The Orissa High Court quashed criminal proceedings against Tata Steel Limited under Section 32A of the Insolvency and Bankruptcy Code, 2016, holding that statutory immunity extends to a successor corporate debtor when a resolution plan effects a change in management. The Court set aside the cognizance order dated 21.11.2023 passed by the S.D.J.M., Dhenkanal, finding continuation of proceedings an abuse of process.
Background & Facts
The Dispute
The petitioner, Tata Steel Limited (TSL), successor-in-interest of erstwhile Bhushan Steel Limited (BSL), subsequently known as Tata Steel BSL Limited (TSBSL), invoked the inherent jurisdiction of the Orissa High Court under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of the entire proceedings in Complaint Case No. 2(c) C.C.47 of 2013 pending before the learned S.D.J.M., Dhenkanal, as well as the order dated 21.11.2023 taking cognizance of the offences qua the petitioner.
Key Facts
- The impugned complaint was instituted by the State Pollution Control Board, Odisha against erstwhile BSL and three of its then officials: Rahul Sengupta (erstwhile Executive Vice President), Atulya Kumar Verma (erstwhile Chief Operating Officer), and Dr. Ram Mohan Sharma (erstwhile Senior General Manager (Environment)).
- The complaint alleged contravention of Sections 21 and 23 of the Air (Prevention and Control of Pollution) Act, 1981, with Sections 37 and 39 thereof being invoked against the petitioner-company.
- Since erstwhile BSL was declared a Non-Performing Asset (NPA), its banker initiated proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) before the National Company Law Tribunal, New Delhi.
- The learned NCLT appointed an Interim Resolution Professional, pursuant to which a resolution plan dated 03.02.2018 was submitted by the present petitioner-company.
- The Committee of Creditors (CoC) approved the resolution plan through voting, and thereafter, vide order dated 15.05.2018, the Adjudicating Authority approved the said plan.
- Pursuant to the approved resolution plan, the present petitioner took over the company under the Scheme; subsequently, upon amalgamation, the company was renamed as Tata Steel BSL Limited (TS BSL).
- Clause 8.6.9 of the approved Resolution Plan provides that the petitioner-TSL shall not, in any manner, be implicated in, or be fastened with any liability in respect of, any investigation, proceedings, orders or any matters relating to Existing Promoter Group, holding companies, subsidiary companies, associate companies and/or Group Companies.
- Clause 8.2.6 of the approved Resolution Plan provides that the New Management shall not incur any civil or criminal liability for any breach, contravention or non-compliance with any law in respect of the period preceding the approval of the Resolution Plan, and that directors, key managerial personnel and officers shall not be fastened with any civil or criminal liability arising out of such breach, contravention or non-compliance.
- Section 32A of the IBC was inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2020 with retrospective effect from 28.12.2019, providing statutory immunity to a corporate debtor for an offence committed prior to the commencement of the CIRP if the resolution plan results in a change in management or control to a person who was not a promoter, related party, or someone whom the investigating authority believes abetted or conspired for the offence.
- It is not in dispute that the alleged offences relate to the period when erstwhile BSL was under its previous management and were committed prior to completion of the CIRP and the change in management on 18.05.2018.
- The petitioner, as the successful resolution applicant and successor-in-interest of erstwhile BSL, contends that the criminal liability of the corporate debtor stands extinguished by operation of Section 32A of the IBC.
Procedural History
- 21.11.2013: Order passed by the learned S.D.J.M., Dhenkanal taking cognizance of the offences against erstwhile BSL and its officials in Complaint Case No. 2(c) C.C.47 of 2013.
- 03.02.2018: Resolution plan dated 03.02.2018 submitted by the petitioner-company before the NCLT, Principal Bench, New Delhi.
- 15.05.2018: Adjudicating Authority approved the resolution plan under Section 31(1) of the IBC.
- 18.05.2018: Change in management and control of the corporate debtor effected pursuant to the approved resolution plan.
