Authority: High Court of Karnataka, Bengaluru

Order Date: 17 October 2026

Case Overview

  • Petitioners: Biodiversity Conservation India Pvt. Ltd. (represented by Official Liquidator Amit Chandrakant Shah), BCIL ZED RIA Properties Ltd. and BCIL Red Earth Developers India Pvt. Ltd. (both represented by Managing Director Chandra Sekhar Hariharan).
  • Respondents: State of Karnataka (represented by SPP, High Court Building) and Mr. Akash Gupta (complainant).
  • FIR Details: Crime No.408/2017 registered at Halasur Police Station, alleging offences under Sections 406, 420 read with Section 34 of the IPC.
  • Allegations: Akash Gupta invested Rs 4.20 crore with the petitioners; they promised repayment of Rs 6.19 crore. Cheques issued for repayment were dishonoured, leading to accusations of cheating.
  • Petitioners' Arguments: Claim the complaint is false; civil arbitration A.A.No.373/2017 is pending; NCLT admitted the companies to CIRP on 09‑08‑2018 and approved resolution plans on 16‑07‑2019 (for BCIL ZED RIA) and 09‑08‑2019 (for BCIL Red Earth). Cite Section 32A of the Insolvency and Bankruptcy Code (IBC) as a bar to prosecution of the corporate debtor and its directors.
  • Respondents' Counter‑Argument: While the corporate debtor may be immune, the second proviso of Section 32A makes directors/officers personally liable; therefore petitioners Nos.2 and 3 cannot escape liability.

Legal Reasoning

  • The Court affirmed that under Section 32A(1) of the IBC, liability of a corporate debtor for offences committed before the commencement of the CIRP ceases, but the second proviso imposes personal liability on any "designated partner" or "officer who is in default" who was involved in the offence.
  • Relied on Manish Kumar v. Union of India (2021) 5 SCC 1, interpreting the scope of Section 32A.
  • Cited Delhi High Court judgment in Tata Steel BSL Ltd. v. Union of India (W.P.(Crl) 3037/2019), confirming that a resolution plan’s approval does not shield directors from prosecution under the second proviso.
  • Applied Apex Court decision Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Ltd. (2023) 10 SCC 545, which held that criminal proceedings under the Negotiable Instruments Act against a director are permissible during IBC proceedings.
  • Concluded that while the corporate debtor (Biodiversity Conservation India) enjoys immunity, the directors of BCIL ZED RIA Properties Ltd. and BCIL Red Earth Developers India Pvt. Ltd. remain liable under the second proviso of Section 32A.

Final Outcome

  • (i) Petition of Biodiversity Conservation India Pvt. Ltd. is allowed; the FIR registered in Crime No.408/2017 is quashed.
  • (ii) Petitions of BCIL ZED RIA Properties Ltd. and BCIL Red Earth Developers India Pvt. Ltd. are rejected; their directors continue to face criminal liability for the alleged cheating and cheque‑bounce offences.

Topics: Insolvency, Director Liability, Cheque Bounce