Mumbai: The special PMLA court has discharged a company namely Vadraj Cement Limited (VCL), an accused in IL & FS money laundering case. The court while discharging the company said the corporate debtor cannot be prosecuted.
Liability of Past Management
The court, while discharging the firm clarified that said, the erstwhile officer or directors of the corporate debtor who was/were 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 nany manner shall continue to be prosecuted and punished for the offence committed by the corporate debtor.
The company Vadraj Cement had allegedly obtained a loan of over Rs 900 crores from IL and FS and was declared as NPA. The company was booked by the Economic Offence Wing and also by the enforcement directorate for money laundering. The company however, Nuvoco Vistas Corporation Limited acquired VCL and has also deposited Rs 1800 crores in an escrow account.
Defense Argument
The company’s senior counsel Pranav Badheka contended that a new management has now taken over. Further the Board of Directors of the VCL has also been reconstituted and there is now complete change in control of the company and there is a clean break from the erstwhile Management of VCL. Hence it was prayed that no prosecution or legal proceeding can be continued or initiated against the Corporate Debtor for past offences. This immunity is absolute and binding on all authorities, including under special statutes like PMLA.
The court accepted the arguments that discharged the company, observing that, “The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a ‘clean slate’.”
However, the court further said that, “The immunity is granted only to the corporate debtor and not to the persons who were in charge and responsible for the affairs of the company at the relevant time of the offence. Any person who was in the management or control of the corporate debtor or was in any manner in charge of or responsible to the corporate debtor for the conduct of its business.”
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