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NCLAT upheld the Adjudicating Authority's order under Section 66(2) IBC, holding that the suspended directors had authorised encashment of cheques during the Section 14 moratorium using post-CIRP credits, without any underlying liability or commercial justification. This conduct amounted to wrongful trading, reflecting failure to exercise due diligence to minimise creditor losses, thereby satisfying Section 66(2). The Tribunal rejected reliance on Sections 95 and 96 IBC, clarifying that the interim moratorium does not bar proceedings or orders under Section 66 against suspended directors. Finding no infirmity in the impugned order, NCLAT held the appeal by suspended directors not maintainable and dismissed it, sustaining the direction to jointly and severally refund Rs. 91,00,000/- to the corporate debtor.
NCLAT upheld the Adjudicating Authority's order under Section 66(2) IBC, holding that the suspended directors had authorised encashment of cheques during the Section 14 moratorium using post-CIRP credits, without any underlying liability or commercial justification. This conduct amounted to wrongful trading, reflecting failure to exercise due diligence to minimise creditor losses, thereby satisfying Section 66(2). The Tribunal rejected reliance on Sections 95 and 96 IBC, clarifying that the interim moratorium does not bar proceedings or orders under Section 66 against suspended directors. Finding no infirmity in the impugned order, NCLAT held the appeal by suspended directors not maintainable and dismissed it, sustaining the direction to jointly and severally refund Rs. 91,00,000/- to the corporate debtor.
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