# In the matter of Veracious Builders & Developers Private Limited

> NCLT judgment dated 2023-12-14. Citation: TCN-2023-NCLT-00236. The case involves a petition filed by the Liquidator of M/s Veracious Builders and Developers…

- **Court:** NCLT
- **Order date:** 14 Dec 2023
- **Citation:** TCN-2023-NCLT-00236
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/veracious-builders-developers-private-limited-ec14cc20

## Summary

### Background

The case involves a petition filed by the Liquidator of M/s Veracious Builders and Developers Private Limited, the Corporate Debtor, under Section 66(1) and (2) of the Insolvency and Bankruptcy Code (IBC), 2016. The Liquidator seeks a direction from the Tribunal to order the Respondents, Mr. Kaluvoy Sreenivasulu Reddy and Mrs. Kaluvoy Madhavi, former directors of the Corporate Debtor, to jointly and severally pay Rs. 13,21,92,691 into the Liquidation Account of the Corporate Debtor. This amount is sought as a contribution to the assets of the Corporate Debtor, alleging fraudulent transactions and diversion of funds by the Respondents during their tenure as directors. The petition is based on findings from a Transaction Audit Report which revealed various financial

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## Facts

The Corporate Debtor, M/s Veracious Builders and Developers Private Limited, underwent liquidation following an order dated 17.01.2020. The Liquidator initiated a Transaction Audit, which revealed several financial irregularities. Loans and advances totaling Rs. 19,53,97,557 were systematically written off in the Corporate Debtor's books. These transactions lacked proper documentation, such as PAN and GST details, and were made to unidentified individuals. The Corporate Debtor also made payments for the personal expenses of the directors, Mr. Kaluvoy Sreenivasulu Reddy and Mrs. Kaluvoy Madhavi, totaling Rs. 1,26,00,458. These expenses included credit card payments, life insurance premiums, and school fees. Additionally, the Corporate Debtor repaid a car loan of Rs.

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## Issues and analysis

### Issue 1: Whether the former directors of the Corporate Debtor engaged in fraudulent transactions as defined …

**Ratio:** Section 66(1) of the IBC, 2016, states that if during the corporate insolvency resolution

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**Reasoning:** The Tribunal relied on the Transaction Audit Report, which revealed several instances of

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**Interpretation:** Section 66 of the IBC aims to prevent and penalize fraudulent activities

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**Application:** The Tribunal found that the Respondents, as former directors of the Corporate

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## Parties

- **Judges:** (Retd.) T.…; Manoj Kumar…
- **Appellants:** Shirley M…
- **Respondents:** M/S. VERACIOUS…; Kaluvoy Sreenivasu…

## Timeline

- **2020-01-17 — Liquidation…**: Order issued for the…
- **2019-09-11 — First Meeting of…**: Resolution passed to conduct…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 66(1) — Fraudulent trading or wrongful trading](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-66)

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