Moratorium Doesn't Extinguish The Criminal Liability In Terms Of 32A When The Plan Is Not Approved.

The Delhi High Court on 17 March 2026 held that Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) only creates a temporary moratorium and does not extinguish criminal liability. Protection under Section 32A is available only after the approval of a resolution plan that brings about a qualifying change in management.

The Bench of Justice Chandrasekharan Sudha dismissed the plea of JAS Infrastructure and Power Ltd. seeking suspension of sentence in a coal block allocation case.

The Court noted:

“Coming to the case at hand, it is admitted that the resolution plan was not approved by the adjudicating authority. It must be remembered that the immunity is premised on various conditions being fulfilled, the foremost being, there must be a resolution plan and it must be approved…….(…)”

JAS Infrastructure and Power Ltd. had been convicted under Sections 420 and 120B IPC and sentenced to pay a fine of Rs. 50 lakh each. The company argued that it had entered insolvency in 2019 and been under liquidation since 2020, and that past criminal liability should not survive. It relied on Sections 14, 32A, and 33(5) of the IBC to contend that suspension of sentence was necessary for smooth liquidation and to attract prospective buyers.

The CBI opposed the plea, noting that the chargesheet was filed in 2014, before the insolvency proceedings, and submitted that Section 32A protection applies only when a resolution plan is approved and the corporate debtor comes under a new management unconnected with the previous management or the offence. No such plan existed in this case.

Agreeing with the CBI, the Court observed that Section 14 only suspends proceedings during the moratorium and Section 32A immunity is conditional. Since the company did not meet these conditions, and considering the seriousness of the offence, the Court refused to suspend the sentence.

Accordingly, the Delhi High Court dismissed the company's plea for suspension, leaving the conviction and fines intact.

Meanwhile, the main criminal appeal remains active, with the next hearing scheduled for 15 October 2026.