Amount duly payable to liquidator as assets proved to be fictitious/ fraudulent

Shibu Job Cheeran Vs Ashok Velamur Seshadri (NCLAT Chennai)

NCLAT Chennai held that as assets proved to be fictitious/ fraudulent and seems to have been created in books of accounts with an intent to defraud the creditors. Accordingly, amount duly payable to liquidator for distribution under section 53 of I&B Code, 2016.

Facts- A Corporate Insolvency Resolution Process was initiated by the Adjudicating Authority on an application filed by an Operational Creditor M/s Minsa Tech India Pvt. Ltd. u/s. 9 of the I & B Code, 2016. Subsequently, Archana Motors Pvt. Ltd., the Corporate Debtor was initiated for liquidation, by the Adjudicating Authority.

An Interlocutory Application was filed under Section 66 of the I & B Code, 2016 by the Liquidator of the Corporate Debtor.

Adjudicating Authority being satisfied of all facts and provisions of law, agreed to the prayers sought by the Liquidator declaring the entries of Rs. 21.37 crores shown in the Audited Financial Statement for the year 2018 as fraudulent transactions and the Appellants herein were held liable to pay this amount to the Liquidator/ Respondent herein for distribution under Section 53 of the I & B Code, 2016.

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