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2021 (11) TMI 615 - HC - Insolvency and BankruptcyJurisdiction under Section 32A of the Insolvency and Bankruptcy Code, 2016 - seeking rejection to discharge Dewan Housing Finance Corporation Limited-Corporate Debtor, from the CBI Special Case - Whether Section 32(1)(a) of IBC lays down a direction that, Corporate Debtor, would be absolved of all criminal offences committed prior to commencement of CRIP, from the date of approval of Resolution Plan, although, appeals against Section 31 order of the IBC were pending before the NCLAT? - Article 227 of the Constitution of India read with Section 482 of the Criminal Procedure Code. HELD THAT - It may be stated that, the subsequent events were placed on record vide purshis dated 12th October, 2021 and thereafter intervenor had filed a reply Affidavit, dated 20th October, 2021 and dealt with subsequent events extensively. As such, it is not deemed appropriate to keep the subsequent events out of consideration and relegate the parties to the trial Court for reconsideration - subsequent events indisputably caused change in management and control of Corporate Debtor. The immunities under 32A of IBC, cannot be denied to Corporate Debtor - the petitioner-DHFL, stands discharged from the CBI Special Case pending before the CBI Cases Sessions Court, Mumbai. Whether successful resolution applicant was eligible to invoke Section 32A of IBC, when appeals against the order of the Adjudicating Authority, were pending before NCLAT? - HELD THAT - Although Section 32 provides for appeal against an order approving the Resolution Plan, yet, mere filing of appeal would by itself not operate as a stay, until a specific prayer in this regard is made and orders thereon are passed, as held in the case of MADAN KUMAR SINGH (D) THR. LR. VERSUS DISTT. MAGISTRATE, SULTANPUR ORS 2009 (8) TMI 1140 - SUPREME COURT . Infact, herein appeals were filed with a specific prayer to grant stay to the Section 31 order. However, the NCLAT by reasoned order, declined to stay the order. Thus, the application preferred by the successful resolution person, was not pre-matured. The point is answered accordingly. The application of Dewan Housing Finance Corporation Limited moved under Section 32A of the Insolvency and Bankruptcy Code, 2016 is granted - petition disposed off.
Issues Involved:
1. Whether Section 32(1)(a) of IBC absolves the Corporate Debtor of all criminal offences committed prior to the commencement of CIRP from the date of approval of the Resolution Plan, despite pending appeals against the Section 31 order of the IBC before the NCLAT. Analysis: Issue 1: Applicability of Section 32(1)(a) of IBC The primary question raised was whether Section 32(1)(a) of the Insolvency and Bankruptcy Code (IBC) absolves the Corporate Debtor of all criminal offences committed prior to the commencement of the Corporate Insolvency Resolution Process (CIRP) from the date of the approval of the Resolution Plan, even if appeals against the Section 31 order of the IBC were pending before the National Company Law Appellate Tribunal (NCLAT). Submissions: - Petitioners' Argument: The petitioners argued that once the Resolution Plan is approved by the Adjudicating Authority, the Corporate Debtor should not be liable for any offences committed before the CIRP. They relied on Section 32(1)(a) of the IBC and the Supreme Court judgment in Manish Kumar v. Union of India, which emphasized that the liability of the Corporate Debtor for prior offences ceases upon the approval of the Resolution Plan, provided there is a change in management or control. - Intervenor's Argument: The intervenor contended that the execution of the Resolution Plan is subject to the outcome of appeals pending before the NCLAT, and thus, discharging the Corporate Debtor under Section 32A was premature. They argued that the change in management had not yet fully occurred and that the appeals might affect the finality of the Resolution Plan. - CBI's Argument: The CBI argued that cognizance of an offence cannot be taken twice, and until the statutory appeals are decided, discharging the Corporate Debtor would be inappropriate. Court's Reasoning: - The court noted that the subsequent events, including the merger of Piramal Capital and Housing Finance Limited into DHFL and the appointment of new directors, indicated a change in management and control of the Corporate Debtor. - The court found that the conditions for immunity under Section 32A of the IBC were satisfied: the Resolution Plan was approved, there was a change in management, and the new management was not related to the Corporate Debtor. - The court held that the mere filing of appeals does not operate as a stay, and since the NCLAT had refused to stay the Resolution Plan, the application under Section 32A was not premature. Conclusion: The court concluded that the Corporate Debtor, DHFL, stands discharged from the CBI Special Case No. 830 of 2021. The court quashed the impugned order permitting the prosecution of the Corporate Debtor through its erstwhile directors, as they had been ousted from the Board of Directors by the RBI two years ago. Final Judgment: - The application of Dewan Housing Finance Corporation Limited under Section 32A of the IBC in Criminal Complaint No. 355/PW/2002 corresponding to Sessions Case No. 830 of 2021 is granted. - The petitions are disposed of, and the rule is made absolute in the aforesaid terms. - The intervention application does not survive and is also disposed of. - The request for a stay of the operation of the judgment was rejected.
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