The Orissa High Court at Cuttack has quashed criminal proceedings pending against Tata Steel Limited in connection with alleged violations of the Air (Prevention and Control of Pollution) Act, 1981, concerning the erstwhile Bhushan Steel Limited.
Justice Sibo Sankar Mishra held that, following the approved insolvency resolution process and change in management, the criminal liability arising from acts attributable to the erstwhile corporate debtor could not be fastened upon the present resolution applicant, subject to the conditions under Section 32A of the Insolvency and Bankruptcy Code, 2016.
Background
The proceedings originated from Complaint Case No. 2(c) C.C.47 of 2013 before the S.D.J.M., Dhenkanal. The State Pollution Control Board, Odisha had initiated the complaint against erstwhile Bhushan Steel Limited and three of its officials, alleging contravention of Sections 21 and 23 of the Air Act, with Sections 37 and 39 also invoked.
During the pendency of the criminal case, Bhushan Steel underwent Corporate Insolvency Resolution Process (CIRP). Tata Steel submitted a resolution plan, which was approved by the Committee of Creditors and subsequently by the Adjudicating Authority. Tata Steel thereafter took over the company, resulting in a change in its management and control. The company was subsequently renamed Tata Steel BSL Limited.
Tata Steel approached the High Court under Section 482 of the Code of Criminal Procedure, seeking quashing of the proceedings and the order taking cognizance against it.
The High Court considered Section 32A of the IBC, which provides protection to a corporate debtor from prosecution for offences committed before the insolvency resolution process where the approved resolution plan results in a change of management or control, subject to the statutory conditions.
The Court also noted that the approved resolution plan itself contained provisions protecting the new management from liabilities relating to the period preceding approval of the plan.
The Court observed:
“In view thereof, any civil or criminal liability arising from acts or omissions attributable to the erstwhile BSL cannot be fastened upon the present petitioner-company, subject to the provisions of Section 32-A of the IBC.”
The Court further found that the Delhi High Court’s earlier decision in Tata Steel BSL Ltd. and another v. Union of India and another supported Tata Steel’s case and squarely covered the circumstances before it.
The Orissa High Court accordingly quashed the pending criminal proceedings against Tata Steel Limited in Complaint Case No. 2(c) C.C.47 of 2013, along with the cognizance order, insofar as they concerned Tata Steel.
The Court clarified that it had expressed no opinion on the merits of the case against the remaining accused persons.
With that observation, the criminal miscellaneous case was disposed of.
