IBC_Module 5

OFFENCES AND PENALTIES

Fraudulent or malicious initiation of proceedings.
Offence - If any person initiates the insolvency resolution process or liquidation
proceedings fraudulently or with malicious intent for any purpose other than for the
resolution of insolvency, or liquidation, as the case may be.
Section - 65(1)
Authority- NCLT
Penalty - Minimum 1 lakh rupees which may extend to 1 crore rupees.
Offence - If any person initiates voluntary liquidation proceedings with the intent to
defraud any person

Section - 65(2)
Authority- NCLT
Penalty - Minimum 1 lakh rupees which may extend to 1 crore rupees.

Punishment for concealment of property
Offence –
Where any officer of the corporate debtor has,—
(i) within the twelve months immediately preceding the insolvency commencement
date,—
(a) wilfully concealed any property or part of such property of the corporate debtor or

concealed any debt due to, or from, the corporate debtor, of the value of ten thousand
rupees or more; or
(b) fraudulently removed any part of the property of the corporate debtor of the value
of ten thousand rupees or more; or
(c) wilfully concealed, destroyed, mutilated or falsified any book or paper affecting or
relating to the property of the corporate debtor or its affairs, or
(d) wilfully made any false entry in any book or paper affecting or relating to the
property of the corporate debtor or its affairs, or
(e) fraudulently parted with, altered or made any omission in any document affecting
or relating to the property of the corporate debtor or its affairs; or
(f) wilfully created any security interest over, transferred or disposed of any property
of the corporate debtor which has been obtained on credit and has not been paid for
unless such creation, transfer or disposal was in the ordinary course of the business of
the corporate debtor; or
(g) wilfully concealed the knowledge of the doing by others of any of the acts
mentioned in clauses (c) , (d) or clause (e) ; or
(ii) at any time after the insolvency commencement date, committed any of the acts
mentioned in sub-clause (a) to (f) of clause (i) or has the knowledge of the doing by
others of any of the things mentioned in sub-clauses (c) to (e) of clause (i) ; or
(iii) at any time after the insolvency commencement date, taken in pawn or pledge, or
otherwise received the property knowing it to be so secured, transferred or disposed

Section - 68

Authority- Special Court established under the Companies Act

Penalty - Minimum 3 years which may extend to 5 years, or Fine:- Minimum 1 lakh
rupees which may extend to 1 crore rupees,
or Both.

Punishment for transactions defrauding creditors.

Offence

On or after the insolvency commencement date, if an officer of the corporate debtor
or the corporate debtor :-

(a) has made or caused to be made any gift or transfer of, or charge on, or has caused
or connived in the execution of a decree or order against, the property of the corporate
debtor;
(b) has concealed or removed any part of the property of the corporate debtor within
two months before the date of any unsatisfied judgment, decree or order for payment
of money obtained against the corporate debtor.

Section - 69

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum one year which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both.

Punishment for misconduct in course of corporate insolvency resolution process
by the corporate debtor.

Section - 70(1)

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both.

Punishment for misconduct in course of corporate insolvency resolution process
by the Insolvency Professional

Section - 70(2)

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both.

Punishment for falsification of books of corporate debtor

Section - 71

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both.

Punishment for wilful and material omissions from statements relating to affairs
of corporate debtor.

Section - 72

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both.

Punishment for false representations to creditors.

Section - 73

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both

Punishment for contravention of moratorium or the resolution plan.

Section - 74

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both

Punishment for false information furnished in application

Section - 75

Authority- Special Court established under the Companies Act

Penalty- Fine for Minimum one lakh rupees which may extend to one crore rupees.

Punishment for non- disclosure of dispute or repayment of debt by operational
creditor.

Section - 76

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both

Punishment for providing false information in application made by corporate
debtor.

Section - 77

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum three years which may extend to five years,
or Fine for Minimum one lakh rupees which may extend to one crore rupees,
or Both.

Punishment for false information, etc., by creditor in insolvency resolution
process.

Section - 184

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Minimum one year which may extend to five years,
or Fine for Minimum five lakh rupees which may extend to one crore rupees,
or Both.

Punishment for contravention of provisions.

Section- 185

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Six months Fine for Minimum five lakh rupees which may
extend to one crore rupees, or Both.

Punishment for false information, concealment, etc., by bankrupt.

Section- 186

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for Six months, Fine for Minimum five lakh rupees which
may extend to one crore rupees, or Both.

Punishment for certain actions.

If a bankruptcy trustee-

(a) has fraudulently misapplied, retained or accounted for any money or property
comprised in the estate of the bankrupt;

or
(b) has wilfully acted in a manner that the estate of the bankrupt has suffered any loss

in consequence of breach of any duty of the bankruptcy trustee in carrying out his
functions under section 149-

Section- 187

Authority- Special Court established under the Companies Act

Penalty- Imprisonment for a term which may extend to three years,
or Fine - If loss is quantifiable- minimum three times of the loss caused or likely to
have been caused, to persons concerned on account of such contravention,
If loss is not quantifiable- which may extend to five lakhs rupees,
or Both.

Disciplinary committee.

Where any insolvency professional agency or insolvency professional or an
information utility has contravened any provision of this Code or rules or regulations
made thereunder.

Section- 220 (3)

Authority- Disciplinary Committee

Penalty-

Three times the amount of the loss caused, or likely to have been caused, to persons
concerned on account of such contravention, or
Three times the amount of the unlawful gain on account of such contravention,
whichever is higher

Where such loss is not quantifiable, penalty may extend to one crore rupees.
The Disciplinary Committee may suspend, or cancel the registration of insolvency
professional agency or information utility as the case may be.