# In the matter of New Empire Textile Processor Private Limited

> NCLT judgment dated 2024-01-02. Citation: TCN-2024-NCLT-03362. This is an application IA 430/2023 filed by the Resolution Professional of New Empire Textile…

- **Court:** NCLT
- **Order date:** 2 Jan 2024
- **Citation:** TCN-2024-NCLT-03362
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/new-empire-textile-processor-private-limited-a15f273e

## Summary

### Background

This is an application IA 430/2023 filed by the Resolution Professional of New Empire Textile Processor Private Limited, the Corporate Debtor, under Section 66 of the Insolvency & Bankruptcy Code, 2016, seeking reliefs against the Respondents. The CIRP was initiated in terms of C.P. No. 1981 (IB)/MB/2019. The Resolution Professional alleges fraudulent transactions entered into between the Respondents, specifically the transfer/sale of residential flats and subsequent routing of funds. The Corporate Debtor is involved in spinning, weaving, and finishing of textiles. The Tribunal admitted the Corporate Debtor pursuant to Petition u/s Section 9 of the Code on August 26, 2019, and appointed an Interim Resolution Professional, who then constituted a Committee of Creditors.

## Facts

The Corporate Debtor, New Empire Textile Processor Private Limited, underwent CIRP initiated in 2019. The Resolution Professional filed an application IA 430/2023 under Section 66 of the IBC alleging fraudulent transactions. Mr. Kiran Mehta and Mr. Atul Vikram Mehta, suspended directors, are Respondents 1 & 2. Mrs. Sangeeta Jatinder Mehta, sister-in-law of Mr. Kiran Mehta, is Respondent 3. Mr. Divyank Jatinder Mehta, nephew of Mr. Kiran Mehta, is Respondent 4. M/s. Ayush Dye Chem and M/s. Vinod Chemicals, proprietary concerns of Mr. Dinesh Vani, are Respondents 5 & 6. Sangeeta Tex Dyes P. Ltd. is Respondent 7. The Resolution Professional alleges that the Corporate Debtor fraudulently transferred four immoveable properties. Flat No. 903 was transferred to Mrs.

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## Issues and analysis

### Issue 1: Whether the transactions involving the transfer of properties and subsequent financial maneuvers …

**Ratio:** Section 66 of the Insolvency & Bankruptcy Code, 2016, deals with fraudulent trading

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**Reasoning:** The Tribunal found that the Corporate Debtor sold four immoveable properties to related

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**Interpretation:** Section 66 allows the Adjudicating Authority to take action against individuals

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**Application:** The Tribunal concluded that the transfer of flats by the Corporate Debtor was

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## Parties

- **Judges:** Prabhat…; V.G. B…
- **Appellants:** Kailash…
- **Respondents:** New Empire…; Kiran Charandas…
- **Advocates:** Mitali…; Shyam Ka…; +1 more

## Timeline

- **2019-01-01 — CIRP Init…**: Corporate Insolvency Resolution Process (“CIRP”) initiated in terms of C.P. No. 1981…
- **2019-08-26 — Tribunal…**: Tribunal admitted the Corporate Debtor…

## 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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