- 28.12.2019: Insolvency and Bankruptcy Code (Amendment) Act, 2020 came into force, inserting Section 32A with retrospective effect from this date.
- 22.02.2021: Resolution plan approved by the learned NCLT, New Delhi, the Adjudicating Authority (as per the Court’s note).
- 16.03.2020: Delhi High Court decided Tata Steel BSL Ltd. and another v. Union of India and another, W.P.(CRL.) No.3037 of 2019, quashing criminal complaint and summoning orders qua erstwhile BSL on the ground of statutory immunity under Section 32A of the IBC.
- 10.09.2026: Date of hearing before the Orissa High Court.
- 30.09.2026: Date of judgment.
Relief Sought
The petitioner sought quashing of the entire criminal proceedings and the cognizance order dated 21.11.2023, arguing that continuation of the proceedings would constitute an abuse of the process of law and that the petitioner is entitled to statutory immunity under Section 32A of the IBC.
The Legal Issue
The central question was whether Section 32A of the Insolvency and Bankruptcy Code, 2016 confers statutory immunity on a successor corporate debtor (Tata Steel Limited) for offences committed by the erstwhile corporate debtor (Bhushan Steel Limited) prior to the commencement of the corporate insolvency resolution process, where the approved resolution plan effects a change in management or control to a person who is not a promoter, related party, or someone whom the investigating authority believes abetted or conspired for the offence, thereby barring prosecution and requiring quashing of the cognizance order and ongoing proceedings.
Arguments Presented
For the Petitioner
The petitioner, through Senior Counsel Mr. Ashok Parija, contended that Section 32A of the IBC provides a complete shield against prosecution for offences committed prior to the commencement of the CIRP when a resolution plan is approved and results in a change in management or control to a person not connected with the erstwhile management or deemed an abettor. Reliance was placed on the express language of Section 32A(1) and its explanatory provisos, which extinguish the liability of the corporate debtor from the date of approval of the resolution plan. The petitioner highlighted that the resolution plan was approved by the Adjudicating Authority on 15.05.2018 (and again noted on 22.02.2021), that the change in management occurred on 18.05.2018, and that the alleged offences pertain to the period prior to this change. Furthermore, the petitioner relied on the Delhi High Court judgment in Tata Steel BSL Ltd. and another v. Union of India and another, W.P.(CRL.) No.3037 of 2019, decided on 16.03.2020, which squarely covered analogous facts and held that the criminal complaint and summoning orders qua erstwhile BSL were quashed on the basis of statutory immunity under Section 32A. It was submitted that continuation of the proceedings against the petitioner would serve no useful purpose and amount to an abuse of the process of law, warranting invocation of the inherent jurisdiction under Section 482 CrPC.
For the Respondent
The opposite party, represented by Mr. Bikram Pratap Das, argued that invocation of the High Court’s jurisdiction under Section 482 CrPC at this stage is impermissible in law, as the grounds challenging the order taking cognizance can appropriately be raised before the learned trial court at the appropriate stage of the proceeding. Once cognizance has been taken and the proceeding initiated at the instance of the opposite party is pending before the learned trial court, the High Court ought not to interfere so as to scuttle the ongoing proceeding. It was contended that the petitioner should first exhaust remedies before the trial court, and that the High Court’s interference would undermine the trial court’s jurisdiction.
The Court's Analysis
The Court began by noting that it is undisputed that the impugned complaint was filed by the State Pollution Control Board under Sections 37 and 39 of the Air Act, alleging contravention of Sections 21 and 23 thereof against erstwhile BSL and its officials. The Court then turned to the substantive plea of statutory immunity under Section 32A of the IBC.
The Court reproduced the text of Section 32A(1) and its provisos, emphasizing that the legislature intended to extinguish the liability of a corporate debtor for an offence committed prior to the commencement of the CIRP if a resolution plan is approved by the Adjudicating Authority and results in a change in management or control to a person who was not a promoter, related party, or someone whom the investigating authority believes abetted or conspired for the offence. The Court observed that the express language leaves no room for ambiguity: the liability ceases from the date of approval of the resolution plan, and the corporate debtor shall not be prosecuted for such an offence.
Applying the provision to the facts, the Court found it not in dispute that the resolution plan was approved by the Adjudicating Authority on 15.05.2018 (and later affirmed on 22.02.2021), that the change in management and control of the corporate debtor was effected on 18.05.2018, and that the alleged offences relate to the period when erstwhile BSL was under its previous management and were committed prior to this change. The Court further noted that the petitioner, as the successful resolution applicant and successor-in-interest of erstwhile BSL, is not a promoter, related party, or someone whom the investigating authority believes abetted or conspired for the offence. Consequently, all conditions of Section 32A(1) are satisfied.
The Court then considered the reliance on the Delhi High Court judgment in Tata Steel BSL Ltd. and another v. Union of India and another, W.P.(CRL.) No.3037 of 2019, decided on 16.03.2020. The Court held that the Delhi High Court’s decision squarely covers the facts and circumstances of the present case and supports the petitioner’s contention that the criminal liability of the corporate debtor stands extinguished.
Regarding the objection raised by the opposite party under Section 482 CrPC, the Court observed that the power to quash proceedings under Section 482 is exercised to prevent abuse of the process of law or to secure the ends of justice. In the present case, continuation of the criminal proceedings against the petitioner, despite the statutory immunity conferred by Section 32A, would serve no useful purpose and would amount to an abuse of the process of law. The Court therefore found it appropriate to invoke its inherent jurisdiction to quash the cognizance order and the ongoing proceedings.
The Court, however, made it clear that it has not expressed any opinion on the merits of the case insofar as the remaining accused persons (the three officials of erstwhile BSL) are concerned, against whom cognizance was taken by the learned S.D.J.M., Dhenkanal in the impugned order. The quashing is limited to the petitioner-company only.
"Accordingly, the pending criminal proceeding against the present petitioner and the cognizance order dated 21.11.2023 passed by the learned S.D.J.M., Dhenkanal in 2(c)CC No.47 of 2013 stands quashed in so far it relates to the present petitioner is concerned."
The Court concluded that the petitioner is entitled to the relief sought and disposed of the CRLMC.
The Verdict
The petitioner, Tata Steel Limited, succeeded in its plea. The Court set aside the cognizance order dated 21.11.2023 passed by the learned S.D.J.M., Dhenkanal in Complaint Case No. 2(c) C.C.47 of 2013 and quashed the ongoing criminal proceedings against the petitioner-company to the extent they relate to it. The Court, however, clarified that it has not expressed any opinion on the merits of the case as regards the other accused persons (Rahul Sengupta, Atulya Kumar Verma, and Dr. Ram Mohan Sharma). No monetary relief, interest, or costs were awarded; the operative direction is limited to quashing the proceedings and the cognizance order.
What This Means For Similar Cases
Statutory Immunity Extends to Successor Entities
The judgment clarifies that Section 32A of the IBC provides a complete shield not only to the original corporate debtor but also to its successor-in-interest, provided the resolution plan effects a change in management or control and the statutory conditions are met. Practitioners must verify that the resolution plan has been approved by the Adjudicating Authority, that a change in management has occurred, and that the successor is not a promoter, related party, or deemed abettor before asserting immunity.
Timing of Resolution Plan Approval Is Critical
The Court emphasized that the liability of the corporate debtor ceases from the date of approval of the resolution plan by the Adjudicating Authority. Consequently, any prosecution for offences committed prior to that date is barred, irrespective of when the complaint was filed or cognizance taken. Litigants should check the approval date and ensure that the alleged offence predates it to successfully invoke Section 32A.
Limited Scope: Other Accused Not Affected
The immunity under Section 32A applies solely to the corporate debtor and its successor; it does not extend to officers, directors, or other individuals who may have been involved in the commission of the offence. The Court expressly reserved its opinion on the merits as regards the three officials of erstwhile BSL, indicating that proceedings against them may continue independently.
