Fraudulent Acts During Insolvency Proceedings Under Section 71 Can Lead to Severe Penalties Including Jail and Fines.
Under Section 71 of the Insolvency and Bankruptcy Code, 2016, any individual who, after the insolvency commencement date, destroys, mutilates, alters, or falsifies any books, papers, or securities of a corporate debtor, or knowingly makes false or fraudulent entries with the intent to defraud, is subject to penalties. The penalties include imprisonment for a term of three to five years, a fine ranging from one lakh to one crore rupees, or both. This provision aims to deter fraudulent activities during insolvency resolution and liquidation processes.
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