M/S FERRO ALLOYS CORPORATION LTD. vs SUB DIVISIONAL MAGISTRATE, CHAMPUA
- Court
- Odisha High Court
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
IN THE HIGH COURT OF ORISSA AT CUTTACK
CRLMC No. 5590 of 2025
(In the matter of an application under Section 482 of Criminal
Procedure Code, 1973/ Section 528 of Bharatiya Nagarik Suraksha
Sanhita).
M/S Ferro Alloys Corporations Ltd. …. Petitioner(s)
-versus-
Sub Divisional Magistrate,
Champua & Anr.
…. Opposite Party (s)
Advocates appeared in the case through Hybrid Mode :
For Petitioner(s) : Mr. Sarada Prasanna Sarangi, Adv.
For Opposite Party (s) : Ms. Sarita Moharana, ASC
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:-11.05.2026
DATE OF JUDGMENT:-22.05.2026
Dr. Sanjeeb K Panigrahi, J.
1.
The Petitioner, by way of the present petition, seeks quashing of the
entire proceedings in Complaint Case being 2(c) C.C. No. 19 of 2014,
instituted by the Sub-Divisional Magistrate, Champua, Keonjhar,
Odisha, and presently pending before the Court of the learned Judicial
Magistrate First Class, Barbil.
I. F ACTUAL M ATRIX OF THE C ASE :
2. The brief facts of the case are as follows:
(i) On 01.08.1998, a mining lease deed was executed between
Petitioner No. 1 and the State Government in respect of a mining
Page 1
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
lease over an area measuring Ac.13.674 hectares situated in two
blocks under Katasahi village in the district of Keonjhar, for a
period of twenty years, in terms of the provisions of the Mines
and Minerals (Development and Regulation) Act, 1957.
(ii) That on 06.03.2014, the Opposite Party instituted Complaint Case
bearing No. 2(C) C.C. No. 19 of 2014 against the Petitioners before
the Court of the learned Judicial Magistrate First Class, Barbil. In
the said complaint petition, it was alleged, inter alia, that the
Regional Officer, State Pollution Control Board, Keonjhar, had
reported that the concerned mine did not possess a valid
Environmental Clearance or consent to operate for extraction of
Manganese Ore up to 31.03.2011, and despite such absence of
requisite statutory clearance, mining operations and production
activities were continued during the years 2005-06, 2006-07, 2007-
08 and 2009-10, allegedly exceeding the permissible consented
limits, particularly during the year 2008-09.
(iii) It was further alleged in the complaint petition that the
production carried out beyond the permissible limit amounted to
violation of the provisions of the Environment (Protection) Act,
1986. It is stated that, in view of such alleged violations, the
Ministry of Environment and Forests, Government of India, as
well as the Forest & Environment Department, Government of
Odisha, vide Letter No. 19839/F&E dated 24.09.2013, directed the
Collector, Keonjhar, to initiate appropriate legal action against the
concerned mining project. Pursuant thereto, the impugned
Page 2
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
complaint came to be instituted alleging that the accused
company, namely the Petitioner Company, had produced
manganese ore in excess of the approved limits during the period
from 01.04.2002 to 31.03.2009 without obtaining Environmental
Clearance, thereby contravening the provisions of the
Environment (Protection) Act, 1986 and the EIA Notification,
1994. On the basis of such allegations, it was contended that the
accused company was liable to be prosecuted and punished
under Section 15 of the Environment (Protection) Act, 1986.
(iv) It is stated that the learned Judicial Magistrate First Class, Barbil,
vide order dated 29.04.2014, took cognizance of the alleged
offences in the impugned complaint case and issued summons to
the Petitioners. Thereafter, on 04.07.2015, the Petitioners entered
appearance before the learned J.M.F.C., Barbil. It is further stated
that the allegations made in the impugned complaint petition,
including the alleged violations of the provisions of the
Environment (Protection) Act, 1986 and the consequential
proceedings arising therefrom, pertain to the period when the
Petitioner Company was functioning under its erstwhile
management.
(v) It is further stated that, while the matter stood thus, an
application bearing C.P. (I.B.) No. 251/KB/2017 under Section 7 of
the Insolvency and Bankruptcy Code, 2016 came to be filed by
Rural Electrification Corporation Limited before the learned
National Company Law Tribunal, Kolkata Bench, seeking
Page 3
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
initiation of the Corporate Insolvency Resolution Process (CIRP)
against the Petitioner Company. It is stated that the learned
NCLT, Kolkata, vide order dated 06.07.2017, admitted the said
application, appointed an Interim Resolution Professional to take
over the management and affairs of the Petitioner Company from
its Board of Directors, and imposed moratorium in terms of
Section 14 of the Insolvency and Bankruptcy Code, 2016.
