{"id":77925,"date":"2021-01-22T17:07:30","date_gmt":"2021-01-22T11:37:30","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=77925"},"modified":"2021-01-25T15:40:58","modified_gmt":"2021-01-25T10:10:58","slug":"sc-ruling-on-section-32a-of-ibc","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/sc-ruling-on-section-32a-of-ibc\/","title":{"rendered":"SC ruling on Section 32A of IBC"},"content":{"rendered":"<p><span data-contrast=\"auto\">Section 32A was introduced in the IBC by the amendment act of March, 2020.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">By this section, government provided protection to successful bidders during corporate insolvency resolution process (CIRP). These bidders offer reasonable and fair value for the corporate debtor.\u00a0\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Why this Provision was introduced?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Since the implementation of IBC in 2016, insolvency resolution plan for many big companies could not be implemented. It was because of investigations by agencies like ED and SEBI.\u00a0\u00a0 <\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"15\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">For example,<\/span><\/b><span data-contrast=\"auto\">\u00a0In 2017 Bhushan Power and Steel with more than Rs. 47,000 crore\u00a0<\/span><span data-contrast=\"auto\">debt, entered\u00a0<\/span><span data-contrast=\"auto\">into insolvency proceeding. After a long bidding process, JSW Steel won the rights to take over Bhusan steel. However, ED jumped in and attached their assets worth Rs. 4,000\u00a0<\/span><span data-contrast=\"auto\">crores<\/span><span data-contrast=\"auto\"> for the fraud by the company\u2019s previous owner.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What was the case and ruling of Supreme Court on that?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Petitioners of the case argued that section 32A closes the door for individual investors to recover their claims from the new management. Thus, they are left with the only option of pursuing remedies under criminal law against the former management.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"15\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Supreme Court in its recent decision\u00a0<\/span><b><span data-contrast=\"auto\">upholding the validity of Section 32A of IBC. <\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"15\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Justice Joseph stated that<\/span><\/b><span data-contrast=\"auto\"> the purpose of the amendment was to <\/span><b><span data-contrast=\"auto\">enable a new and clean beginning for the new managemen<\/span><\/b><span data-contrast=\"auto\">t and a clean break from the company\u2019s past.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"15\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">Thus<\/span><b><span data-contrast=\"auto\">, new management cannot be prosecuted for an offence committed prior<\/span><\/b><span data-contrast=\"auto\">\u00a0to the commencement of the corporate insolvency resolution process.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"o\" data-font=\"&quot;Courier New&quot;\" data-listid=\"15\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span data-contrast=\"auto\">It will also be\u00a0<\/span><b><span data-contrast=\"auto\">immune from investigations<\/span><\/b><span data-contrast=\"auto\">\u00a0being conducted either by any investigating agencies ED or other statutory bodies such as SEBI. Immunity is granted only for the matters linked with prior management.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\u00b7\" data-font=\"Symbol\" data-listid=\"15\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">However, such immunity would\u00a0<\/span><b><span data-contrast=\"auto\">be applicable only if there are an approved resolution plan<\/span><\/b><span data-contrast=\"auto\">\u00a0and a change in the management control of the corporate debtor.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">This will provide the corporate bidders with confidence to proceed with confidence while bidding on disputed companies and their assets.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:257}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 32A was introduced in the IBC by the amendment act of March, 2020.\u00a0\u00a0 By this section, government provided protection to successful bidders during corporate insolvency resolution process (CIRP). These bidders offer reasonable and fair value for the corporate debtor.\u00a0\u00a0\u00a0\u00a0 Why this Provision was introduced?\u00a0 Since the implementation of IBC in 2016, insolvency resolution plan&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/sc-ruling-on-section-32a-of-ibc\/\">Continue reading <span class=\"screen-reader-text\">SC ruling on Section 32A of IBC<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":77938,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[1302],"class_list":["post-77925","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-9-pm-daily-articles","tag-eco_7","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/01\/SC-ruling-on-Section-32A-of-IBC.jpg?fit=1280%2C720&ssl=1","views":{"total":67,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/77925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=77925"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/77925\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/77938"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=77925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=77925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=77925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}