# In the matter of Rakesh Kumar Jain Vs. Jagdish Singh Nain & Ors. Company Appeal (AT) (Ins.) No. 425 of 2022

> NCLAT judgment dated 2022-08-04. Citation: TCN-2022-NCLAT-00303. This Company Appeal (AT) (Ins.) No. 425 of 2022 was filed by Rakesh Kumar Jain, the…

- **Court:** NCLAT
- **Order date:** 4 Aug 2022
- **Citation:** TCN-2022-NCLAT-00303
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/rakesh-kumar-jain-vs-jagdish-singh-nain-ors-company-appeal-e14d7748

## Summary

### Background

This Company Appeal (AT) (Ins.) No. 425 of 2022 was filed by Rakesh Kumar Jain, the Resolution Professional of HBN Homes Colonizers Pvt. Ltd., against an order passed by the Adjudicating Authority in I.A. No. 2844/2020 in CP (IB) 1359/ND/2019. The Adjudicating Authority had issued directions under Section 66 of the Insolvency and Bankruptcy Code (IBC), holding Respondent Nos. 2 to 21, including suspended board of directors and related parties, liable for fraudulent trading and misappropriation of funds. The appellant challenged this order, arguing that it was passed during the moratorium period under Section 14 of the IBC, making it unsustainable.

## Facts

Tricolite Electrical Industries Ltd. (Operational Creditor) filed Company Petition No.IB-82/PB/2018 to initiate insolvency resolution process. The petition was filed under Section 9 of IBC and was admitted by Judgment dated 24.07.2019. CP (IB) 1359/ND/2019 was filed by Financial Creditor against HBN Foods Ltd. Jagdish Singh Nain was appointed as resolution professional for completing insolvency resolution process of HBN Homes Colonizers Ltd. During the process of insolvency resolution, the Appellant herein and other respondents in the main petition 3 to 21 indulged in fraudulent trading and business. During Covid-19 lockdown, the appellant was served a copy of application of I.A. No. 2844/2020 filed under Section 66 of IBC. The Adjudicating Authority forfeited the

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority is competent to pass order under Section 66 of IBC during …

**Ratio:** Section 14 of IBC interdicts institution of suits are continuation of pending suits are

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**Reasoning:** The court reasoned that Section 14 aims to prevent new suits or continuation of pending

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**Interpretation:** Section 14(1)(a) of the IBC imposes a moratorium on the institution or

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**Application:** The court applied the principle of harmonious construction to interpret Section

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## Parties

- **Judges:** Ashok Bh…; M. Satyanarayana…; +1 more
- **Appellants:** Rakesh Kuma…
- **Respondents:** HBN Homes…; Jagdish Sin…

## Timeline

- **2018-01-01 — Initiation of…**: Tricolite Electrical Industries Ltd. filed Company Petition No.IB-82/PB/2018 to initiate…
- **2019-07-24 — Admission of…**: The petition filed under Section 9 of IBC was…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 66 — Fraudulent trading or wrongful trading](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-66)

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