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2023 (1) TMI 921 - TRIPURA HIGH COURTFraudulent/wrongful trading - Constitutional Validity of Section 66(1) of the Insolvency and Bankruptcy Code, 2016 - defrauding the gullible creditors to siphon off public money - Jurisdiction in course of winding up of company against the persons responsible for fraudulent conduct of the business of the company - HELD THAT:- As evident from the precedence Section 339 or Companies Act, 2013 and pari material, the provisions of section 542 of Companies Act, 1956 was aimed at conferring jurisdiction in the course of winding up of company to proceed against the persons responsible for fraudulent conduct of the business of the company. Both these provisions were aimed at making such persons personally liable for such fraudulent trading to recouping losses incurred thereby and to relief the company of the liabilities incurred by fraudulent trading. That Section 66(1) also directed towards making such persons personally liable for such fraudulent trading to recouping losses incurred thereby and to provide that the NCLT can pass order holding such persons liable to make such contributions to the assets of the corporate debtor as it may deem fit. No power has been conferred on NCLT to pass such orders against other organizations/legal entities (other than corporate debtors) with whom such business was carried out against any person responsible in such other organizations/legal entities for carrying on business with corporate debtor. Regulation certified “preferential or other transaction” All the insolvency and bankruptcy Board of India (Insolvency resolution process for corporate persons) regulations 2016 stipulates strict time limits for formation of requisite action by the resolution professional by any transaction to be hit Sections 43, 45, 50 and 66 for making determination thereof under the intimation to the Board and also for applying to NCLT for appropriate relief - IBC contains adequate measures to make appropriate application by liquidator or resolution professional or by creditor or member or partner of corporate debtor for avoiding certain transaction under appropriate provisions of sections 43, 45, 47, and 50. It is clear from the language of section 66(1) that unlike application provided under section 43, section 45, section 50 and section 47 or avoiding of such transaction and dehors these provisions. An application contemplated exclusively under section 66(1) is not made for avoidance of any transaction. Even if fraudulent but to fix the liabilities of the persons reasonable for conducting the business of corporate debtor which is fraudulent or wrongful, that too an application made by resolution professional during the CIRP or a liquidation process. In SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT] that the primary focus of the legislature to ensure revival and continuation of corporate debtor by protecting it from its own management and from a corporate by liquidation. Even its long title does not in any manner refer to liquidation which is only availed of as a last resort. If there is either no resolution plan or the resolution plan submitted are not upto the mark. The IBC is a beneficiary legislature which puts the corporate debtor back on its feet not being a mere recovery legislature for creditors. There is no arbitrariness, matchless manifest arbitrariness in section 66(1) of IBC to entertain the instant petition to declare the said provisions as ultra vires of Article 14 and unconstitutional as alleged or otherwise. There is no merit in the submission of the petitioner and the prayers made cannot be considered. Petition dismissed.
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