# In the matter of Arshiya Northern FTWZ Limited

> NCLT judgment dated 2023-12-18. Citation: TCN-2023-NCLT-00191. The case involves an application (I.A. No. 1883 of 2023) filed in an ongoing Corporate…

- **Court:** NCLT
- **Order date:** 18 Dec 2023
- **Citation:** TCN-2023-NCLT-00191
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/arshiya-northern-ftwz-limited-6a94b43d

## Summary

### Background

The case involves an application (I.A. No. 1883 of 2023) filed in an ongoing Corporate Insolvency Resolution Process (CIRP) against Arshiya Northern FTWZ Limited. The CIRP was initiated by the National Company Law Tribunal (NCLT), Mumbai Bench, on 14.11.2022. The applicant, the Interim Resolution Professional (IRP), alleges that the suspended directors of the corporate debtor violated the moratorium imposed under Section 14 of the Insolvency and Bankruptcy Code (IBC) by making payments to group companies. The respondents, including the suspended directors and group companies, argue that the moratorium was not in effect during certain periods due to a stay order by the NCLAT, and that the payments were lawful and made in good faith. The IRP sought penal orders against

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## Facts

The Corporate Insolvency Resolution Process (CIRP) was initiated against Arshiya Northern FTWZ Limited by the NCLT Mumbai Bench on 14.11.2022. Mr. Ram Ratan Kanoongo was appointed as the Interim Resolution Professional (IRP). The IRP filed an application alleging that the suspended directors of the corporate debtor violated Section 14 of the Insolvency and Bankruptcy Code (IBC) by making payments totaling Rs. 1,16,25,000/- to group companies (Respondents 6 and 7). The respondents argued that an order by the NCLAT on 07.12.2022 stayed the NCLT's order, thus the moratorium was not in effect from 07.12.2022 to 15.02.2023, when the NCLAT vacated the stay. The respondents claimed that Rs. 15,50,000/- was repaid to the Corporate Debtor between 28.11.2022 and 06.12.2022, and

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## Issues and analysis

### Issue 1: Whether the suspended directors of the Corporate Debtor violated the moratorium imposed under …

**Ratio:** A stay on the CIRP process does not equate to quashing the CIRP order. The Corporate

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**Reasoning:** The NCLT relied on the judgment of the Hon'ble NCLAT in Ashok Kumar Tyagi v. Uco Bank

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**Interpretation:** The interpretation of Section 14 of the IBC and the effect of a stay order on

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**Application:** In this case, the suspended directors made payments to group companies during

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## Parties

- **Judges:** Reeta K…; SANJIV…
- **Appellants:** Ram Ratan K…
- **Respondents:** Arshiya Northern…; Navnit Jugal…

## Timeline

- **2022-11-14 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor…
- **2022-12-07 — NCLAT Stay…**: Order passed by the Hon'ble NCLAT staying the…

## 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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