# In the matter of Gems Care & Cure Health Center Private Limited CP (IB) No. 201 of 2019

> NCLT judgment dated 2020-06-02. Citation: TCN-2020-NCLT-01258. The case involves an application filed by the Resolution Professional (RP) alleging that the…

- **Court:** NCLT
- **Order date:** 2 Jun 2020
- **Citation:** TCN-2020-NCLT-01258
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/gems-care-cure-health-center-private-limited-cp-ib-no-201-of-2019-69aa2a4d

## Summary

### Background

The case involves an application filed by the Resolution Professional (RP) alleging that the directors of the suspended board of the Corporate Debtor (CD), Gems Care & Cure Health Centre Private Limited, were unauthorizedly transferring/siphoning funds from the CD's account in HDFC Bank after the commencement of the Corporate Insolvency Resolution Process (CIRP). The RP sought directions for the respondents (directors) to cooperate, provide details of transactions, and refund the siphoned amount. The CIRP was initiated based on an order dated 29th August, 2019. The RP discovered a bank account of the CD in HDFC Bank, Rashbehari Branch, and requested the bank to suspend activities on 4th September, 2019. However, the bank allegedly did not adhere to these

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## Facts

Gems Care & Cure Health Centre Private Limited (Corporate Debtor) was undergoing CIRP as per the order of Adjudicating Authority (AA) dated 29th August, 2019. The Resolution Professional (RP) discovered that the Corporate Debtor (CD) had a bank account in HDFC Bank, Rashbehari Branch. The RP visited the bank on 4th September, 2019, and requested the suspension of all activities in the bank account. The bank provided a statement on 12th March, 2020, which revealed that the bank had not adhered to the RP's instructions. The directors of the CD allegedly transferred Rs. 5,96,381 from the HDFC bank account after the CIRP commencement. The RP alleged that the directors were not cooperating and not providing details of the transactions. The directors claimed that the

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## Issues and analysis

### Issue 1: Whether the directors of the Corporate Debtor violated the moratorium under Section 14 of the …

**Ratio:** Section 14 of the Insolvency and Bankruptcy Code imposes a moratorium on the assets of

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**Reasoning:** The court observed that the respondents admitted to making transactions after the CIRP

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**Interpretation:** Section 14 is interpreted strictly to prevent any actions that could diminish

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**Application:** The court applied the ratio to the facts by concluding that the directors'

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## Parties

- **Judges:** Jinan…
- **Appellants:** Rajesh L…
- **Respondents:** Gems Care & Cure…; Ranjana K…

## Timeline

- **2019-08-29 — CIRP Init…**: Order passed by Adjudicating Authority initiating Corporate Insolvency Resolution Process…
- **2019-09-04 — RP Request…**: Resolution Professional (RP) visited HDFC Bank and requested suspension of all activities…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 19 — Personnel to extend co-operation to interim…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-19)

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