Laws, Courts & Judgments.

NCLT Orders Directors of Opulent Infradevelopers to Pay ₹10.46 Crore for Fraudulent Trading

New Delhi: The National Company Law Tribunal (NCLT), New Delhi Bench, has directed the suspended directors of Opulent Infradevelopers Pvt. Ltd. to jointly and severally contribute over ₹10.46 crore to the company's assets. The bench, comprising Shri Manni Sankariah Shanmuga Sundaram (Member, Judicial) and Shri Atul Chaturvedi (Member, Technical), found the directors liable for carrying out fraudulent and wrongful transactions under Section 66 of the Insolvency and Bankruptcy Code, 2016 (IBC).

The tribunal held that a series of transactions, including hefty donations, interest-free loans, and falsification of accounts, were executed with the "intent to defraud creditors" and divert funds from the financially distressed company.

Case Background

Opulent Infradevelopers Pvt. Ltd. was admitted into the Corporate Insolvency Resolution Process (CIRP) on July 12, 2022. The Resolution Professional (RP), Mr. Devendra Umrao, initiated a forensic audit for the period between July 2020 and July 2022. The audit uncovered several suspect transactions, prompting the RP to file an application against the suspended directors, Mr. Amit Kumar Dubey and Mr. Surendra Singh Pilkhwal, alleging fraudulent trading.

Allegations of Fraudulent Transactions

The RP identified four categories of transactions totaling ₹10,46,58,571.95, which were alleged to have been carried out to defraud the company's creditors:

• Unjustified Donations (₹3.10 Crore): The company donated ₹3.10 crore to three trusts between January and June 2021, a period when it was already facing severe financial distress. The RP argued these donations had no connection to the company's real estate business.
• Non-Collection of Interest (₹1.33 Crore): The company advanced loans of approximately ₹12.34 crore to various parties without charging any interest. The RP calculated a notional loss of ₹1.33 crore in interest income, which could have benefited the company.
• Falsification of Books (₹1.06 Crore): Adjustment entries worth ₹1.06 crore were passed just before the insolvency commencement date, setting off receivables against payables without proper documentation.
• Booking False Expenses (₹4.96 Crore): Fictitious and non-business-related expenses amounting to ₹4.96 crore were booked in the company's accounts without supporting invoices or vouchers.

Directors' Defense

The suspended directors denied the allegations, claiming their actions were legitimate. They argued that:

* The donations were made with a "bonafide intent to serve the public."

* It is not legally mandatory to charge interest on loans and advances.

* The adjustment entries were made to "avoid any liability" and prevent the extension of the limitation period.

* The expenses were legitimate, and relevant ledgers had been provided to the RP.

NCLT's Analysis and Ruling

The NCLT meticulously analyzed each transaction and rejected the directors' defenses, finding a clear pattern of fraudulent intent.

On Donations and Expenses

The tribunal observed that the donations had no nexus with the ordinary course of the company's business and were made to reduce the asset pool available to creditors. It stated, "The argument of the Respondents that the donations were made 'to serve the public' cannot be accepted, as directors of an insolvent company are required to act in the interest of creditors once financial distress sets in." Similarly, the booking of ₹4.96 crore in unsubstantiated expenses was deemed a clear attempt to siphon off funds.

On Interest-Free Loans

The bench classified the failure to charge interest as wrongful trading under Section 66(2) of the IBC. It held that advancing interest-free loans during a period of financial constraint, without any business justification, reflected "gross negligence and mala fide intent." The tribunal noted that this conduct "deprived the Corporate Debtor of legitimate income and effectively benefited third parties at its cost."

On Falsification of Accounts

The tribunal found the directors' admission that the set-offs were done "to avoid liability and limitation" as a confession of their intent to manipulate the books. It ruled that such actions "distort the financial position of the Corporate Debtor and mislead creditors" and are squarely covered under fraudulent trading.

Final Order and Implications

The NCLT concluded that the directors were knowingly parties to carrying on the business with an intent to defraud creditors. The tribunal allowed the RP's application and passed the following directions:

• The directors, Mr. Amit Kumar Dubey and Mr. Surendra Singh Pilkhwal, are to jointly and severally contribute ₹10,46,58,571.95 to the assets of Opulent Infradevelopers Pvt. Ltd.
• The payment must be made within 15 days from the date of the order (November 4, 2025).

This judgment serves as a stern warning to the management of companies facing insolvency, reinforcing the principle that directors have a fiduciary duty to protect the interests of creditors and will be held personally liable for actions intended to deplete corporate assets.