Case Details

Case Name: IA (IBC) 2354/2024 in CP (IB) 497/7/HDB/2018

Parties: Atlantic Spinning and Weaving Mills Limited (Applicant) vs. Garg Industries, Lakshmi Fibrelok Pvt. Ltd., Sansar Investment and Finance Company Pvt. Ltd., Meenakshi Jain, Rhythm Jain, Sachin Saigal, Special Land Acquisition Officer & Competent Authority, NHAI (Respondents)

Court/Authority: National Company Law Tribunal, Hyderabad Bench - I

Date of Order: 21 May 2026

Period of Violation: October 2018 onwards (during CIRP/Liquidation proceedings)

Parties Involved

Petitioner: Atlantic Spinning and Weaving Mills Limited represented by its Liquidator, Ms. Sujata Chattopadhyay

Respondents:

  • M/s Garg Industries (R-1)
  • Lakshmi Fibrelok Pvt. Ltd. (R-2)
  • Sansar Investment and Finance Company Pvt. Ltd. (R-3)
  • Meenakshi Jain (R-4)
  • Rhythm Jain (R-5)
  • Sachin Saigal (R-6)
  • The Special Land Acquisition Officer & Competent Authority, NHAI (R-7)

Issues / Allegations / Violations

The Applicant/Liquidator alleged that Respondents 1-6 illegally withdrew and utilized compensation amounts totaling Rs. 11,14,86,115/- from the Corporate Debtor's bank account during the subsistence of moratorium under Section 14 of IBC, 2016, without authorization from the Resolution Professional or leave of the Adjudicating Authority. The withdrawals occurred after NHAI deposited land acquisition compensation of Rs. 8,25,99,062/- into the Corporate Debtor's account on 15.10.2018.

Findings & Observations

The Tribunal found that:

  • The Corporate Debtor was admitted into CIRP on 09.10.2018 and ordered for liquidation on 09.01.2020
  • Respondents admitted to withdrawing specific amounts from the Corporate Debtor's account during CIRP/liquidation proceedings
  • R-1 withdrew and utilized Rs. 2,06,99,309/-
  • R-2 withdrew and utilized Rs. 25,00,000/-
  • R-3 withdrew and utilized Rs. 5,78,50,750/-
  • R-4 withdrew and utilized Rs. 8,00,000/-
  • R-6 received and utilized Rs. 7,42,010/-
  • No authorization was obtained from the Resolution Professional or leave from the Tribunal for these withdrawals
  • The actions violated the moratorium provisions under Section 14 of IBC, 2016
  • The Tribunal refrained from adjudicating matters already decided in IA 452/2022 which are under appeal before NCLAT

Penalties / Settlements / Directions

The Tribunal directed:

  • R-1 to contribute Rs. 2,06,99,309/- plus interest at 18% from 15.10.2018 till actual payment
  • R-2 to contribute Rs. 25,00,000/- plus interest at 18% from 15.10.2018 till actual payment
  • R-3 to contribute Rs. 5,78,50,750/- plus interest at 18% from 15.10.2018 till actual payment
  • R-4 to contribute Rs. 8,00,000/- plus interest at 18% from 15.10.2018 till actual payment
  • R-6 to contribute Rs. 7,42,010/- plus interest at 18% from 15.10.2018 till actual payment
  • All amounts to be paid into the liquidation account of the Corporate Debtor
  • No directions were issued regarding R-5 and R-7 as those matters are sub-judice before NCLAT

Final Ruling & Enforcement

The application was allowed and disposed of. The respondents were found liable to remit the withdrawn amounts back to the Corporate Debtor's liquidation estate with interest. The order is immediately enforceable except for matters under appeal before NCLAT.