When Erstwhile Management indulged into fraudulent trading or unlawful trading which may also include any preferential transactions, order to make contribution by the Erstwhile Directors is very well contemplated under Section 66 of the Code, Section 44(1)(d) of IBC contemplates a direction requiring any person to pay such sums in respect of benefits received by him from the Corporate Debtor – Mr. Saptarshi Nath Vs. Kapil Dev Taneja, RP of Exit 10 Marketing Pvt. Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that: (i) Essential conditions need to be fulfilled for issuing direction under Section 44(1)(d). (i) The Adjudicating Authority may require any person to pay and (ii) Such sums in respect of benefits received by him from the Corporate Debtor. Thus as observed above, the provision of Section 44 is aimed at reversing the effects of preferential transactions when the effects of preferential transaction are, reversed the person who has received benefits from the transactions, can be required to pay the sum which is the power given under Section 44(1)(d) of the Code. (ii) When Erstwhile Management indulged into fraudulent trading or unlawful trading which may also include any preferential transactions, order to make contribution by the Erstwhile Directors is very well contemplated under Section 66 of the Code. (iii) Present is not a case where the Adjudicating Authority has returned any finding under Section 66 or exercised power and issued an order under Section 66 of the Code. The Adjudicating Authority has only issued direction under Section 44(1)(d) of the Code.

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