Delhi High Court Quashes PMLA Proceedings Against BPSL In ₹47,000 Crore Bank Fraud Case Due To Successful CIRP

The Delhi High Court recently quashed criminal proceedings against Bhushan Power & Steel Limited in relation to a complaint filed by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 in view of Section 32A of the Insolvency and Bankruptcy Code. “A plain reading of the above provision would reveal that there is no dispute over the legal position that once a resolution plan has been approved by the adjudicating authority under Section 31 of IBC and the conditions specified in Section 32A of the IBC are fulfilled, the Corporate Debtor shall not be prosecuted for an offence committed prior to the commencement of the CIRP” the Court said. Considering the facts of the case, the High Court stated that in view of BPSL undergoing a successful resolution process under Section 31 of IBC, it cannot be prosecuted for offences committed prior to the commencement of the CIRP as per Section 32A of IBC. “…it is clarified that the role of the Corporate Debtor, as elaborately stated in the prosecution complaint filed before the Special Court for PMLA cases under the PMLA, will necessarily have to be examined in the trial of the erstwhile promoters/directors of the Petitioner Company as it relates to the commission of the offence by the Petitioner Company in its earlier avatar as it was under the erstwhile management, when the offence was committed, more so when there are allegations under Section 70 of the PMLA.” In view of the above, the Court quashed the criminal proceedings against BPSL under the PMLA.