BIODIVERSITY CONSERVATION INDIA PVT LTD., vs STATE OF KARNATAKA

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CRL.P No. 360 of 2018


IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 17 DAY OF OCTOBER, 2026


BEFORE

THE HON'BLE MR. JUSTICE H.P.SANDESH

CRIMINAL PETITION NO.360 OF 2018


BETWEEN:

1. BIODIVERSITY CONSERVATION INDIA PVT. LTD.,
37, 1/1, R.K.CHAMBERS,
GROUND FLOOR, AGA ABBAS ALI ROAD,
BENGALURU-560042.
REPRESENTED BY ITS OFFICIAL LIQUIDATOR
MR. AMIT CHANDRAKANT SHAH.

2. BCIL ZED RIA PROPERTIES LTD.,
37, 1/1, R.K.CHAMBERS,
GROUND FLOOR, AGA ABBAS ALI ROAD,
BENGALURU-560042.
REPRESENTED BY ITS MANAGING DIRECTOR
CHANDRASEKHAR HARIHARAN.

3. BCIL RED EARTH DEVELOPERS INDIA PVT. LTD.,
37, 1/1, R.K.CHAMBERS,
GROUND FLOOR, AGA ABBAS ALI ROAD,
BENGALURU-560042.
REPRESENTED BY ITS MANAGING DIRECTOR
CHANDRASEKHAR HARIHARAN.
…PETITIONERS

(BY SRI. AJESH KUMAR S., ADVOCATE)

AND:

1. STATE OF KARNATAKA,
BY SHO, HALASUR POLICE STATION,
REPRESENTED BY SPP,
HIGH COURT BUILDING,
CUBBON PARK,
BENGALURU-560001.











Digitally signed
by DEVIKA M
Location: HIGH
COURT OF
KARNATAKA

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2. MR. AKASH GUPTA,
S/O MR. BLAMUKUND GUPTA,
PRESENTLY RESIDING AT FLAT NO.22,
TOWER-6, PEBBLE BAY APARTMENT,
ND
SANJAYNAGAR, RMV 2 STAGE,
BENGALURU-560094.
…RESPONDENTS

(BY SRI. SUHAS GOWDA M., HCGP FOR R1;
SRI. N.VENKATESH KAMATH, ADVOCATE FOR
SRI. CHINTAN CHINNAPPA, ADVOCATE FOR R2)

THIS CRIMINAL PETITION IS FILED UNDER SECTION 482
OF CR.P.C PRAYING TO QUASH THE FIR, PENDING BEFORE IV
ACMM, BENGALURU, IN CR.NO.408/2017 OF HALASOORU
POLICE STATION.

THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 13.10.2026, THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:

CORAM: HON'BLE MR. JUSTICE H.P.SANDESH

CAV ORDER
Heard the learned counsel for the petitioners, the
learned High Court Government Pleader appearing for
respondent No.1/State and the learned counsel for
respondent No.2/complainant.
2. This petition is filed by accused Nos.1 to 3
praying this Court to quash the FIR in Crime No.408/2017,
for the offence punishable under Sections 406, 420 read with
34 of IPC.

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3. The factual matrix of the case of the
complainant/respondent No.2, is that the complainant
invested a sum of Rs.4,20,00,000/- with the petitioners, who
allegedly agreed to repay a sum of Rs.6,19,00,000/-.
Towards repayment of the said amount, the petitioners
issued cheques in favour of the complainant. However, upon
presentation, all the cheques were dishonoured. Hence, an
allegation is made that the petitioners with an intention to
deceive the complainant, made him to invest the money and
failed to repay the same as agreed, and the cheques issued
towards repayment were dishonoured upon presentation.
4. The main contention of the learned counsel for
the petitioners before this Court relying upon the documents
Annexures-A to F is that these documents clearly discloses
that a false complaint is filed and case is registered. The
copy of the statement of account of respondent No.2
(Annexure-C) is clear with regard to the payments made to
the complainant by the petitioners. The learned counsel
would contend that suppressing the material facts,
respondent No.2 has initiated the criminal proceedings under
Section 138 of the Negotiable Instruments Act as well as the

