Insolvency and Bankruptcy Code, 2016--Offences and Penalties
Offences and Penalties vis-a-vis Insolvency Resolution and Liquidation of Corporate Persons
Pragya Lalwani
In the era of growing corporate practices, frauds and misconducts are existential. It is the framework of respective legislation that can get hold on such offences. The Insolvency and Bankruptcy Code, 2016 also enshrines the penal provisions for offences being committed by stakeholders during the insolvency resolution process, inculcating the discipline in their actions. This article throws light on the offences that could be committed during an insolvency resolution process or liquidation of a corporate and their respective punishments.
1. Introduction
Though the Companies Act, 2013 provides for penalties and punishments for certain offences, Insolvency and Bankruptcy Code, 2016 ['Code', in short] enshrines certain penal provisions regarding the offences committed by officers or any other persons, including the insolvency professional, during the insolvency resolution process and liquidation of corporates including fraudulent activities, misconduct, false representations, wilful concealment or omission of material information, defrauding creditors, etc. Chapter VII of Part II of the Code provides for such offences and penalties and the same have been discussed hereunder.
2. Concealment of property or defrauding company's state of affairs
Section 68 of the Code provides for punishment in case of any concealment of property or any fraudulent act conducted in relation thereto anticipating corporate debtor's insolvency. Though if the accused proves that he had no intent to defraud or to conceal the state of affairs of the corporate debtor, he would not be liable to punishment under this section.