Section 32A immunity protects a corporate debtor from pre-CIRP prosecution after approval of a resolution plan and change in control.

Section 32A of the Insolvency and Bankruptcy Code, 2016 can bar prosecution of a corporate debtor for offences alleged to have been committed before commencement of the corporate insolvency resolution process, once a resolution plan is approved and management and control pass to an unrelated resolution applicant. Applying the settled principles on quashing of FIRs, the Delhi High Court noted that inherent power may be used where a legal bar extinguishes criminal liability. It treated the alleged offences as pre-CIRP conduct and held that immunity under Section 32A protected the corporate debtor, while liability of persons actually involved in the alleged offences remained unaffected. The FIR and consequential proceedings were liable to be quashed qua the petitioner.

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Issues: Whether the petitioner-corporate debtor was entitled to quashing of the FIR and consequential proceedings on the ground that, after approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016, it had obtained immunity under Section 32A for offences alleged to have been committed before commencement of the corporate insolvency resolution process.

Analysis: The Court applied the settled principles governing exercise of inherent powers to quash an FIR and noted that such power is to be used sparingly, but may be invoked where a legal bar extinguishes criminal liability. It found that the alleged offences related to the period 2008 to 2017, whereas the corporate insolvency resolution process had commenced earlier and the resolution plan had been approved by the adjudicating authority, resulting in change of management and control to a new and unrelated resolution applicant. The Court held that Section 32A protects the corporate debtor from prosecution for pre-CIRP offences after approval of the resolution plan, while preserving liability of persons actually involved in the alleged offences. It also noted that it was not deciding the merits of the allegations or territorial jurisdiction.

Conclusion: The petitioner-corporate debtor was entitled to immunity under Section 32A of the Insolvency and Bankruptcy Code, 2016, and the FIR and consequential proceedings were liable to be quashed qua the petitioner.

Ratio Decidendi: Where pre-CIRP offences are alleged against a corporate debtor and a resolution plan has been approved resulting in a bona fide change in management and control to an unconnected person, Section 32A bars prosecution of the corporate debtor for those offences, though proceedings may continue against the persons individually liable.

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