2026 Supreme(Online)(Bom) 3927

HIGH COURT OF BOMBAY
Manish Pitale, Shreeram V. Shirsat, JJ
Dwarka Iron Industries Pvt. Ltd. – Appellant
Versus
Competent Authority – Respondent
WRIT PETITION NO. 5272 OF 2025

Upon approval of a resolution plan involving a change in management, a corporate debtor and its assets gain statutory immunity from past criminal liability and property attachment, ensuring the entity operates on a clean slate regarding legal obligations existing before the commencement of the insolvency process.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 32A - Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 - Sections 4 to 7 - Corporate Insolvency Resolution Process - Statutory Immunity - Attachment of property - Immunity from prosecution and seizure upon approval of resolution plan - The immunity granted to a corporate debtor upon the approval of a resolution plan prevents further prosecution and protects the corporate debtor's property from attachment, seizure, or confiscation in relation to offences committed prior to the commencement of the resolution process. (Paras 9, 10, 17, 19).

(B) Clean Slate Doctrine - Upon approval of the resolution plan, the corporate debtor starts on a clean slate, and any prior attachment of property, which had not attained finality through a court order, ceases to be enforceable. (Paras 10, 21, 26).

(C) Jurisdiction - The High Court has the authority to entertain a writ petition to resolve substantial questions of law regarding the interplay between competing statutory provisions, even where alternative remedies exist, provided the issue is purely legal and does not require adjudication on disputed facts. (Paras 12, 27).

Facts of the case:
A property belonging to the corporate debtor was attached under a notification issued pursuant to state legislation concerning the protection of depositors. Subsequent to this attachment, insolvency proceedings were initiated against the corporate debtor. A resolution plan was submitted and approved, proposing a change in management and control. The current owner of the corporate debtor sought to quash the attachment, contending that the immunity provisions of the bankruptcy code superseded the attachment proceedings initiated under the state legislation. The state authorities argued that the property vested with them upon the issuance of the notification and that the resolution plan did not cover the attached assets.

Findings of Court:
The court held that the vesting of property under the state law remains inchoate until a final order is passed by the designated court. Since the corporate debtor was not an accused in the criminal proceedings and the resolution plan was duly approved by the adjudicating authority, the corporate debtor is entitled to the full protection of the immunity granted under the bankruptcy law. The court concluded that the attachment order cannot survive the approval of the resolution plan.

Issues: The main issues addressed were whether a corporate debtor is entitled to immunity from property attachment under state law following the approval of a resolution plan under the insolvency code, and whether the writ jurisdiction of the court is appropriate for adjudicating the legal effect of such statutory immunity.

Ratio Decidendi: Statutory provisions granting immunity to a corporate debtor upon the approval of a resolution plan contain a non-obstante clause that overrides other laws. This immunity includes the protection of assets from attachment in relation to past offences, provided there has been a change in management and control. Since the procedural requirements for the final vesting of the attached property had not been satisfied, the statutory immunity prevails, requiring the release of the property to ensure the corporate debtor proceeds on a clean slate.

Result: Petition allowed.