Offences and Penalties

A director hears that his company is about to be admitted into insolvency. That weekend he moves stock to a relative’s godown and deletes some entries from the books. Is that just bad business, or a crime? Under the Insolvency and Bankruptcy Code it can be both a prison offence and a money penalty, decided in different forums. The Code knows that a process built on honest disclosure collapses the moment insiders hide assets, so it backs its procedure with a set of offences and penalties. This topic sorts them into two tracks and gives you the sections and numbers to remember.

In two minutes

The Code punishes misconduct on two tracks: criminal offences in Chapter VII of Part II (ss.68 to 77A), mostly carrying imprisonment of three to five years or a fine of one lakh to one crore rupees, tried by a Special Court on a complaint by the Board or the Central Government; and civil penalties imposed by the NCLT (ss.64A, 65, 67A to 67C and 235A) on application, without a criminal trial.

The rest of this chapter

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