The fine imposed by NCLT on non-cooperation by Ex-management u/s 19(2) or 34(3) of IBC is covered in ‘penalty” and not ‘cost” under Rule 149 of NCLT, and it is required to be dealt under Section 70 and 236 of the Code which is not within jurisdiction of Adjudicating Authority – Rakesh Gupta Vs. Mahesh Bansal Erstwhile RP of Gupta Marriage Halls Pvt. Ltd. – NCLAT New Delhi

In this case, in IA u/s 19(2) and further in 34(3), the Adjudicating Authority imposed a fine of Rs. 5 lacs on the Appellants. The RP/Liquidator has argued that Adjudicating Authority only imposed the cost and not the fine. NCLAT held that we cannot accept that the word “fine” and the cost to be synonyms. we are clear that the intent and legal basis of cost is different from intent and legal basis of penalty which includes “fine”. Therefore, we do not have any hesitation in holding that the word “fine”, used consciously by the Adjudicating Authority in the Impugned Order, is covered in penalty which is required to be dealt under Section 70 and 236 of the Code and which further is not within jurisdiction of the Adjudicating Authority.

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