot therefore be a public servant under Section 2(c)(v) and Section 2(c)(vi) of the PC Act
5.Counsel submitted that Parliament considered the question of corruption in the context of the IBC, leading to the introduction of Section 232 IBC. Notably, the IRP or RP is not included in Section 232 IBC. However, in the very next section i.e. Section 233 IBC, the actions taken in good faith by an IRP or an RP are protected.
6.He further contends that even if it is assumed that IBC and PC Act are both special legislations, the IBC was intended to be a complete code with regards to all matters relating to insolvency. This would also include the creation of the position of IRP and RP as well as the regulations of those persons. The IBC has also been conscious of the public nature of some persons under the IBC and deemed them to be public servants under the IPC
Respondent:
1.Counsel submitted that IBC is a new law and a new concept duly enacted for the issues regarding insolvency and bankruptcy of the corporate persons. He further submits that the PC was amended and Section 2(c) of the PC Act has a very wide amplitude, encompassing the duties performed by the individuals to be termed as a “Public Servant”, though had not specifically provided the word IRP/RP in its definition
2.Counsel contended that IRP/RP is a person who is duly appointed by the NCLT, even if same is proposed by the creditor/corporate debtor/applicant, and by the plain reading of the duties which the IRP/RP are required to perform, it clearly shows that the same are “Public Duty” having a “Public Character”. It was further submitted that the duties and responsibilities bestowed upon the IRP/RP reflects that he is a part of judicial delivery system, working in furtherance of the judicial dispensation, and thus is squarely covered under the definition of “Public Servant” under the IPC and PC Act.
3.It was submitted that any act or commission done or intended to be done by an Insolvency Professional or Liquidator which is not covered under the IBC, 2016 or rules or regulations made thereunder tantamount to, by its nature, a crime punishable under PC Act or IPC, as an IRP or RP or Liquidator or Bankruptcy Trustee is not protected u/s 233, IBC, 2016.
4.It was submitted that So far as an Insolvency Professional or Liquidator not referred in Section 232, IBC, 2016 is concerned, it appears to be an unintended omission of the legislature but the implication by nature of duties, responsibilities, accountability and office of an Insolvency Professional (IRP or RP) or Liquidator under IBC, 2016, ex-facie shows and proves that an Insolvency Professional (IRP or RP) or Liquidator under IBC, 2016 is a public servant.
Decision: RP or IRP does not fall under the definition of public servant
Rationale:
1.Hon’ble court noted that it is trite that every duty, even if has a colour of “public duty”, may necessarily not be of a character which is “public” in nature. There could be many instances where a role or a responsibility of an individual in a particular statute would assume the nature of “public duty” but sans the “Public Character”
2.It held that it is not necessary that all duties which are broadly defined as “public duty” would encompass within itself “public character”. Merely because the IP is vested with certain roles, responsibilities and duties which could partake the nature of “public duties”, it is not a necessary conclusion or a definite inference that the same are being discharged in the nature of “public character”.
3.It held that even if the roles and duties ascribed to the IP may be bordering or falling within “public duties”, the same would still not assume “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 or Section 2(c) PC Act, 1988.
4.IP was not included within the ambit of Section 232 of IBC. As a necessary corollary, it can be safely inferred that the IP, according to the provisions of IBC as it stands today, was not considered to be a “public servant” by the legislature. It held that If the Legislature had intended, at any point of time, even after IBC was codified in the year 2016 to include IP in Section 232 of IBC, the same could have been engrafted or inserted in Section 232 itself or elsewhere, in or about the time when the aforesaid SEBI Regulations were brought into effect in the year 2018.
Order:
