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TMI Blog2021 (11) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... UDGMENT : SANDEEP K. SHINDE, J. 1. Rule. Rule, made returnable forthwith. By consent of the parties, taken up for hearing forthwith. 2. Writ Petition No. 3157 of 2021 under Article 227 of the Constitution of India read with Section 482 of the Criminal Procedure Code, seeks to challenge order dated 20th August, 2021, by which the learned Special Judge, CBI, Greater Bombay in exercise of jurisdiction under Section 32A of the Insolvency and Bankruptcy Code, 2016 ("IBC" for short), declined to discharge Dewan Housing Finance Corporation Limited-Corporate Debtor, from the CBI Special Case No. 830 of 2021 and permitted prosecution of the, Corporate Debtor through its erstwhile Directors (accused nos. 2 and 3) in CBI Special Case No. 830 of 2021. 3. Petitioner, in Writ Petition No. 3221 of 2021, is the successful resolution applicant, whose Resolution Plan dated 22nd December, 2020 has been approved by the Committee of Creditors of Dewan Housing Finance Corporation Limited (DHFL)-(Corporate Debtor) with an overwhelming majority of 93.65% voting and thereafter by the National Company Law Appellate Tribunal (NCLAT), Mumbai, vide its order dated 7th June, 2021. 4. Applicant in Interim A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... majority of 93.65% of votes in the Committee of Creditors (CoC). (ix) Pursuant, to approval of Resolution Plan by CoC and no-objection being granted to the same by RBI, on February 24, 2021 the Administrator filed an application under Section 31 of IBC, before the NCLAT (Adjudicating Authority), seeking approval to Resolution Plan of Piramal Capital. (x) On 7th June 2021, NCLAT approved Piramal Capitals' Resolution Plan for DHFL with effect from 7th June, 2021 and appointed Interim Monitoring Committee. (xi) On 6th July 2021, Piramal Capital obtained all requisite regulatory and statutory approvals in relation to the scheme of arrangement between Piramal Capital and Corporate Debtor i.e. Reverse Merger of the Piramal Capital and Housing Finance Limited, into and with DHFL, the Corporate Debtor. (xii) The Resolution Plan order dated 7th June, 2021 was challenged by one, 63, Moons Technologies Limited, before the NCLAT by filing Company Appeals. (xiii). On 6th July, 2021 and 23rd July, 2021, NCLAT, rejected 63 Moon's prayer for a stay on implementation of Resolution Plan (i.e. order dated 7th June, 2021). (xiv) In the meantime, Mr. Kapil Wadhwan, erstwhile Chairman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shi, Mr. Khushroo B. Jijina and Mr. Sohail Amin Nathani. 8. Heard Mr. Ravi Kadam, learned Senior Counsel for the petitioner in Writ Petition No. 3157/2021, Mr. Aabad Ponda, learned Senior Advocate with Writ Petition No. 3221/2021 and Mr. Pranav Badheka for Intervenor and Mr. Venegaonkar, Learned Prosecutor for the CBI. Issue : 9. Broad question raised in these petitions is : "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 ?" Submissions : 10. Mr. Ravi Kadam, Learned Senior Counsel submitted that, Corporate Debtor would not be liable for any offence committed prior to commencement of CRIP and prosecution would not continue against once Resolution Plan is approved by the Adjudicating Authority. Mr. Kadam, learned Senior Counsel would rely on the provisions of Section 32(1)(a) of the IBC, as inserted by Insolvency of Bankruptcy Code (Amendment) Act, 2020 and would also rely on the judgment of the Apex Court in the case of Manish Kumar V/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the code, the interests of all stakeholders including most importantly the imperative need to attract resolution applicants who would not shy away from offering reasonable and fair value as part of the resolution plan if the legislature thought that immunity be granted to the corporate debtor as also its property, it hardly furnishes a ground for this Court to interfere. (iii) The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate. (iv) That the impugned provision is part of an economic measure. (v) Having regard to the object of the statute we hardly see any manifest arbitrariness in the provision. (vi) That the immunity is premised on various conditions being fulfilled. There must be a resolution plan. It must be approved. There must be a change in the control of the corporate debtor. (vii) The new management cannot be the disguised avatar of the old management. It cannot even be the related party of the corporate debtor. The new management cannot be the subject matter of an investigation which has resulted in material showing abetment or consp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DHFL is discharged from all criminal liabilities. Besides, Mr. Badheka, argued that, in any event, the management or control of DHFL has not yet changed and vested in resolution applicant, which is essential condition, before Corporate Debtor seeks discharge. Mr. Badheka has taken me through the Affidavit of Mr. Kapil Wadhwan (Intervenor) sworn on 22nd September, 2021 in support of this contention. Mr. Badheka, submitted that if DHFL is discharged at this stage and if Appeal is adjudged in favour of the Intervenor, again a cognizance cannot be taken against a Corporate Debtor since cognizance of an offence, can only be taken once. In support of the submission, he has relied on the judgment of the Apex Court in the case of Balveer Singh V/s. State of Rajasthan (2016) 6 SCC 680. His next contention is, once an Appeal is filed before the NCLAT, the order Section 31 cannot be said to have attained finality and therefore discharge plea was pre-mature. In support of the submission, Mr. Badheka, would rely on the judgment of the Apex Court in the case of Union Of India and Others V/s. West Coast Paper Mills Limited and Another (2004) 2 SCC 747. It is therefore submitted that, impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit, dated 20th October, 2021 and dealt with subsequent events extensively. As such, I do not think it appropriate to keep the subsequent events out of consideration and relegate the parties to the trial Court for reconsideration. 19. Herein, subsequent events indisputably caused change in management and control of Corporate Debtor. The immunities sought by the Corporate Debtor though conditional; yet all these conditions have been fulfilled and satisfied; viz (i) Resolution Plan in regard to Corporate Debtor has been approved by the Adjudicating Authority under Section 31 IBC. (ii) Resolution Plan approved caused and resulted inchange in management of Corporate Debtor. (iii) change in management is in favour of persons who were not related to party of Corporate Debtor. Thus, in my view, immunities under 32A of IBC, cannot be denied to Corporate Debtor. 20. For these reasons, I hold that, the petitioner-DHFL, stands discharged from the CBI Special Case No.830 of 2021 pending before the CBI Cases Sessions Court, Mumbai. 21. The next question is, "Whether successful resolution applicant was eligible to invoke Section 32A of IBC, when appeals against the order of the Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 455 of 2021 are also based on similar footing. The rival claims, which are more questions of law would require deliberation and decision at appropriate stage. If the averments made by the Appellant are juxtaposed with averments made by Respondents, we do not find it a fit case to pass interim orders as sought. We do not think that any interim order as sought with regard to Resolution plan approved needs to be passed." 23. Be that as it may, 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 V/s. District Magistrate, (2009) 9 SCC 79. 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. In this regard, the order of the Division Bench of this Court in the case of Sai Shipping Services Private Limited V/s. Union of India, 2017 SCC Online Bombay 6655, would support the contention of the petitioners, in which the Division Bench has held; "The tribunal is la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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