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arbitration proceedings in A.A.No.373/2017 as per
Annexures-E and F. The main contention of the learned
counsel is that it is purely civil in nature and there is a
provision for arbitration as well as with regard to the
bouncing of cheque, already a criminal case is filed giving
criminal colour to the civil dispute. The learned counsel
would vehemently contend that respondent No.2 has
suppressed all the facts and he had promised investment in
the ZED RIA project resulting in the petitioners facing huge
burden of raising loan to pay the land owners, who had
threatened to withdraw from the project.
5. The learned counsel in support of his argument
relies upon the document of copy of the order of the NCLT
dated 09.08.2018 admitting petitioner Nos.1 to 3 to CIRP
and so also the copy of the order of the NCLT, Bangalore
dated 16.07.2019 rejecting the application of respondent
No.2 herein and document Nos.3 and 4 copy of the NCLT
order dated 16.07.2019 and 09.08.2019 approving the
resolution plan of petitioner Nos.2 and 3, respectively. The
learned counsel also vehemently contend that petitioner
Nos.2 and 3 have been admitted to the resolution plan and

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new management also taken over in view of the NCLT order.
The learned counsel also brought to the notice of this Court
the provisions of Section 32A of the Insolvency and
Bankruptcy Code, 2016 (‘IBC’ for short) and contend that
there is a bar to proceed against these petitioners. The
learned counsel also brought to the notice of this Court that
when the proceedings is already initiated under Section 138
of the Negotiable Instruments Act, there is a protection
under Section 32A of IBC and ought not to have initiated the
criminal prosecution.
6. Per contra, the learned counsel for respondent
No.2/complainant would submit that insofar as petitioner
No.1 is concerned, there cannot be any prosecution since
liquidator is appointed. Insofar as petitioner Nos.2 and 3 is
concerned, the learned counsel brought to the notice of this
Court the further proviso of Section 32A of IBC and contend
that former Director cannot escape from the liability and
sub-section (3) of Section 32A is very clear that who are
associated with the company and dealt with the company
affairs, they are liable. The learned counsel would contend
that specific allegations are made against petitioner Nos.2

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and 3 in the complaint and they are liable in their individual
capacity and the Directors cannot escape from the criminal
prosecution.
7. In reply to this argument, the learned counsel for
the petitioners would contend that there is no FIR against
petitioner Nos.2 and 3. The learned counsel in support of his
argument relies upon the judgment of the Apex Court in the
case of MANISH KUMAR v. UNION OF INDIA AND
ANOTHER reported in (2021) 5 SCC 1 and brought to the
notice of this Court the discussion made in paragraph
Nos.317 and 319. Section 32A has been divided into three
parts consisting of sub-sections (1) to (3) i.e., the liability of
a corporate debtor for an offence committed prior to the
commencement of the CIRP shall cease, and the corporate
debtor shall not be prosecuted for such an offence. Both
these immunities are subject to the conditions as mentioned
in paragraph Nos.317.1, 317.2, 317.3 and 317.4.
8. In reply to this argument, the learned counsel for
respondent No.2 would contend that former director cannot
be given a clean chit for the act which they have done.

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9. Having heard the learned counsel for the
respective parties, it is not in dispute that a complaint is
given by respondent No.2 in terms of Annexure-B. It is also
not in dispute that in pursuance of the complaint (Annexure-
B), FIR is registered for the offences punishable under
Sections 406, 420 read with Section 34 of IPC. It is not in
dispute that the Company is liquidated and liquidator is
appointed. Section 32A of IBC is very clear that there cannot
be any prosecution when the company is liquidated and
liquidator is appointed. The learned counsel for respondent
No.2 also not disputes that corporate debtor cannot be
prosecuted.
10. Now the question before this Court is in respect of
petitioner Nos.2 and 3. It is not in dispute that they are the
Directors and investment was made by the complainant. The
complainant invested crores of rupees with the petitioners,
who allegedly agreed to repay the amount along with the
agreed returns. Towards discharge of the said liability, the
petitioners issued cheques in favour of the complainant;
however, the cheques were dishonoured upon presentation.
A specific allegation of cheating was alleged against the

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petitioners that at the inception with an intention to cheat
the complainant, made him to invest money. It has to be
noted that only FIR is registered. This Court would like to
refer to the provisions of Section 32A of IBC i.e., liability for
prior offences is concerned. No doubt, Section 32A is very
clear that 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.
11. The learned counsel for respondent No.2 brought
to the notice of this Court the second proviso to Section 32A,
which is clear that every person who was a “designated
partner” as defined in clause (j) of section 2 of the Limited
Liability Partnership Act, 2008, or an “officer who is in
default”, as defined in clause (60) of section 2 of the
Companies Act, 2013, or was in any manner in charge of, or
responsible to the corporate debtor for the conduct of its
business or associated with the corporate debtor in any
manner and who was directly or indirectly involved in the
commission of such offence as per the report submitted or
complaint filed by the investigating authority, shall continue

