Case Note & Summary
This appeal was filed by Mr. Ammeet Kumar Agarwal, the Suspended Director of Supreme Transport Organisation Private Limited, challenging an order from the National Company Law Tribunal, Mumbai, which directed him to contribute a substantial sum to the Corporate Debtor's account due to unauthorized withdrawals during the moratorium period of the Corporate Insolvency Resolution Process (CIRP). The Corporate Debtor had defaulted on loans from Axis Bank, leading to the initiation of CIRP on 08.09.2023. The Appellant had previously contested the admission of the insolvency petition but failed to secure the necessary deposit as ordered by the Appellate Tribunal. The Resolution Professional alleged that significant funds were withdrawn from the Corporate Debtor's account during the moratorium, prompting the application under Sections 66, 74, and 60(5) of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority found the Appellant and others liable for these withdrawals and directed prosecution under Section 74. The Appellant contended that the Tribunal exceeded its jurisdiction and failed to properly adjudicate the allegations of fraudulent trading under Section 66. The Respondent argued that the application was not limited to Section 66 and that the Adjudicating Authority acted within its jurisdiction. The Tribunal ultimately upheld the findings of the Adjudicating Authority, emphasizing that the violation of the moratorium was adequately established and that the direction for contribution was justified based on the breach of statutory provisions.
Headnote
A) Insolvency Law - Moratorium Violation - Liability for Unauthorized Withdrawals - Insolvency and Bankruptcy Code, 2016, Sections 14, 60(5) - The Adjudicating Authority directed the Appellant to contribute Rs. 8,05,11,748/- to the Corporate Debtor's account for unauthorized withdrawals during the moratorium, establishing liability under Section 14 without determining fraudulent intent under Section 66. Held that the direction was justified based on the breach of moratorium (Paras 34-36).
Issue of Consideration
Whether the Adjudicating Authority exceeded its jurisdiction by directing prosecution under Section 74 of the Insolvency and Bankruptcy Code, 2016 and whether the findings regarding unauthorized withdrawals during the moratorium were justified.
Final Decision
The Tribunal upheld the order of the Adjudicating Authority, confirming the direction for the Appellant to contribute Rs. 8,05,11,748/- to the Corporate Debtor's account based on the established violation of the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Corporate Insolvency Resolution Process
- moratorium violation
- fraudulent trading
- burden of proof