(vi) That the aforesaid order dated 06.07.2017 passed by the learned
NCLT, Kolkata was challenged by the erstwhile management of
the petitioner before the learned National Company Law
Appellate Tribunal in Company Appeal (AT) No. 92/2019, which
came to be dismissed by order dated 08.01.2019. Similarly, Civil
Appeal No. 1484/2019 was filed before the Hon’ble Supreme
Court against the order of the NCLAT, which came to be
dismissed vide order dated 11.02.2019.
M
(vii) That on 30.10.2019, /s Sterlite Power Transmission Ltd.
submitted a Resolution Plan for the Petitioner Company, to be
implemented through one of its group companies. It is stated
that, under the terms of the said Resolution Plan, the new
management of the Petitioner Company was not to be held liable
for any past non-compliance or violations of applicable laws
allegedly committed by the erstwhile management, and all
proceedings relating thereto were to stand permanently
extinguished upon approval of the Resolution Plan.
Page 4
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
(viii) It is further stated that the learned National Company Law
Tribunal, Cuttack Bench, vide order dated 30.01.2020, approved
the Resolution Plan submitted by M/s Sterlite Power
Transmission Limited. It is stated that the said order dated
30.01.2020 was thereafter assailed before the learned National
Company Law Appellate Tribunal in Company Appeal (AT)
(Insolvency) Nos. 207–208 of 2020 and Company Appeal (AT)
(Insolvency) No. 272 of 2020. However, the said appeals came to
be dismissed vide orders dated 12.03.2020 and 08.06.2020
respectively, thereby confirming the order passed by the learned
NCLT, Cuttack Bench.
(ix) It is further stated that, pursuant to the Resolution Plan approved
by the learned National Company Law Tribunal, the Board of
Directors of the Petitioner Company came to be reconstituted on
21.09.2020, and the management and control of the Petitioner
Company were thereafter taken over by the new management.
(x) It is further stated that this Hon’ble Court, in W.P.(C) No. 20286
of 2020 [Ferro Alloys Corporation Ltd. v. State of Odisha &
Others], vide judgment dated 10.12.2021, has already taken
judicial notice of the successful completion of the Corporate
Insolvency Resolution Process of the Petitioner Company and
quashed the impugned demands pertaining to the period prior
thereto, which had arisen out of the acts and omissions of the
erstwhile management.
Page 5
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
Being aggrieved by the aforesaid facts and circumstances, the Petitioner
has been constrained to approach this Court by filing the present
CRLMC Application seeking appropriate relief in accordance with law.
II. S UBMISSIONS O N B EHALF O F T HE P ETITIONER :
3. The learned counsel for the Petitioner respectfully and earnestly made
the following submissions in support of his contentions:
(i) The Petitioner submits hat the Petitioner Company has
successfully undergone the Corporate Insolvency Resolution
Process (CIRP) under the provisions of the Insolvency and
Bankruptcy Code, 2016, resulting in a complete change in the
management and control of the Company. It is contended that, in
view of Section 32A of the Insolvency and Bankruptcy Code,
2016, the liability of the corporate debtor in respect of any offence
allegedly committed prior to the commencement of the CIRP
stands extinguished upon approval of the Resolution Plan and
consequent change in management. The Petitioner therefore
submits that continuation of the present criminal proceeding, in
relation to alleged historical acts attributable to the erstwhile
management, is legally impermissible and barred under law.
(ii) It was further contended on behalf of the Petitioner that all the
statutory conditions contemplated under Section 32A of the
Insolvency and Bankruptcy Code, 2016 stand fully satisfied in the
present case. It is submitted that the Resolution Plan in respect of
the Petitioner Company was duly approved by the learned
National Company Law Tribunal, Cuttack Bench, vide judgment
Page 6
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
dated 30.01.2020 passed in C.P. (I.B.) No. 251/KB/2017, pursuant
to which there occurred a complete and absolute change in the
management and control of the Petitioner Company. It is further
submitted that the present management is neither connected with
nor related to any erstwhile promoter or person who was in
management or control of the corporate debtor prior to
commencement of the CIRP. According to the Petitioner, there is
no material available on record to indicate, or even remotely
suggest, that the present management had in any manner
abetted, conspired, or participated in the commission of the
alleged offences forming the subject matter of the present
proceeding.
