Section 32A explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 32A protects the corporate debtor, and in some cases its property, from prosecution for offences committed before the corporate insolvency resolution process began, but only where the plan changes management or control to a person who is not tied to the old management or to the offence. This article reads it as per the IBBI consolidated text of the Code amended up to 12 August 2021. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 does not amend section 32A. A bidder or lender checking a target's history before relying on it can ask for financial and legal due diligence.
From the date the Adjudicating Authority approves the plan under section 31, the corporate debtor's liability for an earlier offence ceases and it cannot be prosecuted, if the plan results in a change in management or control to a person who was not a promoter, in management or control, a related party of such a person, or someone the investigating authority has reason to believe abetted or conspired. Property is also protected on similar conditions. Individuals involved in the offence remain liable. The corporate debtor must still cooperate with investigators.
Sub-section (1): the corporate debtor's liability ceases
Section 32A(1) begins "Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force". It says that "the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31", provided the resolution plan "results in the change in the management or control of the corporate debtor to a person who was not" one of the following.
| Limb | Person to whom control passes must not be |
|---|---|
| (a) | a promoter or in the management or control of the corporate debtor or a related party of such a person |
| (b) | a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court |
"Related party" is defined in section 5(24); see our article on that clause. Two conditions must therefore both be met: the plan must be approved under section 31 (see the live post on section 31), and it must change management or control to a person outside both limbs.
The two provisos
- Pending prosecutions. "If a prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor, it shall stand discharged from the date of approval of the resolution plan subject to requirements of this sub-section having fulfilled".
- People remain liable. "Every person who was a 'designated partner' as defined in clause (j) of section 2 of the Limited Liability Partnership Act, 2008 or an 'officer who is in default', as defined in clause (60) of section 2 of the Companies Act, 2013, or was in any manner in-charge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section." Check the current law for the corresponding provisions of those two Acts.
So the protection belongs to the corporate debtor, not to the persons named in the second proviso.
Example. Before its process, Dalal Chemicals Private Limited is alleged to have committed a regulatory offence. A resolution plan from an unrelated buyer, Aarav Holdings, is approved under section 31 and Aarav takes control. Aarav is not a promoter of Dalal Chemicals, not a related party of one, and no investigating authority has reported it as an abettor. The corporate debtor's liability for the earlier offence ceases from the approval date. A former director named in the investigating authority's report remains liable to be prosecuted.
A buyer or lender relying on this protection should check each limb against the facts, including the bidder's links and the investigation record, before a plan is signed.
Sub-section (2): property
Section 32A(2): "No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority under section 31, which results in the change in control of the corporate debtor to a person, or sale of liquidation assets under the provisions of Chapter III of Part II of this Code to a person, who was not" a promoter, in management or control, or related party of such a person, or a person the investigating authority reasonably believes abetted or conspired (limbs (i) and (ii), which mirror (a) and (b)).
Notice that this sub-section extends to a sale of liquidation assets under Chapter III. The Explanation clarifies two things.
- "an action against the property of the corporate debtor in relation to an offence shall include the attachment, seizure, retention or confiscation of such property under such law as may be applicable to the corporate debtor".
- "nothing in this sub-section shall be construed to bar an action against the property of any person, other than the corporate debtor or a person who has acquired such property through corporate insolvency resolution process or liquidation process under this Code and fulfils the requirements specified in this section, against whom such an action may be taken under such law as may be applicable."
Sub-section (3): cooperation
"Subject to the provisions contained in sub-sections (1) and (2), and notwithstanding the immunity given in this section, the corporate debtor and any person, who may be required to provide assistance under such law as may be applicable to such corporate debtor or person, shall extend all assistance and co-operation to any authority investigating an offence committed prior to the commencement of the corporate insolvency resolution process." The immunity therefore does not stop an investigation; the duty to assist continues.
What the section does not say
The section does not list the offences it covers, name any other law's offence, or say what happens if a later finding shows the new owner was within limb (a) or (b). It speaks only of the report or complaint submitted or filed by the investigating authority. For limits on which persons may submit plans, see the live post on section 29A.
The Amendment Act, 2026 (No. 6 of 2026) does not amend section 32A, although it amends neighbouring sections including section 31. The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether those changes have been notified. Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help assessing a section 32A position?
Whether a bidder falls within limb (a) or (b), and whether property is "covered under a resolution plan", turn on documents and dates. Our financial and legal due diligence team can review the bidder, the plan and the record with you.
Key takeaways
- The corporate debtor's liability for pre-process offences ceases, and it cannot be prosecuted, from the approval of the plan under section 31, if control changes to a person outside limbs (a) and (b).
- Pending prosecutions against the corporate debtor stand discharged.
- Designated partners, officers in default and others involved remain liable.
- Property covered under the plan, or sold in liquidation under Chapter III, is protected from action on similar conditions.
- The duty to assist investigating authorities continues.
Read next
- Section 30: submission of the resolution plan
- Section 34: appointment of the liquidator
- Section 5: related party and resolution applicant
- Resolution plan: contents, approval and implementation
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.