Fraudulent trading and director personal liability: tribunal affirms unlimited recovery period under Section 66 and dismisses the appeal.

Fraudulent trading by directors and their personal liability to compensate creditors was upheld on the basis of the resolution professional's evidence that directors transferred company assets to an entity they controlled. The tribunal held that fraudulent transactions under Section 66 have no statutory look-back period, permitting recovery of assets and losses irrespective of time; the appellants' non-denial and failure to rebut RP material led to dismissal of the appeal and affirmation of director liability to make good creditor losses.

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Issues: (i) Whether the Adjudicating Authority was justified in holding under Section 66 of the Insolvency and Bankruptcy Code, 2016 that the impugned transactions were fraudulent, declaring the suspended directors personally liable to make good losses and directing production of documents; and whether any statutory "look-back" or limitation period restricts actions under Section 66.

Analysis: The Resolution Professional produced documents including land pattas, Form-C claim verification and site inspection findings stating transfer of land, plant and movable assets to a related entity. The Adjudicating Authority allowed the application under Section 66 after hearing the Resolution Professional and some respondents; several appellants failed to file replies and were proceeded against ex parte. The Tribunal examined whether Section 66 contains a prescribed look-back or limitation period and whether limitation under the Limitation Act, 1963 or the Code restricts recovery for fraudulent transactions. The Tribunal concluded that fraudulent transactions under Section 66 are not subject to a specified statutory look-back period and that the Resolution Professional may seek recovery of losses caused to creditors without temporal limitation. The Tribunal also considered the absence of any substantial denial by the appellants to the RP's assertions and the ex parte stance of several appellants when evaluating the sufficiency of material produced to infer fraudulent transfers and personal liability of directors.

Conclusion: The impugned order declaring the transactions fraudulent under Section 66, holding the suspended directors personally liable to make good losses and directing production of documents is upheld; merits support the Adjudicating Authority's findings and Section 66 is not subject to a specified look-back period. Decision in favour of Respondent.

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