The NCLAT has ruled that a ₹74.49 lakh transaction was fraudulent under insolvency law but rejected a Section 66 application due to procedural bars against non-management parties. This highlights the tribunal's rigorous stance on fraudulent transactions during insolvency.
NCLAT Deems ₹74.49 Lakh Transaction Fraudulent
The National Company Law Appellate Tribunal (NCLAT) has held that a transaction worth ₹74.49 lakh, related to a Master Lease Agreement post-insolvency, was fraudulent. However, the tribunal also dismissed the application under Section 66 of the Insolvency and Bankruptcy Code, indicating that recovery under this provision is barred against non-management parties.
The decision emphasizes the tribunal's commitment to addressing fraudulent transactions identified during the insolvency process, notwithstanding the procedural limitations imposed by the statutory framework. The bench noted that allowing such frauds to persist would undermine the integrity of the insolvency resolution process.
This ruling serves as a crucial reminder for practitioners dealing with insolvency to consider the implications of fraudulent transactions and to navigate the complexities of recovery mechanisms effectively. The tribunal has clearly stated that fraudulent activities uncovered during insolvency cannot be disregarded, thereby reinforcing the need for diligence in transactions prior to insolvency.
Citations
- NCLAT Case (2026) NCLAT