(iii) It is further contended that Section 32A of the Insolvency and
Bankruptcy Code, 2016 was enacted with the specific legislative
intent of providing a “clean slate” to the corporate debtor upon
approval of a Resolution Plan and transfer of management to a
new and unrelated entity. According to the Petitioner, the said
provision seeks to extinguish criminal and penal liabilities arising
out of past acts, omissions, or defaults attributable to the
erstwhile management, so as to facilitate effective revival and
rehabilitation of the corporate debtor. It is submitted that the
allegations made in the impugned complaint under Section 15 of
the Environment (Protection) Act, 1986 pertain to the period
between 2002 and 2009, which is much prior to commencement of
the CIRP and approval of the Resolution Plan. Therefore, the
Page 7
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
Petitioner contends that continuation of the present criminal
proceeding, in relation to such pre-CIRP alleged violations, is
expressly barred in law and liable to be quashed.
(iv)
It was respectfully submitted that Section 238 of the IBC, 2016,
provides a non-obstante clause ensuring that the Code, being a
special enactment and a complete code in itself, exercises
overriding authority over all other inconsistent legislations,
including criminal and environmental statutes like the EP Act,
1986. This overriding mandate has been explicitly affirmed by the
and
Apex Court in Innoventive Industries Ltd. v. ICICI Bank
Principal Commissioner of Income Tax v. Monnet Ispat & Energy
1
Ltd .
(v) In the alternative, and without prejudice to the aforesaid
submissions, it is contended that by virtue of the Jan Vishwas
(Amendment of Provisions) Act, 2023, the offences punishable
under Section 15 of the Environment (Protection) Act, 1986 have
been decriminalized with effect from 01.04.2024, inasmuch as the
punishment of imprisonment has been deleted and the
contraventions have been converted into civil liabilities attracting
monetary penalties. It is submitted that the said amendment,
being beneficial and ameliorative in nature, is retrospective in
operation and squarely applicable to the present proceeding in
view of the settled principles laid down in T. Barai. The Petitioner
further contends that, when the effect of the aforesaid
1
2018 (1) SCC 407
Page 8
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
amendment is read conjointly with Section 31 of the Insolvency
and Bankruptcy Code, 2016, the continuation of the impugned
criminal proceeding becomes wholly unsustainable in the eye of
law and is liable to be terminated.
(vi) It was further argued on behalf of the Petitioner that the
expression “offence” occurring in Section 32A of the Insolvency
and Bankruptcy Code, 2016 ought to receive a broad, liberal and
purposive interpretation so as to advance the legislative object
underlying the provision. According to the Petitioner, the said
expression is not required to be construed in a narrow or
pedantic sense confined only to conventional criminal offences,
but must also encompass statutory and regulatory infractions
carrying penal consequences, including civil liabilities of a
punitive character. It is contended that such an interpretation
alone would give full effect to the legislative intent of granting a
complete “fresh start” to the corporate debtor after approval of
the Resolution Plan, free from the burden of past liabilities and
proceedings attributable to the erstwhile management.
(vii) It is further contended that the inordinate, unexplained, and
oppressive delay of more than eleven years in the current
criminal proceedings violates the Petitioner's fundamental right
to a speedy trial under Article 21 of the Constitution of India.
Cognizance was taken as far back as 29.04.2014, and despite the
Petitioner appearing regularly through counsel since 04.07.2015,
the trial has not progressed beyond issuing repeated summons
Page 9
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
due to the perpetual non-availability of prosecution witnesses, as
explicitly recorded in the order sheets (such as the orders dated
28.10.2022 and 02.02.2024).
(viii) It was urged that the entire delay is wholly attributable to the
State/complainant. Given that the current management has no
connection with or knowledge of events that allegedly occurred
nearly twenty years ago, continuing these stale proceedings
serves no legal purpose and is a clear abuse of the process of
court.
(ix) It is further argued that the Impugned Complaint is ex facie
vague, fundamentally defective, and violative of Section 16 of the
EP Act, 1986. The statute mandates that when an offence is
committed by a company, the individuals in charge of and
responsible to the company at the time must be identified. The
Impugned Complaint fails to name any Director, Manager, or
Officer responsible during the 2002–2009 period, choosing
instead to name the Petitioner Company as the sole accused.
