Orissa High Court Quashes Air Pollution Case Against Tata Steel Over Bhushan Steel's Pre-CIRP Offences

The Orissa High Court has quashed criminal proceedings against Tata Steel Limited (TSL) arising from alleged violations of the Air (Prevention and Control of Pollution) Act, 1981 by erstwhile Bhushan Steel Limited (BSL).

A coram of Justice Sibo Sankar Mishra was dealing with a petition filed by TSL under Section 482 of the Criminal Procedure Code seeking quashing of proceedings pending before the SDJM, Dhenkanal, as well as the order taking cognizance against the company.

The State Pollution Control Board, Odisha had instituted the complaint against erstwhile BSL and three of its officials, alleging violations under the Air Act.

During the pendency of the criminal proceedings, BSL underwent Corporate Insolvency Resolution Process under the IBC. TSL's resolution plan was approved by the Committee of Creditors with 99.80% voting share and subsequently approved by the National Company Law Tribunal.

Pursuant to the resolution plan, TSL acquired 72.65% of BSL's equity through its wholly-owned subsidiary, Bamnipal Steel Limited, resulting in a change in the management and control of the company. BSL was subsequently renamed Tata Steel BSL Limited.

TSL contended that the alleged offences were committed under BSL's erstwhile management, prior to the completion of CIRP and the change in management, and therefore it was entitled to statutory immunity under Section 32A of the Insolvency and Bankruptcy Code.

The Bench first examined the approved Resolution Plan, which provided that the new management would not incur civil or criminal liability for pre-resolution breaches of law, nor would the company's directors, key managerial personnel or officers be held liable for such violations.

The Court then examined Section 32-A(1) of the IBC and observed:

a Corporate Debtor would not be liable for any offence committed prior to the commencement of the CIRP and the corporate debtor would not be prosecuted if a resolution plan has been approved by the Adjudicating Authority.”

The Court noted that the NCLT had approved TSL's resolution plan and that TSL subsequently took over the company under the resolution plan. It therefore held that civil or criminal liability arising from acts or omissions attributable to erstwhile BSL could not be fastened upon TSL.

It further found that the Delhi High Court's decision in Tata Steel BSL Ltd. v. Union of India squarely covered the facts of the present case.

Accordingly, the Court quashed the pending criminal proceedings and the cognizance order insofar as it concerned TSL.

For Petitioner: Senior Advocate Ashok Parija

For Opposite Party: Advocate Bikram Pratap Das