The transaction of transfer of assets within the Group Companies will not come within the umbrage of the fraudulent trading as per Section 66(1) of the Code – Renuka Devi Rangaswamy,IRP of M/s. Regen Infrastructure and Services Pvt. Ltd. Vs. Mr. Madhusudan Khemka – NCLAT Chennai

NCLAT held that: (i) under Section 66 of the Code, 2016, it is not essential to attract that there ought to be a debtor and a creditor relationship. (ii) for proving a fraudulent trading needs meeting the high standard of proof which is attached to a fraudulent intent. (iii) a Director of a Company may be proceeded against for a wrongful trading because of the reason of negligent failure of management. (iv) dishonesty is an essential ingredient of fraudulent trading. (v) the ingredients of Section 66 (1) and 66 (2) of the Code, 2016 operate in a different arena. (vi) it is crystalline clear that the transaction of transfer of assets among / within the Group Companies, ex-facie, will not come within the umbrage of the fraudulent trading as per Section 66(1) of the Code, as opined by this Tribunal.

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