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Corporate Debtor would not be liable for any offence committed prior to commencement of the CIRP: Delhi HC
Justice Vibhu Bakhru of the Delhi High Court held that where there is no dispute that a Resolution Plan has been approved by the Adjudicating Authority and in the circumstances, there is much merit in the contention that the petitioner cannot be prosecuted and is liable to be discharged.Tata Steel BSL Ltd. filed a petition with the Delhi High Court against the impugned order of the trial court...
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Justice Vibhu Bakhru of the Delhi High Court held that where there is no dispute that a Resolution Plan has been approved by the Adjudicating Authority and in the circumstances, there is much merit in the contention that the petitioner cannot be prosecuted and is liable to be discharged.
Tata Steel BSL Ltd. filed a petition with the Delhi High Court against the impugned order of the trial court in the case of ‘Serious Fraud Investigation Office v. Bhushan Steel Limited’, in which the Trial Court had taken cognizance of the offences punishable under the Companies Act, 2013; Companies Act, 1956 and; certain offences under the Indian Penal Code, 1860.
The petitioner stated that the erstwhile ‘Bhushan Steel Limited’ (a financial creditor of the Tata Steel BSL) had initiated the Corporate Insolvency Resolution Process (CIRP) by filing a petition before the National Company Law Tribunal (NCLT). Thereafter, Tata Steel Limited had submitted a Resolution Plan with respect to ‘Bhushan Steel Limited’, which was approved by the Committee of Creditors in March 2018 and by the Adjudicating Authority (NCLT) in May 2018. The order of the NCLT was impugned before the National Company Law Appellate Tribunal (NCLAT) but was dismissed by NCLAT in August 2018. Thereafter, 72.65% of Bhushan Steel equity capital was acquired by Tata Steel Limited.
At the Delhi High Court, the counsel for Tata Steel BSL Ltd. stated that the management of Tata Steel BSL Ltd. has been taken over by new promoters, who are not connected with the previous management and prayed that the complaint by the Serious Fraud Investigation Office (SFIO) be quashed.
The Delhi High Court held that as per Section 32A(1) of the Insolvency and Bankruptcy Code (IBC), a Corporate Debtor would not be liable for any offence committed prior to commencement of the Corporate Insolvency Resolution Process (CIRP) and the corporate debtor would not be prosecuted if a resolution plan has been approved by the Adjudicating Authority.
The Court set aside the impugned complaint by the SFIO and clarified that the 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.