The National Company Law Appellate Tribunal in New Delhi ...

NCLAT upholds NCLT order u/s 66 of IBC, 2016 for fraudulent transactions reducing liability towards Corporate Debtor. Appeal dismissed.

Case Laws     Insolvency and Bankruptcy

May 22, 2024

The National Company Law Appellate Tribunal in New Delhi addressed the maintainability of proceedings u/s 66 of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional failed to provide a clear opinion as required by Regulation 35A, leading to the filing of the application u/s 66. The Tribunal held that action can be taken against any person involved in fraudulent transactions to recover amounts for the Corporate Debtor. In this case, the appellant was closely linked to the Corporate Debtor, reducing the outstanding amount and causing losses to creditors. Previous cases support the Tribunal's decision to uphold orders u/s 66. The Tribunal found no reason to interfere with the Adjudicating Authority's order, and the appeal was dismissed. The authority to recover from fraudulent transactions was affirmed by the Supreme Court in Phoenix Arc (P) Ltd. vs. Spade Financial Services Ltd.

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