Approval of resolution plan under Section 32A IBC extinguishes prior MPID Act property attachments.

The Petitioner is the Successful Resolution Applicant (SRA) for the Corporate Debtor (CD), M/s. Abhirama Steels Limited. In 2008, the CD purchased the subject immovable property and subsequently mortgaged it to Indian Bank

On 19.03.2016, the State of Maharashtra attached the property under the MPID Act following an FIR against a different entity, Birla Power Solutions Ltd.; notably, the CD was neither a "financial establishment" nor an accused in that case

Following insolvency proceedings initiated in 2021, the NCLT Hyderabad approved a resolution plan on 17.09.2024, which the Petitioner implemented by settling bank dues

The Petitioner sought quashing of the MPID attachment, arguing immunity under Section 32A of the Insolvency and Bankruptcy Code (IBC). The State opposed this, claiming the property had already "vested" in the State upon attachment

1. Whether the liability of a corporate debtor and the attachment of its property cease upon the approval of a resolution plan under the IBC, despite proceedings under the MPID Act.

2. Whether an attachment order under Section 4 of the MPID Act results in absolute vesting of the property in the State, thereby excluded it from the CIRP.

The Court primarily applied Section 32A of the IBC, which provides that the liability of a corporate debtor for prior offences ceases, and no action (including attachment or seizure) shall be taken against its property once a resolution plan is approved and management changes hands

The Court relied on Manish Kumar v. Union of India, which established that Section 32A offers a "protective umbrella" to ensure the CD starts on a "clean slate"

Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction, which affirmed the clean slate doctrine

It also considered Sections 4 and 7 of the MPID Act, distinguishing between an interim attachment and an absolute vesting order

The Court reasoned that Section 32A(2) of the IBC contains a non-obstante clause that explicitly prohibits taking or continuing any action against the property of a CD covered under an approved resolution plan

The Court rejected the State's argument that the property had "vested" in the Competent Authority upon attachment under Section 4 of the MPID Act. It clarified that under the MPID Act's scheme, vesting under Section 4(2) is merely "inchoate" and "pending further orders," only reaching finality when the Designated Court makes the attachment absolute under Section 7

Since no Section 7 order was passed, the property remained the CD's asset and was subject to the IBC. Furthermore, since the CD was never an accused in the MPID FIR and the resolution plan changed the management to a clean third party, all conditions for immunity under Section 32A were satisfied

The Court allowed the Writ Petition, quashed the notification dated 19.03.2016 regarding the subject property, and directed the Registry to return the bank guarantee of Rs. 74.24 lakhs previously furnished by the Petitioner