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to be liable to be prosecuted and punished for such an
offence committed by the corporate debtor notwithstanding
that the corporate debtor's liability has ceased under this
sub-section. Hence, there is a force in the contention of the
learned counsel for respondent No.2/complainant.
12. This Court would like to rely upon the judgment
of the Delhi High Court passed in W.P.(Crl) 3037/2019 and
Crl.M.A.39126/2019 in the case of TATA STEEL BSL
LIMITED AND ANOTHER v. UNION OF INDIA AND
ANOTHER, wherein the Delhi High Court taken note of and
extracted Section 32A(1) of the IBC, particularly the second
proviso fixing the liability. The Delhi High Court in paragraph
No.6 observed that it is clear from the express language of
the aforementioned provision that a corporate debtor would
not be liable for any offence committed prior to
commencement of the CIRP and the corporate debtor would
not be prosecuted if a resolution plan has been approved by
the adjudicating authority. It is also observed that there is
no dispute that a resolution plan has been approved by the
adjudicating authority (NCLT) and in the circumstances,
there is much merit in the contention that the petitioner

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cannot be prosecuted and is liable to be discharged. In
paragraph No.9 it is clarified that this order will not affect the
prosecution of the erstwhile promoters or any of the officers
who may be directly responsible for committing the offences
in relation to the affairs of the petitioner company. Hence
this judgment goes against petitioner Nos.2 and 3.
13. This Court also would like to rely upon the
judgment of the Apex Court in the case of AJAY KUMAR
RADHEYSHYAM GOENKA v. TOURISM FINANCE
CORPORATION OF INDIA LIMITED reported in (2023)
10 SCC 545, wherein it is held that the criminal proceedings
under the Negotiable Instruments Act against
Director/signatory for dishonour of cheque, during the
pendency of proceedings under IBC, is permissible. It is also
discussed with regard to scope of Section 32A of IBC in
paragraph Nos.69 and 70. It is held that Section 32A
broadly leads to extinguishment of the criminal liability of the
corporate debtor, if the control of the corporate debtor goes
in the hands of the new management which is different from
the original old management. The prosecution in relation to
every person who was a “designated partner” as defined in

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clause (j) of Section 2 of the Limited Liability Partnership Act,
2008, or an “officer who is in default”, as defined in clause
(60) of Section 2 of the Companies Act, 2013, or was in any
manner incharge of, or responsible to the corporate debtor
for the conduct of its business or associated with the
corporate debtor is any manner and who was directly or
indirectly involved in the commission of such offence” shall
be proceeded and the law will take its own course. Only the
corporate debtor (with new management) as held in
paragraph No.42 of the judgment in the case of P. Mohan
Raj v. Shah Bros. Ispat (P) Ltd. reported in (2021) 6
SCC 258 , will be safeguarded. In paragraph No.69.3 it is
held that if the old management takes over the corporate
debtor, the corporate debtor itself is also not safeguarded
from prosecution under Section 138 or any other offences.
In paragraph No.70 it is held that by operation of the
provisions of IBC, the criminal prosecution initiated against
the natural persons under Section 138 read with Section 141
of the Negotiable Instruments Act read with Section 200 of
Cr.P.C. would not stand terminated. Further discussion was
made in paragraph Nos.80, 81 and 82. Hence, the contention

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of the learned counsel for the petitioners cannot be accepted
in respect of petitioner Nos.2 and 3 and they being the
Directors, in view of further proviso to Section 32A of IBC,
they are not entitled for the relief. The judgment of the
Apex Court in the case of Manish Kumar (supra) will not
come to the aid of petitioner Nos.2 and 3 in view of the
discussion made in paragraph No.319 of the judgment.
14. In view of the discussions made above, I pass the
following:
ORDER

(i) The petition in respect of petitioner No.1 is
allowed. The proceedings initiated against
petitioner No.1 in FIR registered in Crime
No.408/2017 is quashed.


(ii) The petition in respect of petitioner Nos.2 and
3 is rejected.


Sd/-
(H.P.SANDESH)
JUDGE


MD