In The High Court of Delhi
W.P. (Crl) 3037/2019 and Crl.M.A. 39126/2019
Petitioner
Tata Steel BSL Limited & anr
Respondent
Union of India and Anr.
Date of Judgement
16 March, 2020
Bench
Justice Vibhu Bakhru
Facts of the Case:
The terms of the Insolvency and Bankruptcy Code, 2016 (hereafter the ‘IBC’), a financial creditor of the petitioner (then known as ‘Bhushan Steel Limited’) had initiated the Corporate Insolvency Resolution Process (CIRP) by filing a petition before the National Company Law Tribunal (NCLT). The said petition was admitted on 26.07.2017. Thereafter, Tata Steel Limited had submitted a Resolution Plan with respect to the petitioner (then known as ‘Bhushan Steel Limited’), which was approved by the Committee of Creditors on 20.03.2018 and by Adjudicating Authority (NCLT) on 15.05.2018. The said order dated 15.05.2018 was impugned before the National Company Law Appellate Tribunal (NCLAT) in Company Appeal (AT) (Insolvency) No. 221/2018 and connected matters. The same was dismissed by NCLAT on 10.08.2018. Thereafter, 72.65% of the petitioner’s equity capital was acquired by Tata Steel Limited. In terms of the Resolution Plan, the management of the petitioner company has been taken over by new promoters, who are not connected with the previous management. A person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court. There is no dispute that a resolution plan has been approved by the Adjudicating Authority (NCLT) and in the circumstances, there is much merit in the contention that the petitioner cannot be prosecuted and is liable to be discharged.
Issues:
- Whether the petitioner company has been taken over by new promoters, who are not connected with the previous management?
- Whether prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor?
Arguments Advanced:
- In terms of Section 32A of the IBC, as inserted by virtue of the Insolvency of Bankruptcy Code (Amendment) Act, 2020; the petitioner is required to be discharged from the aforesaid proceedings.
- In any manner in-charge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor’s liability has ceased under this sub-section.
Judgment:
If a prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor, it shall stand discharged from the date of approval of the resolution plan subject to requirements of this sub-section having been fulfilled. The petition is, accordingly, allowed and the impugned order dated 16.08.2019 and the impugned summons dated 21.08.2019, are set aside. The impugned compliant (CC No. 770/2019) against the petitioner, is also set aside. It is clarified that this order will not affect the prosecution of the erstwhile promoters or any of the officers who may be directly responsible for committing the offences in relation to the affairs of the petitioner company.
The pending application is also disposed of.
Edited by Sree Ramya
Approved & Published – Sakshi Raje
