The Bombay High Court has clarified that the approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016, triggers an absolute statutory immunity for the corporate debtor’s property against pre-CIRP attachments, even where such attachments were made under the Maharashtra Protection of Interest of Depositors Act, 1999. This ruling reinforces the clean slate principle under Section 32A IBC and limits the extraterritorial reach of state-level deposit protection laws over corporate assets.
Background & Facts
The Dispute
The petitioner, Dwarka Iron Industries Pvt. Ltd., is the successful resolution applicant for M/s. Abhirama Steels Limited, a corporate debtor. The dispute arises from an attachment order dated 19.03.2016 issued by the Competent Authority under the MPID Act, which targeted a property belonging to the corporate debtor - Survey No. 272/1, Chityala Village, Pargi Mandal, Dist. Rangareddy, Telangana. The attachment was initiated in connection with criminal proceedings against Birla Power Solutions Ltd., a separate entity, in which the corporate debtor was never named as an accused.
Key Facts
- The corporate debtor purchased the subject property via registered sale deed on 06.09.2008.
- On 30.12.2013, the Economic Offences Wing (EOW) registered FIR No. 168/2013 under Sections 420, 409, 477A and 120B IPC against Birla Power Solutions Ltd. The corporate debtor was not named as an accused.
- The charge sheet filed in 2014 also did not implicate the corporate debtor or its property as proceeds of crime.
- On 19.03.2016, the State of Maharashtra issued the impugned notification under Section 4 of the MPID Act, attaching the subject property.
- The Indian Bank had extended credit facilities to the corporate debtor and created an equitable mortgage over the property in 2010.
- On 31.03.2017, the Indian Bank classified the loan as a Non-Performing Asset and issued a demand notice under Section 13(2) of the Securitisation Act.
- On 16.11.2021, an operational creditor initiated CIRP under Section 9 of the IBC. The NCLT, Hyderabad, admitted the petition on 23.11.2021.
- The NCLAT dismissed the appeal on 08.07.2022, and the Supreme Court dismissed the SLP on 26.02.2024, allowing CIRP to proceed.
- On 17.09.2024, the NCLT approved the resolution plan submitted by the petitioner.
- On 09.10.2024, the petitioner paid Rs. 14.50 crores to the Indian Bank, which issued a no-objection certificate, extinguishing all charges on the property.
- The resolution professional had previously filed Writ Petition No. 3447 of 2022 challenging the attachment, which was permitted to be withdrawn on 26.02.2025 with liberty to file fresh proceedings.
- The present writ petition was filed on 04.11.2025, seeking quashing of the 19.03.2016 attachment order under Section 32A IBC.
Procedural History
- 06.09.2008: Corporate debtor purchases subject property via registered sale deed.
- 30.12.2013: FIR No. 168/2013 registered against Birla Power Solutions Ltd. Corporate debtor not named.
- 2014: Charge sheet filed; corporate debtor still not arraigned.
- 19.03.2016: Impugned notification issued under MPID Act attaching subject property.
- 31.03.2017: Indian Bank declares loan NPA; issues demand notice under Securitisation Act.
- 25.07.2018: MPID Court refuses stay on e-auction; auction does not proceed.
- 16.11.2021: Operational creditor files petition under Section 9 IBC.
- 23.11.2021: NCLT admits CIRP; Interim Resolution Professional appointed.
- 08.07.2022: NCLAT dismisses appeal.
- 26.02.2024: Supreme Court dismisses SLP; CIRP resumes.
- 17.09.2024: NCLT approves resolution plan submitted by petitioner.
- 09.10.2024: Petitioner pays Rs. 14.50 crores to Indian Bank; charge extinguished.
- 26.02.2025: Writ Petition No. 3447/2022 withdrawn with liberty to file fresh petition.
- 04.11.2025: Present writ petition filed; interim relief granted releasing attachment subject to bank guarantee.
- 08.06.2026: Judgment pronounced.
The Parties' Positions
The petitioner, Dwarka Iron Industries Pvt. Ltd., contends that Section 32A IBC extinguishes all pre-CIRP attachments upon approval of the resolution plan, provided the conditions of change in management/control are satisfied. It argues that the property was covered under the resolution plan and the corporate debtor was never an accused in the underlying criminal case.
The respondents, the Competent Authority and the State of Maharashtra, argue that the attachment under MPID Act vested in the Competent Authority upon issuance of the 19.03.2016 notification, making the property unavailable for inclusion in the resolution plan. They rely on National Spot Exchange Limited v. Union of India and contend that the NCLT’s order dated 17.09.2024, which granted liberty to approach the MPID Court, precludes the petitioner from seeking relief in a writ petition.
Relief Sought
The petitioner seeks quashing of the impugned notification dated 19.03.2016, release of the subject property from attachment, and return of the bank guarantee of Rs. 74.24 lakhs furnished as interim security.
The Legal Issue
The central question was whether Section 32A of the Insolvency and Bankruptcy Code, 2016 extinguishes the validity of a pre-CIRP attachment order issued under the Maharashtra Protection of Interest of Depositors Act, 1999, when the corporate debtor was never an accused in the underlying proceedings and the property is covered under a resolution plan approved by the NCLT.