(x) It was submitted that vicarious liability cannot be fastened upon
a corporate entity or individuals unless the complaint specifically
pleads the specific role and control of an individual at the
relevant time. This incurable, foundational defect is fatal to the
prosecution under the law as enunciated in SMS
2
Pharmaceuticals v. Neeta Bhalla , Aneeta Hada v. Godfather
3 4
Travels , and Sunil Bharti Mittal v. CBI .
2
2005 SCC (CRI) 1975
Page 10
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
(xi) Therefore, submits that the Impugned Complaint and the
proceedings arising therefrom are without any basis, arbitrary,
and bad in law. Having no alternative efficacious remedy, the
Petitioner moves this Hon'ble Court to prevent an abuse of the
process of the court and secure the ends of justice by quashing
the impugned order of cognizance and all consequential
proceedings in exercise of its inherent powers under Section 528
of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, read
with Section 482 of the Criminal Procedure Code, 1973.
III. S UBMISSIONS O N B EHALF O F T HE O PPOSITE P ARTIES :
4. Per contra , the learned counsel for the Opposite Parties earnestly made
the submission that the present CRLMC is not maintainable before this
Court and deserves to be rejected in limine.
(i) It was submitted that the learned court below was fully justified
in issuing Non-Bailable Warrants (NBWs) against the accused
person, Amaresh Chandra Das. The case record clearly
establishes that the accused has been willfully absconding and
actively avoiding the process of law.
(ii) It was submitted that the provisions of Section 32A of the
Insolvency and Bankruptcy Code (IBC), 2016, cannot act as a
blanket shield to automatically stifle valid criminal prosecutions
under environmental laws. The infractions under Section 15 of
the Environment (Protection) Act, 1986, involve serious damage
3
2012 (5) SCC 661
4
(2015) 4 SCC 609
Page 11
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
to the ecological balance and public health committed between
2002 and 2009, and the corporate entity cannot evade statutory
liability merely by undergoing a subsequent financial
restructuring.
(iii) It is further contended that the amendments introduced by the
Jan Vishwas (Amendment of Provisions) Act, 2023, which took
effect on 01.04.2024, do not have automatic retrospective
application to wipe out past criminal liabilities. Criminal
proceedings where cognizance was lawfully taken as far back as
29.04.2014 must be governed by the penal provisions in force at
the time of the commission of the offence and the taking of
cognizance.
(iv) It was respectfully submitted that the delay in the progress of the
trial is not intentional or oppressive so as to violate Article 21 of
the Constitution of India. In complex matters involving
environmental infractions by corporate entities, the collection,
verification, and production of official records and prosecution
witnesses naturally consume time, and such delay cannot be a
ground to completely quash a legitimate trial.
(v) It is further submitted that the complaint is neither vague nor
fundamentally defective. A company is a distinct legal juristic
person capable of being prosecuted independently for statutory
violations. The absence of specific individual names of Directors
or Officers in the initial complaint does not absolve the corporate
Page 12
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
entity itself from its primary liability for environmental
degradation under Section 16 of the EP Act, 1986.
(vi) It was argued that the Environment (Protection) Act, 1986, is a
specialized piece of legislation enacted to give effect to
international obligations and safeguard the right to a clean
environment. Therefore, the overriding provisions of the IBC
under Section 238 cannot be stretched unreasonably to extinguish
liabilities arising out of penal offenses affecting public welfare
and the environment.
IV. C OURT S R EASONING AND A NALYSIS :
’
5. Heard Learned Counsel for parties and perused the documents placed
before this Court.
6. At the outset, it is to be noted that the scope of interference in exercise
of inherent jurisdiction under Section 482 of the Code of Criminal
Procedure is well settled.
7. It is further a well-settled principle of law that while exercising its
inherent jurisdiction under Section 482 of the Code of Criminal
Procedure, the High Court ought not to embark upon a meticulous
enquiry into the reliability, admissibility, or sufficiency of the evidence
collected during investigation.
8. The scope of interference at such stage is inherently limited and is
required to be exercised sparingly, with great caution, and only in
exceptional circumstances where continuation of the criminal
proceeding would amount to an abuse of the process of Court or where
no offence is disclosed on the face of the record.
Page 13
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
9. In the present case, it is not in dispute that the Petitioner Company has
successfully undergone the Corporate Insolvency Resolution Process
(CIRP) under the provisions of the Insolvency and Bankruptcy Code,
2016, resulting in a complete change in the management and control of
the corporate debtor pursuant to approval of the Resolution Plan.
