# In the matter of Prasanth Chandra Rath & Ors Vs. Surya Kanta Satapathy and Ors. Company Appeal (AT) (Insolvency) No.869 of 2022 with  Company Appeal (AT) (Insolvency) No.850 of 2022

> NCLAT judgment dated 2022-09-30. Citation: TCN-2022-NCLAT-00177. The case involves appeals against orders passed by the Adjudicating Authority (National…

- **Court:** NCLAT
- **Order date:** 30 Sept 2022
- **Citation:** TCN-2022-NCLAT-00177
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/prasanth-chandra-rath-ors-vs-surya-kanta-satapathy-and-ors-company-appeal-3d9d9659

## Summary

### Background

The case involves appeals against orders passed by the Adjudicating Authority (National Company Law Tribunal, Cuttack Bench) in two related IAs. The Adjudicating Authority had directed the Appellants to jointly and severally pay certain amounts to the Corporate Debtor for indulging in fraudulent and undervalued transactions under Section 66 of the Insolvency and Bankruptcy Code (IBC). Additionally, the Adjudicating Authority rejected the Resolution Plan submitted by the Resolution Applicant under Section 29-A(g) of the IBC and ordered the liquidation of the Corporate Debtor.

## Facts

Maa Durga Rice Products Pvt. Ltd. (Corporate Debtor) underwent Corporate Insolvency Resolution Process (CIRP). The Resolution Professional appointed a Transaction Auditor (TA) who submitted a Transaction Audit Report (TAR). The TAR revealed four fraudulent transactions under Section 66 of IBC and seven undervalued transactions under Section 45 of IBC. The Resolution Professional filed IA No. 276/2020 against the Resolution Applicant and two other suspended Directors. The Adjudicating Authority found that the Resolution Applicant and other directors had indulged in fraudulent transactions, including diverting Rs. 13.45 crores to Maa Durga Thermal Power Company Ltd. (MDTPCL), a sister concern. The Adjudicating Authority also found an unusual write-off of inventory and

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## Issues and analysis

### Issue 1: Whether the application filed by the Resolution Professional under Section 66 of the IBC before the …

**Ratio:** Regulation 35-A of the CIRP Regulations, which prescribes timelines for the Resolution

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**Reasoning:** The Tribunal relied on the Supreme Court's observations in 'State of Uttar Pradesh Vs.

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**Interpretation:** The interpretation of Regulation 35-A as directory allows for flexibility in

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**Application:** In this case, the Tribunal found that the delay in filing the Section 66

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## Parties

- **Judges:** Ashok Bh…; M. Satyanarayana…; +1 more
- **Appellants:** Prasant Chandra…
- **Respondents:** Maa Durga Rice…; Surya Kanta…
- **Advocates:** DeveshTri…; Abhishek…; +9 more

## Timeline

- **2019-09-04 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP) was initiated for Maa Durga Rice Products…
- **2019-11-18 — TA Appoin…**: Transaction Auditor (TA) was…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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