Public servant status of Resolution Professional and prima facie money-laundering material upheld at discharge stage.

A Resolution Professional appointed under the Insolvency and Bankruptcy Code, 2016 was treated as performing a public duty and was held to fall within the meaning of a public servant for the Prevention of Corruption Act, 1988. On the money-laundering issue, the Court applied the settled discharge standard and held that it could only see whether the material disclosed sufficient ground to proceed, not conduct a mini trial; it further noted the broad scope of proceeds of crime and Section 3 of the Prevention of Money Laundering Act, 2002. On the facts alleged, the investigation material was found sufficient to sustain refusal of discharge and allow the prosecution to continue.

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Issues: (i) Whether a Resolution Professional appointed under the Insolvency and Bankruptcy Code, 2016 falls within the meaning of a public servant for the purposes of the Prevention of Corruption Act, 1988. (ii) Whether the materials collected in investigation disclosed a prima facie case of money-laundering under the Prevention of Money Laundering Act, 2002 so as to justify refusal of discharge.

Issue (i): Whether a Resolution Professional appointed under the Insolvency and Bankruptcy Code, 2016 falls within the meaning of a public servant for the purposes of the Prevention of Corruption Act, 1988.

Analysis: The statutory scheme of the Insolvency and Bankruptcy Code, 2016 shows that an interim resolution professional and resolution professional are appointed and operate within a resolution process having public consequences, particularly where the process concerns corporate debtors, creditor claims, protection of assets, and administration of the insolvency framework. The Court treated the earlier view of the same High Court as binding and noted that the function performed by a resolution professional is in the nature of public duty. On that basis, the Court rejected the contention that such a professional lies outside the definition of public servant under the Prevention of Corruption Act, 1988.

Conclusion: The issue was answered against the petitioner and it was held that a Resolution Professional comes within the ambit of public servant for the purpose of the Prevention of Corruption Act, 1988.

Issue (ii): Whether the materials collected in investigation disclosed a prima facie case of money-laundering under the Prevention of Money Laundering Act, 2002 so as to justify refusal of discharge.

Analysis: The Court applied the settled principles governing discharge and framing of charge, namely that the court must only see whether the record discloses sufficient ground for proceeding and cannot conduct a mini trial. It held that the concept of proceeds of crime under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 is broad, and that Section 3 covers not only concealment but also possession, acquisition, use, and projecting or claiming the tainted property as untainted. On the facts recorded in the complaint and investigation, the Court found material indicating acceptance of illegal gratification and involvement in activity connected with proceeds of crime, sufficient at the stage of discharge to justify continuation of the prosecution.

Conclusion: The issue was answered against the petitioner and it was held that a prima facie case existed for proceeding under the Prevention of Money Laundering Act, 2002.

Final Conclusion: The revision was found to be without merit and the refusal to discharge the petitioner was upheld, leaving the prosecution to proceed to trial.

Ratio Decidendi: At the stage of discharge, the court must only determine whether the prosecution material, taken at face value, discloses sufficient ground to proceed, and in money-laundering cases possession, acquisition, or projection of proceeds of crime as untainted property is enough to attract Section 3 of the Prevention of Money Laundering Act, 2002.

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