Section 32A of the Insolvency and Bankruptcy Code, 2016 has been
enacted with the avowed object of ensuring revival of the corporate
debtor by granting it a fresh slate upon takeover by a new and
unrelated management. The said provision unequivocally stipulates
that where the management and control of the corporate debtor stand
transferred to a person who is neither a promoter nor in any manner
connected with the erstwhile management responsible for the
commission of the offence, the liability of the corporate debtor in
respect of offences committed prior to commencement of the CIRP shall
cease, and the corporate debtor shall not be subjected to prosecution for
such antecedent offences. Thus, upon fulfillment of the statutory
requirements contemplated under Section 32A of the IBC, the
continuation of criminal proceedings against the corporate debtor in
relation to pre-CIRP offences becomes legally impermissible.
10.
Section 32A of the Insolvency and Bankruptcy Code, 2016 has been
introduced by the legislature with the clear and avowed object of
affording a “clean slate” to the corporate debtor upon approval of a
Resolution Plan and consequent transfer of management and control to
a new and unrelated entity. The underlying legislative intent behind
incorporation of the said provision is to facilitate effective revival and
Page 14
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
rehabilitation of the corporate debtor by insulating it from the burden
of past criminal and penal liabilities attributable to the erstwhile
management. The provision contemplates that, once the Corporate
Insolvency Resolution Process attains finality and the management of
the corporate debtor stands vested in a new dispensation unconnected
with the previous promoters or persons in control, the corporate debtor
shall stand discharged from prosecution in respect of offences
committed prior to commencement of the CIRP. In essence, Section 32A
creates a statutory immunity in favour of the corporate debtor so as to
ensure that historical liabilities do not frustrate the very object and
efficacy of the resolution process envisaged under the Insolvency and
Bankruptcy Code, 2016.
5
11. In the case of Manish Kumar v. Union of India the Apex Court has
adjudged that any prior offence committed by the corporate debtor
shall cease.
“ 317. Section 32-A has been divided into three parts consisting
of sub-sections (1) to (3). Under sub-section (1), notwithstanding
anything contained, either in the Code or in any other law,
liability of a corporate debtor, for an offence committed prior to
the commencement of the CIRP, shall cease. Further, the
corporate debtor shall not be liable to be prosecuted for such an
offence. Both these immunities are subject to the following
conditions:
A resolution plan, in regard to the corporate debtor, must
317.1.
be approved by the adjudicating authority under Section 31 of
the Code.
317.2. The resolution plan, so approved, must result in the
change in the management or control of the corporate debtor.
5
(2021) 5 SCC 1
Page 15
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
317.3. The change in the management or control, under the
approved resolution plan, must not be in favour of a person, who
was a promoter, or in the management and control of the
corporate debtor, or in favour of a related party of the corporate
debtor.
317.4. The change in the management or control of the corporate
debtor must not be in favour of a person, with regard to whom
the relevant investigating authority has material which leads it to
entertain the reason to believe that he had abetted or conspired for
the commission of the offence and has submitted or filed a report
before the relevant authority or the Court. This last limb may
require a little more demystification. The person, who comes to
acquire the management and control of the corporate person,
must not be a person who has abetted or conspired for the
commission of the offence committed by the corporate debtor
prior to the commencement of the CIRP. Therefore, abetting or
conspiracy by the person, who acquires management and control
of the corporate debtor, under a resolution plan, which is
approved under Section 31 of the Code and the filing of the
report, would remove the protective umbrella or immunity
erected by Section 32-A in regard to an offence committed by the
corporate debtor before the commencement of the CIRP. To make
it even more clear, if either of the conditions, namely, abetting or
conspiring followed by the report, which have been mentioned as
aforesaid, are present, then, the liability of the corporate debtor,
for an offence committed prior to the commencement of the CIRP,
will remain unaffected.
