The Delhi High Court has set aside the Serious Fraud Investigation Office (SFIO) complaint and proceedings against Tata Steel BSL Ltd, formerly known as Bhushan Steel Limited.
The Court has nonetheless clarified that the order will not affect the prosecution of the erstwhile promoters of the company or any of the officers who may be directly responsible for committing the offences under SFIO investigation.
The order was passed by a Single Judge Bench of Justice Vibhu Bakhru.
Last year, the SFIO had initiated investigation against Tata Steel BSL Ltd, then known as Bhushan Steel Limited, its promoters etc for allegedly siphoning off company’s funds.
Subsequently, the Trial Court had taken cognizance of the offences punishable under the Companies Act and the Indian Penal Code, and summons were issued.
Meanwhile, Tata Steel Limited’s Resolution Plan for Bhushan Steel Limited was accepted by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016.
After the appeal against Tata Steel Ltd’s Resolution Plan was dismissed by the National Company Law Appellate Tribunal, 72.65% of Bhushan Steel Limited’s equity capital was acquired by Tata Steel Limited.
The management of the Bhushan Steel was taken over by new promoters and the company came to be known as Tata Steel BSL Ltd.
The Petitioner argued that in terms of Section 32A IBC, as inserted by virtue of the Insolvency of Bankruptcy Code (Amendment) Act, 2020; Tata Steel BSL Ltd was required to be discharged from the SFIO proceedings.
In view of the newly inserted section, the Court stated that it was clear from the express language of the provision that a corporate debtor would not be liable for any offence committed prior to commencement of the Corporate Insolvnecy Resolution Process.
The corporate debtor would thus not be prosecuted if a resolution plan has been approved by the Adjudicating Authority i.e. the NCLT, it added.
In the present case, the Court noted that there was no dispute that Tata Steel’s Resolution Plan had been approved by the Adjudicating Authority i.e NCLT and concluded,
“In the circumstances, there is much merit in the contention that the petitioner (Tata Steel BSL Ltd) cannot be prosecuted and is liable to be discharged.”
The Court, therefore, ordered that the SFIO complaint as well as the summons against Tata Steel BSL Ltd be set aside.
Source- Bar & Bench.