Arguments Presented
For the Petitioner
The petitioner relied on Section 32A IBC, particularly sub-section (2), which bars any action against the corporate debtor’s property covered under an approved resolution plan. It cited Manish Kumar v. Union of India (2021) 5 SCC 1, which held that the immunity under Section 32A is absolute and includes attachment, seizure, and confiscation. The petitioner emphasized that the corporate debtor was never named in the FIR or charge sheet, and the property was never established as proceeds of crime. It further relied on Kalyani Transco v. Bhushan Power and Steel Ltd. (2025 SCC OnLine SC 2093) and Shiv Charan v. Adjudicating Authority (2024 SCC OnLine Bom 701) to affirm that the clean slate principle applies regardless of pending MPID proceedings. The petitioner argued that the NCLT’s grant of liberty to approach the MPID Court did not oust the High Court’s writ jurisdiction under Godrej Sara Lee Ltd. v. Excise and Taxation Officer (2023 SCC OnLine SC 95).
For the Respondent
The respondents contended that under Section 4(2) of the MPID Act, the property vested in the Competent Authority upon issuance of the 19.03.2016 notification, making it unavailable for the CIRP. They relied on National Spot Exchange Limited v. Union of India (2025) 8 SCC 393 to argue that MPID Act attachments take precedence over IBC proceedings. They further contended that paragraph 8(g) of the NCLT’s resolution plan approval order, which directed the petitioner to approach the MPID Court, rendered the writ petition premature and barred by alternative remedy. They asserted that vesting under MPID Act was complete and that Section 32A IBC could not override a vested proprietary interest.
The Court's Analysis
The Court undertook a detailed textual and contextual analysis of Section 32A IBC and the procedural framework of the MPID Act. It emphasized that the non-obstante clause at the beginning of Section 32A(2) explicitly overrides any contrary provision in any other law, including the MPID Act. The Court held that the term "action against the property" under the Explanation to Section 32A(2) includes attachment, seizure, and confiscation, and is not limited to criminal proceedings.
"The word 'include' under sub-clause (i) of the Explanation is intended to have the widest possible amplitude. There is a clear nexus with the object of the Code."
The Court rejected the respondents’ argument that the property had vested under Section 4(2) of the MPID Act. It clarified that vesting under the MPID Act is not immediate or absolute upon issuance of the attachment order. Sub-section (2) of Section 4 explicitly states that the property vests in the Competent Authority only "pending further orders from the Designated Court." Absolute vesting occurs only upon the Designated Court passing an order under Section 7, which had not occurred in this case.
The Court further held that the NCLT’s order dated 17.09.2024, which granted liberty to approach the MPID Court, did not imply that the property was excluded from the resolution plan. The liberty granted was procedural, not substantive, and did not negate the statutory immunity conferred by Section 32A. The Court relied on Godrej Sara Lee Ltd. to affirm that where the issue is purely legal - such as the applicability of a statutory immunity - the High Court retains jurisdiction under Article 226 even if an alternative remedy exists.
The Court also noted that the corporate debtor was never an accused in the criminal proceedings leading to the attachment, and the property was not shown as proceeds of crime in any charge sheet. This further strengthened the applicability of Section 32A, which is designed to protect corporate debtors from being penalized for the acts of others.
The Court concluded that the conditions under Section 32A(2) were fully satisfied: (i) a resolution plan was approved by the NCLT; (ii) the plan resulted in a change of management/control to a person not connected to the prior offence; and (iii) the property was covered under the plan. Therefore, the attachment could not survive.
The Verdict
The writ petition is allowed. The impugned notification dated 19.03.2016, to the extent it attaches the subject property, is quashed and set aside. The bank guarantee of Rs. 74.24 lakhs furnished by the petitioner with the Registry of this Court is directed to be returned forthwith. The corporate debtor’s property is released from all claims arising from the MPID Act proceedings, and the petitioner is entitled to proceed with the resolution plan on a clean slate as mandated by Section 32A of the IBC.
What This Means For Similar Cases
Attachment Under State Laws Cannot Override IBC’s Clean Slate
- Practitioners must now argue that any pre-CIRP attachment under state laws (e.g., MPID Act, SARFAESI, state revenue laws) is automatically suspended upon approval of a resolution plan under Section 32A IBC, provided the statutory conditions are met.
- The mere issuance of an attachment order under a state law does not create a vested right that survives the IBC’s statutory immunity.
Vesting Under MPID Act Is Not Immediate
- The distinction between "attachment" and "vesting" under the MPID Act is now legally critical. Only the Designated Court’s order under Section 7 makes the attachment absolute.
- Any attachment order pending before the Designated Court is effectively stayed by Section 32A IBC upon resolution plan approval.
Writ Jurisdiction Remains Open for Pure Questions of Law
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Where the issue involves statutory interpretation of IBC provisions, the High Court’s writ jurisdiction is not barred by the existence of an alternative remedy under other laws.
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The NCLT’s grant of liberty to approach another forum does not preclude a writ petition if the core issue is a legal question under Section 32A.
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Practitioners should file writ petitions under Article 226 where the dispute hinges on the applicability of Section 32A IBC, even if the property is subject to state-level attachment proceedings.
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The burden shifts to the state authority to prove that the property was lawfully vested under Section 7 MPID Act before the resolution plan was approved.
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Always verify whether the corporate debtor was ever named as an accused in the underlying criminal proceedings - failure to do so strengthens the claim under Section 32A.
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Ensure that the resolution plan explicitly includes the property in question, as this is a prerequisite for invoking Section 32A(2).
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The Rs. 74.24 lakh bank guarantee returned in this case sets a precedent: interim security may be required, but it must be returned upon successful adjudication under Section 32A.