326. We are of the clear view that no case whatsoever is made out
to seek invalidation of Section 32-A. The boundaries of this
Court's jurisdiction are clear. The wisdom of the legislation is
not open to judicial review. Having regard to the object of the
Code, the experience of the working of the Code, the interests of
all stakeholders including most importantly the imperative need
to attract resolution applicants who would not shy away from
offering reasonable and fair value as part of the resolution plan if
the legislature thought that immunity be granted to the corporate
debtor as also its property, it hardly furnishes a ground for this
Court to interfere. The provision is carefully thought out. It is
Page 16
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
not as if the wrongdoers are allowed to get away. They remain
liable. The extinguishment of the criminal liability of the
corporate debtor is apparently important to the new management
to make a clean break with the past and start on a clean slate. We
must also not overlook the principle that the impugned provision
is part of an economic measure. The reverence courts justifiably
hold such laws in cannot but be applicable in the instant case as
well. The provision deals with reference to offences committed
prior to the commencement of the CIRP. With the admission of
the application the management of the corporate debtor passes
into the hands of the interim resolution professional and
thereafter into the hands of the resolution professional subject
undoubtedly to the control by the Committee of Creditors. As far
as protection afforded to the property is concerned there is clearly
a rationale behind it. Having regard to the object of the statute
we hardly see any manifest arbitrariness in the provision.”
12. In another Apex Court case of P. Mohanraj v. Shah Bros. Ispat (P)
6
Ltd. , the adjudication that there cannot be continuance of debt when
there is a resolution by a new management.
“42. …If the language of the second proviso is taken to interpret
the language of Section 32-A(1) in that the “offence committed”
under Section 32-A(1) would not include offences based upon
complaints under Section 2(d) CrPC, the width of the language
would be cut down and the object of Section 32-A(1) would not
be achieved as all prosecutions emanating from private
complaints would be excluded. Obviously, Section 32-A(1)
cannot be read in this fashion and clearly incudes the liability of
the corporate debtor for all offences committed prior to the
commencement of the corporate insolvency resolution process.
Doubtless, a Section 138 proceeding would be included, and
would, after the moratorium period comes to an end with a
resolution plan by a new management being approved by the
adjudicating authority, cease to be an offence qua the corporate
debtor.
6
(2021) 6 SCC 258
Page 17
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
43. … If, therefore, the expression “prosecution” in the first
proviso of Section 32-A(1) refers to criminal proceedings
properly so-called either through the medium of a first
information report or complaint filed by an investigating
authority or complaint and not to quasi-criminal proceedings
that are instituted under Sections 138/141 of the Negotiable
Instruments Act against the corporate debtor, the object of
Section 14(1) IBC gets subserved, as does the object of Section
32-A, which does away with criminal prosecutions in all cases
against the corporate debtor, thus absolving the corporate debtor
from the same after a new management comes in.”
13. In the present case, the allegations forming the subject matter of the
impugned complaint under Section 15 of the Environment (Protection)
Act, 1986 admittedly relate to the period between the years 2002 and
2009, which is substantially prior to the initiation of the Corporate
Insolvency Resolution Process and the subsequent approval of the
Resolution Plan in respect of the Petitioner Company. Thus, the alleged
contraventions are attributable to the erstwhile management and
pertain to a period anterior to the change in management and control
brought about pursuant to the CIRP. In such circumstances,
continuation of the present criminal proceeding against the corporate
debtor would run contrary to the express mandate and legislative
object underlying Section 32A of the Insolvency and Bankruptcy Code,
2016.
14. Once the statutory conditions contemplated under the said provision
stand satisfied, the corporate debtor becomes entitled to immunity
from prosecution in respect of offences allegedly committed prior to
commencement of the CIRP. Consequently, this Court is of the
Page 18
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
considered view that continuation of the impugned proceeding against
the Petitioner Company in relation to such pre-CIRP allegations is
legally unsustainable and barred by operation of law.
7
15. In the Supreme Court case of T. Barai v. Henry Ah Hoe , it was held
that there are principles of sound reason and common sense to be taken
into consideration.
” 22. It is only retroactive criminal legislation that is prohibited
under Article 20(1). The prohibition contained in Article 20(1) is
that no person shall be convicted of any offence except for
violation of a law in force at the time of the commission of the act
charged as an offence prohibits nor shall he be subjected to a
penalty greater than that which might have been inflicted under
the law in force at the time of the commission of the offence. It is
quite clear that insofar as the Central Amendment Act creates
new offences or enhances punishment for a particular type of
offence no person can be convicted by such ex post facto law nor
can the enhanced punishment prescribed by the amendment be
applicable. But insofar as the Central Amendment Act reduces
the punishment for an offence punishable under Section 16(1)(a)
of the Act, there is no reason why the accused should not have the
benefit of such reduced punishment. The rule of beneficial
construction requires that even ex post facto law of such a type
should be applied to mitigate the rigour of the law. The principle
is based both on sound reason and common sense.
