Forensic audit reports cannot alone establish director liability; corroborative evidence or criminal investigation is required.

A lone, incomplete forensic audit report that expressly records non-cooperation and lacks contemporaneous supporting documents cannot alone establish director liability under Section 66 read with Section 60(5) of the Insolvency and Bankruptcy Code; the operative legal principle requires corroborative evidentiary material to prove fraudulent or wrongful conduct, and where such evidence is absent because of non-cooperation the appropriate remediation is a criminal investigation to obtain admissible proof. The Adjudicating Authority's refusal to act solely on an inconclusive forensic report was upheld and the impugned order sustained.

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Issues: Whether the Adjudicating Authority erred in rejecting IA No.1100/2022 filed under Section 66 read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016, on the ground that the forensic audit report relied upon was inconclusive and unsupported by corroborative evidence.

Analysis: The Court examined whether a standalone forensic audit report, which the report itself characterises as incomplete due to non-cooperation of the management and which lacks supporting documents and verification, can form the sole basis for imposing liability on suspended directors under Section 66 read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016. The Court noted that where supporting evidence is absent because of non-cooperation, the resolution lies in criminal investigation to unearth evidentiary material and that an incomplete forensic report cannot substitute for contemporaneous corroborative documents or proof required to establish fraudulent or wrongful trading for the purposes of Section 66.

Conclusion: The rejection of IA No.1100/2022 by the Adjudicating Authority on the ground that the forensic audit report was inconclusive and unsupported by necessary evidence was legally sustainable; the appeal is dismissed and no interference with the Impugned Order is warranted.

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