TaxTMI 
TaxTMI 
2026 (6) TMI 806
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....enactment of the MPID Act needs to be taken into consideration by this Court, while determining the effect of Section 32A of the IBC, in the facts and circumstances of the present case. In order to properly appreciate the rival contentions and the questions sought to be raised by the rival parties, it would be necessary to briefly refer to the chronology of events, leading to filing of the present writ petition. 2. The corporate debtor in the present case is M/s. Abhirama Steels Limited and it is represented by the Successful Resolution Applicant i.e. Dwarka Iron Industries Pvt. Ltd. On 06.09.2008, much prior to the alleged offence registered in the present case attracting the provisions of the MPID Act, the corporate debtor purchased the subject immovable property bearing Survey No. 272/1, Chityala Village, Pargi Mandal, Dist. Rangareddy, Telangana, by way of registered sale deed. On 29.12.2008, the corporate debtor was incorporated under the provisions of the Companies Act and it commenced its business of manufacturing basic iron and steel. In the year 2010, the Indian Bank sanctioned various credit facilities to the corporate debtor. In that context, the corporate debtor crea....
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.... consequence, Corporate Insolvency Resolution Process (CIRP) was initiated in the context of the corporate debtor and an Interim Resolution Professional was appointed. Upon admission of the CIRP on 23.11.2021, the resolution professional issued a public notice in Form A, inviting claims from creditors. Thereupon, expressions of interest were invited in Form G from prospective resolution applicants. The order of the NCLT, admitting the corporate debtor in CIRP was confirmed, when National Company Law Appellate Tribunal (NCLAT) dismissed the Company Appeal on 08.07.2022. Thereafter, an appeal was filed before the Supreme Court, wherein status-quo was granted. But, eventually, on 26.02.2024, the appeal was dismissed and the interim order was vacated. As a consequence, the CIRP proceedings continued. 6. On 17.09.2024, the NCLT, Hyderabad, approved the resolution plan submitted by the successful resolution applicant. As per the position of law recognized by the Supreme Court in a series of judgments, the corporate debtor was to now start its activities on a clean slate. On 09.10.2024, the successful resolution applicant paid amount of Rs.14.50 crores to the Indian Bank in full and fi....
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....attachment. It was further submitted that the Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited & Ors., (2021) 9 SCC 657 emphasized the position that upon the resolution plan being accepted, the corporate debtor started on a clean slate, thereby indicating that the effect of the impugned notification could no longer survive. He further referred to the judgment of the Supreme Court in the case of Kalyani Transco vs. Bhushan Power and Steel Ltd. & Ors., 2025 SCC OnLine SC 2093 to demonstrate that the effect of non-obstante clause at the beginning of the Section 32A of the IBC clearly demonstrated that no action could be taken in respect of the subject property of the corporate debtor in respect of any offence committed prior to the commencement of the CIRP, particularly when such property was covered under the resolution plan approved by the adjudicating authority. 11. It was further submitted that a Division Bench of this Court in the case of Shiv Charan & Ors. vs. Adjudicating Authority, 2024 SCC OnLine Bom 701 had followed the said position of law. It was fairly brought to the notice of this Court that in ....
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.... the adjudicating authority, when it approved the resolution plan as per order dated 17.09.2024. Attention of this Court was specifically invited to paragraph 8(g) of the said order, to contend that the NCLT had clarified that the prayer for lifting of the attachment could be made before the competent authority and that such a prayer made while submitting the resolution plan was specifically refused. It was submitted that if the petitioner was aggrieved by the said order, it should have challenged the same under the provisions of the IBC and in absence thereof, the said order had attained finality. Therefore, the only forum available for the petitioner for seeking lifting of the attachment of the subject property, was the designated MPID Court. Instead of approaching the said Court, the petitioner had filed the present writ petition, which ought not to be entertained by this Court. 15. It was submitted that although the position of law, regarding the corporate debtor starting on a clean slate after approval of the resolution plan has been recognized by the Supreme Court in various judgments, in the case of National Spot Exchange Limited vs. Union of India & Ors. (supra), the Sup....
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....ner as defined in clause (j) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), or an officer who is in default, as defined in clause (60) of section 2 of the Companies Act, 2013 (18 of 2013), or was in any manner incharge 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. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapt....
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.... the interest of the depositors with an intension to defraud them; and if the Government is satisfied that such Financial Establishment is not likely to return the deposits or make payment of interest or other benefits assured or to provide the services against which the deposit is received, the Government may, in order to protect the interest of the depositors of such Financial Establishment, after recording reasons in writing, issue an order by publishing it in the Official Gazette, attaching the money or other property believed to have been acquired by such Financial Establishment either in its own name or in the name of any other person from out of the deposits, collected by the Financial Establishment, or if it transpires that such money or other property is not available for attachment or not sufficient for repayment of the deposits, such other property of the said Financial Establishment or the promoter, director, partner or manager or member of the said Financial Establishment as the Government may think fit. (2) On the Publication of the order under sub-section (1), all the properties and assets of the Financial Establishment and the persons mentioned the....
