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TMI Blog2024 (2) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the new management, pursuant to the order passed by the NCLT. In view of the same, the new management takes over the A1 company as a clean slate and the criminal liability can no longer be mulcted as against A1 company. Therefore, the continuation of criminal proceedings as against A1 company can no longer subsist. Company has been taken over by a new management and the criminal liability cannot be passed on to the new management. The criminal liability of a company cannot be transferred to another company or the new management ipso facto. Therefore, the new management apart from not taking over the criminal liability of the A1 company, cannot also be made to undergo criminal prosecution for the offence committed by the persons who were incharge of the company during the relevant point of time. This Court has already recorded the fact that A2 has already died and therefore, the charge abates insofar as A2 is concerned. Accordingly, the proceedings as against A1 company in all these complaints stands quashed. It is left open to the respondent to identify the persons who were in-charge of running the company and were involved in the day today affairs of the company during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years 2010-2011 till 2015 2016. The undisclosed income for these assessment years were also separately worked out and mentioned in the complaint. The company was arrayed as A1 and the Managing Director one Mr.A.M.Arun was arrayed as A2. 4. The case of the petitioner is that an application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for Brevity herein after called as IBC) by M/s.Alcon Laboratories, before the NCLT, Chennai Bench. This application was admitted and by an order dated 21.04.2017, the company was admitted into the Corporate Insolvency Resolution Process (CIRP) and Interim Resolution Professional (IRP) was appointed. The IRP who took charge of the company proceeded further and ultimately, filed an application under Section 30 of the IBC on 03.03.2022 seeking for the approval of the resolution plan. The NCLT, Chennai, approved the resolution plan and IRP was appointed as the Chairman of the Monetary committee. He submitted the list of creditors including the name of the Income Tax Department, which was also shown as one of the Creditor. The Successful Resolution Applicant took over the Management of the A1 company on 01.04.2023. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shall be proceeded and the law will take it s own course. Only the corporate debtor (with new management) as held in Para 42 of P. Mohanraj will be safeguarded. c. If the old management takes over the corporate debtor (for MSME Section 29A does not apply (see 240A), hence for MSME old management can takeover) the corporate debtor itself is also not safeguarded from prosecution under Section 138 or any other offences. 9. In the above judgement, the Apex Court after dealing with the provision in detail, came to a categoric conclusion that insofar as the criminal prosecution is concerned, the criminal liability of the corporate debtor viz., company gets completely wiped off and the new management is allowed to take over the company on a clean slate. However, the Apex Court also made it clear that the persons who are involved in the day today affairs of the company and were incharge and responsible for running of the company, will be liable to face all the offenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atorium comes into operation. Once the resolution plan is accepted by the NCLT and orders are passed and the Corporate debtor gets into hands of the new management, all the past liabilities including the criminal liability of the Corporate debtor gets wiped off and the new Mangement takes over the company with clean slate. 12. In the instant case, the A1 company has now gone into the hands of the new management, pursuant to the order passed by the NCLT dated 03.02.2023. In view of the same, the new management takes over the A1 company as a clean slate and the criminal liability can no longer be mulcted as against A1 company. Therefore, the continuation of criminal proceedings as against A1 company can no longer subsist. 13. The company has been taken over by a new management and the criminal liability cannot be passed on to the new management. The Apex Court had an occasion to directly deal with this issue in a recent judgement reported in 2023 4 MLJ Criminal 497. Paragraph 30 in that judgement is extracted hereunder :- 30. It is, therefore, noticeable that the criminal liability of a company (a) is recognized where it can be attributable to individual acts of employees, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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