[Jan] section 32A of Insolvency and Bankruptcy Code (IBC).

Question 1

What is Section 32A?

Answer 1

Section 32A provides that Corporate Debtor shall not be prosecuted for an offence committed prior to commencement of Corporate Insolvency Resolution Process (CIRP) once Resolution Plan has been approved by Adjudicating Authority (AA).

The section further provides that no action shall be taken against property of Corporate Debtor covered under such a Resolution Plan.

Question 2

SC judgement?

Answer 2

It was important for the IBC to attract bidders who would offer reasonable and fair value for the corporate debtor to ensure the timely completion of corporate insolvency resolution process (CIRP).

Such bidders, however, must also be granted protection from any misdeeds of the past since they had nothing to do with it.

Question 3

What’s the issue then?

Answer 3

32A continues to hold liable every person who was a ‘designated partner’ or an ‘officer who is in default’ or was in any manner in-charge of, or responsible to Corporate Debtor for conduct of its business or associated in any manner and who was directly or indirectly involved in commission of such offence.