Authority: National Company Law Appellate Tribunal Principal Bench, New Delhi (Justice Yogesh Khanna - Officiating Chairperson and Indevar Pandey - Member (Technical))

Order Date: 3rd August, 2026

Case Overview

This appeal was filed by Mr. Ammeet Kumar Agarwal, Suspended Director of Supreme Transport Organisation Private Limited (Corporate Debtor), challenging the order dated 19.12.2024 passed by the National Company Law Tribunal, Mumbai Bench in I.A. No. 3653 of 2024. The application was filed by Ssarvi Resolution Services LLP through Mr. Prashant Jain, the Resolution Professional of the Corporate Debtor, under Sections 66, 74 and 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Section 213 of the Companies Act, 2013.

The Corporate Debtor had availed credit facilities from Axis Bank Ltd and defaulted in repayment, leading to initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor on 08.09.2023. During the CIRP period, the Resolution Professional alleged that an aggregate sum of Rs. 8,05,11,748/- had been wrongfully withdrawn from the Corporate Debtor's account during the moratorium period under Section 14 of the Code.

The key allegations included that the suspended directors continued to operate the business, utilized funds from the Corporate Debtor's bank accounts, and sold assets (specifically the Panvel Property mortgaged to Axis Bank) during the moratorium period on 02.11.2023, despite the NCLAT having specifically declined permission to sell any property of the Corporate Debtor in its order dated 16.10.2023.

The Appellant contended that the payments were made through cheques drawn prior to the insolvency commencement date towards legitimate liabilities including employee salaries and creditor dues in the ordinary course of business. He argued that the Adjudicating Authority erred in granting relief under Section 14 without first adjudicating whether the ingredients of Section 66 (fraudulent trading) were satisfied.

Final Outcome

The NCLAT dismissed the appeal and upheld the NCLT's order directing the Appellant and other suspended directors to jointly and severally contribute Rs. 8,05,11,748/- to the account of the Corporate Debtor within thirty days. The Appellate Tribunal found that:

1. The application was properly filed under multiple provisions including Sections 66, 74 and 60(5) of the Code, not just Section 66

2. The Adjudicating Authority consciously refrained from adjudicating Section 66 and properly exercised jurisdiction under Sections 14 and 60(5) for violation of moratorium

3. The Appellant sold the Panvel Property during moratorium despite specific prohibition by NCLAT

4. The Appellant failed to substantiate his defense with documentary evidence regarding pre-CIRP cheques

5. The direction for prosecution under Section 74 became infructuous as this section was omitted from the IBC via Amendment Act, 2026 effective from 26 May 2026

The Tribunal emphasized that the direction for restoration of funds was intended to protect and preserve the insolvency estate, which is qualitatively different from finding liability under Section 66 for fraudulent trading.

Topics: Insolvency Proceedings, Moratorium Violation, Director Liability