# In the matter of National Plywood Industries Limited CP (IB) 9-GB-2018

> NCLT judgment dated 2020-06-05. Citation: TCN-2020-NCLT-01240. The case involves an application filed by the Resolution Professional (RP) seeking modification…

- **Court:** NCLT
- **Order date:** 5 Jun 2020
- **Citation:** TCN-2020-NCLT-01240
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/national-plywood-industries-limited-cp-ib-9-gb-2018-89488a81

## Summary

### Background

The case involves an application filed by the Resolution Professional (RP) seeking modification of an interim order issued by the Adjudicating Authority (AA) on 20.05.2020. The RP contends that the interim order inadvertently recognized banking transactions conducted by the erstwhile management on 18.04.2020, which are deemed illegitimate and devoid of authority during the ongoing Corporate Insolvency Resolution Process (CIRP). The RP argues that the suspended board of directors should reimburse the amounts transferred from the Corporate Debtor's (CD) bank account and spent on raw materials during the CIRP period, as they lacked the authority to undertake such transactions. The RP also highlights the transfer of funds from the CD's bank accounts to its associate

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## Facts

The Resolution Professional (RP) filed an application seeking modification of an interim order issued by the Adjudicating Authority (AA) on 20.05.2020. The RP argued that the interim order inadvertently recognized banking transactions performed by the erstwhile management on 18.04.2020, which the RP deemed illegitimate during the ongoing CIRP. The RP claimed that the suspended board of directors should repay Rs. 32.50 lakhs transferred from the CD's bank account and Rs. 3.29 lakhs spent on raw materials. The RP also highlighted the transfer of Rs. 35.79 lakhs from the CD's bank accounts to JSVM Plywood Industries Limited, an associate company, through unauthorized internet banking, which the RP had blocked since the CIRP's initiation. The RP contended that the order

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## Issues and analysis

### Issue 1: Whether there is any apparent error or mistake in the orders under challenge so as to allow …

**Ratio:** Rules 154 and 155 of the NCLT Rules, 2016, allow for the correction of clerical or

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**Reasoning:** The court found no clerical or arithmetical mistakes or errors in the interim order that

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**Interpretation:** The court interpreted Rules 154 and 155 narrowly, requiring a clear showing of

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**Application:** The court applied the rules to the facts by determining that the RP had not

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## Parties

- **Judges:** Jinan…
- **Appellants:** Sandeep K…
- **Respondents:** National Plywood…

## Timeline

- **2020-04-18 — Banking Transactions by…**: Erstwhile management performed banking…
- **2020-05-20 — Interim Order by…**: Adjudicating Authority issued an interim…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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