Court Quashes Criminal Proceedings Against Tata Steel Limited Under Section 32A of IBC, Upholding Statutory Protection for Corporate Debtor Post-CIRP; Liability of Former Officials Continues
In a landmark judgment dated September 30, 2026, the Orissa High Court, presided over by Justice Sibo Sankar Mishra, quashed the criminal proceedings against Tata Steel Limited (TSL), the successor-in-interest of erstwhile Bhushan Steel Limited (BSL), under the Air (Prevention and Control of Pollution) Act, 1981. The judgment reinforces the statutory immunity granted under Section 32A of the Insolvency and Bankruptcy Code (IBC), 2016, safeguarding corporate debtors from prosecution for offences committed prior to the commencement of the Corporate Insolvency Resolution Process (CIRP), subject to certain conditions.
The case arose from a complaint filed by the State Pollution Control Board, Bhubaneswar, alleging violations of pollution control laws by the erstwhile BSL and its officials during their management tenure. The complaint invoked Sections 21 and 23 of the Air Act, with Sections 37 and 39 invoked against the petitioner. During the pendency of the criminal proceedings, BSL underwent CIRP under the IBC, culminating in the approval of a resolution plan by the National Company Law Tribunal (NCLT) on May 15, 2018. Tata Steel Limited, through its wholly-owned subsidiary Bamnipal Steel Ltd., acquired a majority shareholding and took over management control, leading to the renaming of BSL as Tata Steel BSL Limited.
Senior Advocate Ashok Parija, representing Tata Steel Limited, contended that Section 32A of the IBC, inserted retrospectively with effect from December 28, 2019, provides statutory immunity to a corporate debtor and the successful resolution applicant from prosecution for offences committed prior to the CIRP commencement date, provided there is a change in management or control. He emphasized that the offences alleged pertained to the period before TSL's takeover and, hence, the criminal proceedings against TSL should be quashed.
The Court noted that the approved resolution plan explicitly contained clauses (8.6.9 and 8.2.6) exempting the new management from any civil or criminal liability for acts committed by the erstwhile promoter group prior to the plan's approval. The Court further relied on the precedent set by the Delhi High Court in Tata Steel BSL Ltd. v. Union of India (2020), where similar criminal complaints were quashed on the ground of statutory immunity under Section 32A of the IBC.
While quashing the proceedings against Tata Steel Limited, the Court clarified that the immunity does not extend to the former officials or persons who were in charge of the company during the commission of the alleged offences. Such individuals remain liable to prosecution and punishment as per the law. The judgment expressly refrained from commenting on the merits of the case against the remaining accused persons.
The Orissa High Court's decision thus affirms the legislative intent behind Section 32A of the IBC to facilitate the smooth resolution of stressed assets by protecting successful resolution applicants from legacy liabilities, while maintaining accountability for persons directly responsible for offences committed by the corporate debtor before the resolution.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 Section 32A Corporate debtor after approval of resolution plan and change in management - Immunity from prosecution for offences committed prior to commencement of CIRP - Criminal proceedings under Air (Prevention and Control of Pollution) Act, 1981 against successor company liable to be quashed - Liability of erstwhile officers/persons in charge continues.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 32A; Code of Criminal Procedure, 1973 Section 482; Air (Prevention and Control of Pollution) Act, 1981 Sections 21, 23, 37, 39
