Case Law Details
Thomas George Vs 1.K. Easwara Pillai (NCLAT Chennai)
NCLAT Chennai held that there is no specified look back period for fraudulent trading under section 66 and hence losses caused to the Creditors are recovered in the event of the Liquidation and that the Directors who caused such losses are made liable to make good such losses.
Facts-
CIRP commenced against the ‘Corporate Debtor’ on 20.11.2020 and Mr. K. Easwara Pillai was appointed as the IRP. During the course of CIRP, while inspecting the factory of the Corporate Debtor, the Resolution Professional found irregular business activities in the factory and at the Registered Office of the Corporate Debtor. It was pleaded that as the ‘Corporate Debtor’ was dormant during 2015-2016, the Resolution Professional had prepared the annual Accounts of 2014-2015 with limited information. The Books of Accounts, records etc. were either destroyed or mutilated.
The Company failed to file the Statutory Accounts before the RoC from 2015 onwards. It is stated that all the movable and current assets were traded to M/s. Whispower Sales & Services Pvt. Ltd. and sold to settle the liabilities of the Corporate Debtor by cash mode, outside the Books of Accounts of the Corporate Debtor. It was pleaded that there were no workers and employers working under the pay role of the Corporate Debtor.
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