Protections available to successful bidder in the liquidation process U/s 32A

 Query; “ Whether the successful bidder in the liquidation process, in the situation of acquiring the CD as a going concern, will get the protection as available to the Resolution Applicant under Section 32A. “

Section 32A has two dimensions;

1. Protection against prosecution of corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process

2. Protection from action against the property of the corporate debtor in relation to an offence, i.e. the attachment, seizure, retention or confiscation of such property under such law as may be applicable to the corporate debtor;

1.  Sub-section (1)  provides protection from prosecution of CD for offences committed prior to the commencement of the corporate insolvency resolution process, reading as under;

Section 32A. (1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not-

• (a) a promoter or in the management or control of the corporate debtor or a related party of such a person; or

• (b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court:

Provided that if a prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor, it shall stand discharged from the date of approval of the resolution plan subject to requirements of this sub-section having fulfilled:

This section [Section 32A(1)] specifically provides protection from prosecution only after the resolution plan has been approved by AA, and this protection is not available in any other situation like sale of CD as a going concern during liquidation process. This may be due to the fact that Code does not envisage sale of CD as a going concern during liquidation process. Code under Section 54 provides for dissolution of CD after assets of the corporate debtor have been completely liquidated.

2. Sub-section (2)  provides protection from attachment, seizure, retention or confiscation of the property in relation to an offence committed prior to the commencement of the corporate insolvency resolution process, under such law as may be applicable to the corporate debtor, reading as under;

Section 32A (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, …………..

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Explanation.- For the purposes of this sub-section, it is hereby clarified that,-

• (i) an action against the property of the corporate debtor in relation to an offence shall include the attachment, seizure, retention or confiscation of such property under such law as may be applicable to the corporate debtor;

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