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....sferred to the Designated Court. 7. Powers of Designated Court regarding attachment.- (1) Upon receipt of an application under section 5, the Designated Court shall issue to the Financial Establishment or to any other person whose property is attached and vested in the Competent Authority by the Government under section 4, a notice accompanied by the application and affidavits and of the evidence, if any, recorder, calling upon the said Establishment or the said person to show cause on a date to be specified in the notice, why the order of attachment should not be made absolute. (2) The Designated Court shall also issue such notice, to all other persons represented to it as having or being likely to claim, any interest or title in the property of the Financial Establishment or the person to whom the notice is issued under sub-section (1), calling upon all such persons to appear on the same date as that specified in the notice and make objection if they so desire to the attachment of the property or any portion thereof, on the ground that they have interest in such property or portion thereof. (3) Any person claiming an interest in the property at....
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....ction shall be taken against the property of the corporate debtor in relation to such an offence committed prior to the commencement of CIRP when such property is covered under the resolution plan approved by the adjudicating authority. The explanation to the aforesaid provision clarifies that action against the property of the corporate debtor in relation to an offence includes attachment, seizure, confiscation, etc. The corporate debtor, despite the immunity is required to provide assistance to the investigating authority in relation to such an offence. Thus, a bare reading of the above quoted Section 32A of the IBC makes it abundantly clear that neither can prosecution against the corporate debtor be continued, nor can any action of attachment, seizure, confiscation, etc. in respect of property of the corporate debtor be continued, the moment the resolution plan is approved by the adjudicating authority. 20. The Supreme Court in the case of Manish Kumar vs. Union of India & Anr. (supra) while considering the said provision of the IBC, observed as follows: "317. Section 32-A has been divided into three parts consisting of sub-sections (1) to (3). Under sub-section (1)....
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.... during the CIRP against the corporate debtor, the corporate debtor will stand discharged. This is, however, subject to the condition that the requirements in sub-section (1), which have been elaborated by us, have been fulfilled. In other words, if under the approved resolution plan, there is a change in the management and control of the corporate debtor, to a person, who is not a promoter, or in the management and control of the corporate debtor, or a related party of the corporate debtor, or the person who acquires control or management of the corporate debtor, has neither abetted nor conspired in the commission of the offence, then, the prosecution, if it is instituted after the commencement of the CIRP and during its pendency, will stand discharged against the corporate debtor. Under the second proviso to sub-section (1), however, the designated partner in respect of the liability partnership or the officer in default, as defined under Section 2(60) of the Companies Act, 2013, or every person, who was, in any manner, in charge or responsible to the corporate debtor for the conduct of its business, will continue to be liable to be prosecuted and punished for the offenc....
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....he corporate debtor; or (c) a related party of the corporate debtor; (d) a person with regard to whom the investigating authority, had, on the basis of the material, reason to believe that he has abetted or conspired for the commission of the offence and has submitted a report or a complaint. If all these aforesaid conditions are fulfilled then the law giver has provided that no action can be taken against the property of the corporate debtor in connection with the offence. 321. The Explanation to sub-section (2) of Section 32-A has clarified that the words "an action against the property of the corporate debtor in relation to an offence", would include the attachment, seizure, retention or confiscation of such property under the law applicable to the corporate debtor. Since the word "include" is used under sub-clause (i) of the Explanation, the word "action" against the property of the corporate debtor is intended to have the widest possible amplitude. There is a clear nexus with the object of the Code. The other part of the clarification, under the Explanation, is found in the second sub-clause of Explanation (ii). 322. Under the second limb of the Explanation t....
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....erson who has been retained has not been found to have abetted or conspired in the commission of the offence. It further provides that no action shall be taken against the properties of the corporate debtor in relation to an offence committed prior to the commencement of the CIRP of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31 of the IBC." 22. This Court followed the said position of law in its judgment in case of Shiv Charan & Ors. vs. Adjudicating Authority (supra). In the said judgment, it was observed as follows : "20. Therefore, as a matter of law, once the resolution plan is approved with the attendant conditions set out in Section 32A being met, further prosecution against the corporate debtor and its properties, would cease. Section 32A(3) enjoins the corporate debtor to continue to cooperate with the enforcement agencies in the continued prosecution against the individuals in question." 23. We are of the opinion that even if leave has been granted in the Special Leave Petition filed against the said judgment and interim order has been granted, the purport of Section 32....
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....ondents-State that upon issuance of the impugned notification dated 19.03.2016, attaching the subject property, it vested in the competent authority under the MPID Act, is rejected. 26. Once this finding is reached, we find that there is no substance in the contention raised on behalf of the respondents-State that the subject property was not available with the corporate debtor at the stage of approval of the resolution plan. We also do not find much substance in the contention raised on behalf of the respondents that, in view of paragraph 8(g) of the order dated 17.09.2024 passed by the NCLT, approving the resolution plan, the subject property could not be said to be part of the resolution plan. A proper reading of the said order, including paragraph 8 thereof, shows that the NCLT thought it fit to call upon the successful resolution applicant to approach the competent authority i.e. the designated Court under the MPID Act for lifting of the attachment. When as a matter of law and by operation of Section 32A of the IBC, the attachment could no longer continue, particularly in the absence of any order being passed by the designated Court under Section 7 of the MPID Act, making t....