24. In Rattan Lal v. State of Punjab [AIR 1965 SC 444: (1964) 7
SCR 676: (1965) 1 SCJ 779: (1965) 1 Cri LJ 360] , the question
that fell for consideration was whether an appellate court can
extend the benefit of Probation of Offenders Act, 1958 which had
come into force after the accused had been convicted of a criminal
offence. The Court by majority of 2: 1 answered the question in
the affirmative. Subba Rao, J. who delivered a majority opinion,
concluded that in considering the question, the rule of beneficial
construction required that even ex post facto law of the type
7
(1983) 1 SCC 177
Page 19
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
involved in that case should be applied to reduce the
punishment.”
16. This Court is of the considered view that, subsequent to the approval
of the Resolution Plan, the erstwhile Board of Directors of the Petitioner
Company ceased to hold office and the management and affairs of the
Company stood vested in a newly constituted Board of Directors under
the control of the successful Resolution Applicant. The materials
available on record unequivocally demonstrate that the Petitioner
Company has undergone a successful Corporate Insolvency Resolution
Process in accordance with the provisions of the Insolvency and
Bankruptcy Code, 2016, resulting in a complete and substantive change
in its control, management and ownership structure.
17. The corporate entity is now being managed by a new dispensation
entirely distinct and independent from the erstwhile management
against whom the allegations pertain. Such transformation in the
corporate structure and management assumes considerable
significance while examining the applicability and effect of the
statutory protection contemplated under Section 32A of the Insolvency
and Bankruptcy Code, 2016.
18. In the aforesaid circumstances, it becomes manifestly clear that any
liability arising out of the allegations made in the impugned complaint,
which admittedly pertain to the period prior to commencement of the
Corporate Insolvency Resolution Process, cannot be fastened upon the
present management of the Petitioner Company. Such liabilities, being
attributable to the acts and omissions of the erstwhile management,
stand extinguished in the eye of law by virtue of the statutory
Page 20
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
framework and protective mechanism engrafted under the Insolvency
and Bankruptcy Code, 2016, particularly Section 32A thereof.
19. Consequently, continuation of the present criminal proceeding against
the Petitioner Company, despite the complete change in management
and successful implementation of the Resolution Plan, would be
contrary to the legislative mandate and object underlying the
Insolvency and Bankruptcy Code, 2016.
20.
It is further brought to the notice of this Court that, during the
pendency of the present criminal proceeding, the Parliament enacted
the Jan Vishwas (Amendment of Provisions) Act, 2023 with the avowed
object of decriminalizing certain minor and technical offences,
rationalizing penal provisions, and promoting ease of doing business.
21. It is submitted that, pursuant to the aforesaid legislative reform, the
offences punishable under Section 15 of the Environment (Protection)
Act, 1986 have also been decriminalized with effect from 01.04.2024,
whereby the penal consequences involving imprisonment have been
substituted with a regime of civil penalties and monetary sanctions.
The said legislative development assumes considerable significance
while examining the sustainability and continuance of the present
criminal prosecution.
22. In view of the subsequent legislative change brought about by the Jan
Vishwas (Amendment of Provisions) Act, 2023, coupled with the object
and intent underlying such decriminalization, this Court is of the
considered opinion that continuation of the present criminal
Page 21
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 27-May-2026 15:45:01
proceeding under Section 15 of the Environment (Protection) Act, 1986
would no longer subserve the ends of justice.
23. Once the legislature itself has consciously altered the nature of the
contravention by removing the element of criminality and substituting
the penal consequences with a civil regulatory framework, continuance
of the pending criminal prosecution for such alleged infractions would
be rendered legally unsustainable. Accordingly, having regard to the
changed statutory regime, as well as the facts and circumstances of the
present case, this Court is of the considered view that the impugned
proceeding is liable to be quashed.
ONCLUSION
V. C :
24. In view of the foregoing analysis, and upon an anxious, careful, and
comprehensive consideration of the material facts, records, and
circumstances attendant to the present case, this Court is of the
considered opinion that the allegations levelled against the Petitioner,
even if taken at their face value and accepted in their entirety, do not
warrant continuation of the criminal proceedings, and the same are
liable to be quashed in the interest of justice.
25. Accordingly, the CRLMC stands allowed.
26. Interim order, if any, passed earlier stands vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
nd
Dated 22 May, 2026
Page 22