Bad commercial business decision cannot be considered to be fraudulent or wrongful trading under provisions of Section 66 of the IBC – Mr. Venkatesan Sankaranarayanan, the RP for RTIL Ltd. Vs. Mr. Nitin Shambhukumar Kasliwal & Ors. – NCLT Mumbai Bench
The Adjudicating Authority held that it is a fact that management of company have taken certain decision which has not worked out as intended by the management and eventually loss occurred. However, such bad commercial business decision cannot be considered to be fraudulent or wrongful trading under provisions of Section 66 of the IBC. The Bench in conclusion, therefore is of the view that the transaction review report has only highlighted that certain transaction may be potential fraudulent transaction. However, the transaction review report does not have any reference to siphoning of or diversion of funds in any manner. Therefore, there is no credible rational input based on which a Section 66 application can be entertained and application deserves to be dismissed.
