# in the matter of Rahul Gupta & Ors. vs. Chandra Prakash

> NCLAT judgment dated 2023-10-19. Citation: TCN-2023-NCLAT-00112. The case involves an appeal against an order dated 07.06.2022 passed by the National Company…

- **Court:** NCLAT
- **Order date:** 19 Oct 2023
- **Citation:** TCN-2023-NCLAT-00112
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/rahul-gupta-ors-vs-chandra-prakash-73bef3d5

## Summary

### Background

The case involves an appeal against an order dated 07.06.2022 passed by the National Company Law Tribunal (NCLT), New Delhi, Court-III, in I.A. 1678 of 2021 in CP (IB) No. 921 (ND) of 2020. The appellants, Mr. Rahul Gupta and Ms. Divya Gupta, who were members of the suspended board of directors of Gem Batteries Pvt Ltd, filed the appeal. The NCLT had allowed an application under Section 19(2) read with Section 19(3) of the Code read with Rule 11 of the NCLT Rules, 2016, and imposed a cost of Rs. 10,00,000/- each on the Appellants under Section 70 of the Code. The appellants contended that the NCLT failed to appreciate that Section 70 of the Code, which deals with offences and penalties, can only be invoked through a trial by a Special Court under Section 236 of the

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## Facts

Mr. Rahul Gupta and Ms. Divya Gupta, members of the suspended board of directors of Gem Batteries Pvt Ltd, appealed against an order by the National Company Law Tribunal (NCLT), New Delhi. The NCLT imposed a cost of Rs. 10,00,000/- each on the Appellants under Section 70 of the Insolvency and Bankruptcy Code (IBC) for failing to cooperate during the Corporate Insolvency Resolution Process (CIRP). Gem Batteries Pvt Ltd. is a private limited company incorporated on 13.08.2003. CIRP was initiated against Gem Batteries Pvt Ltd. on 01.12.2020, and Mr. Chandra Prakash was appointed as the Interim Resolution Professional. The Appellants allegedly did not provide necessary documents and information to the Resolution Professional. The Respondent filed an Application being I.A.

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority (NCLT) had the jurisdiction to impose a penalty under Section 70 …

**Ratio:** The legal principle is that offences punishable under the IBC, specifically those under

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**Reasoning:** The court reasoned that Section 236(2) of the Code stipulates that no court shall take

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**Interpretation:** Section 70 of the IBC outlines punishments for misconduct during the corporate

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**Application:** In this case, the Adjudicating Authority directly imposed a penalty on the

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## Parties

- **Judges:** Anant Bijay…; Naresh Sa…
- **Appellants:** Rahul G…
- **Respondents:** Gem Batteries…; Chandra P…
- **Advocates:** Abhishek…; Sajal…; +2 more

## Timeline

- **2020-01-01 — CP (IB) No. 921 (ND) of…**: Filing of CP (IB) No.…
- **2020-12-01 — CIRP Init…**: Corporate Insolvency Resolution Process…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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