Offences & Penalties (Sec. 68-77)

“(1) 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,
such officer shall be punishable with imprisonment for a term which shall not be less than
three years but which may extend to five years and with fine, which shall not be less than
one lakh rupees, but may extend to one crore rupees, or with both:
Provided that nothing in this section shall render a person liable to any punishment
under this section if he proves that he had no intent to defraud or to conceal the state of
affairs of the corporate debtor.” VL Note : –

“1
[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,
such officer of the corporate debtor or the corporate debtor, as the case may be, shall be
punishable with imprisonment for a term which shall not be less than one year, but which
may extend to five years, or with fine which shall not be less than one lakh rupees, but may
extend to one crore rupees, or with both:
Provided that a person shall not be punishable under this section if the acts mentioned in
clause (a) were committed more than five years before the insolvency commencement date;
or if he proves that, at the time of commission of those acts, he had no intent to defraud the
creditors of the corporate debtor.” VL Note : –

“(1) On or after the insolvency commencement date, where an officer of the
corporate debtor —
(a) does not disclose to the resolution professional all the details of property of the
corporate debtor, and details of transactions thereof, or any such other information as
the resolution professional may require; or
(b)does not deliver to the resolution professional all or part of the property of the
corporate debtor in his control or custody and which he is required to deliver; or
(c) does not deliver to the resolution professional all books and papers in his control
or custody belonging to the corporate debtor and which he is required to deliver; or
(d) fails to inform their solution professional the information in his knowledge that
a debt has been falsely proved by any person during the corporate insolvency resolution
process; or
(e) prevents the production of any book or paper affecting or relating to the property
or affairs of the corporate debtor; or
(f) accounts for any part of the property of the corporate debtor by fictitious losses
or expenses, or if he has so attempted at any meeting of the creditors of the corporate
debtor within the twelve months immediately preceding the insolvency commencement
date,
he shall be punishable with imprisonment for a term which shall not be less than three years,
but which may extend to five years, or with fine, which shall not be less than one lakh rupees,
but may extend to one crore rupees, or with both:
Provided that nothing in this section shall render a person liable to any punishment under this section if he proves that he had no intent to do so in relation to the state of affairs of the
corporate debtor.
(2) If an insolvency professional deliberately contravenes the provisions of this Part,
the shall be punishable with imprisonment for a term which may extend to six months, or
with fine which shall not less than one lakh rupees, but may extend to five lakhs rupees, or
with both.
” VL Note : –

“On and after the insolvency commencement date, where any person destroys, mutilates,
alters or falsifies any books, papers or securities, or makes or is in the knowledge of making
of any false or fraudulent entry in any register, books of account or document belonging to
the corporate debtor with intent to defraud or deceive any person, he shall be punishable with
imprisonment for a term which shall not be less than three years, but which may extend to
five years, and with fine which shall not be less than one lakh rupees, but may extend to one
crore rupees, or with both.” VL Note : –

“Where an officer of the corporate debtor makes any material and wilful omission in any
statement relating to the affairs of the corporate debtor, he shall be punishable with
imprisonment for a term which shall not be less than three years but which may extend to five
years, or with fine which shall not be less than one lakh rupees, but may extend to one crore
rupees, or with both” VL Note : –

“(1) Where any officer of the corporate debtor —
(a) on or after the insolvency commencement date, makes a false representation or
commits any fraud for the purpose of obtaining the consent of the creditors of the
corporate debtor or any of them to an agreement with reference to the affairs of the
corporate debtor, during the corporate insolvency resolution process, or the liquidation
process;
(b) prior to the insolvency commencement date, has made any false representation,
or committed any fraud, for that purpose,
he shall be punishable with imprisonment for a term which shall not be less than three years,
but may extend to five years or with fine which shall not be less than one lakh rupees, but
may extend to one crore rupees, or with both.
” VL Note : –

“(1) Where the corporate debtor or any of its officer violates the provisions of section
14, any such officer who knowingly or wilfully committed or authorised or permitted such contravention shall be punishable with imprisonment for a term which shall not be less than
three years, but may extend to five years or with fine which shall not be less than one lakh
rupees, but may extend to three lakh rupees, or with both.
(2) Where any creditor violates the provisions of section 14, any person who knowingly
and wilfully authorised or permitted such contravention by a creditor shall be punishable with
imprisonment for a term which shall not be less than one year, but may extend to five years,
or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees,
or with both.
(3) Where the corporate debtor, any of its officers or creditors or any person on whom
the approved resolution plan is binding under section 31, knowingly and wilfully contravenes
any of the terms of such resolution plan or abets such contravention, such corporate debtor,
officer, creditor or person shall be punishable with imprisonment of not less than one year,
but may extend to five years, or with fine which shall not be less than one lakh rupees, but
may extend to one crore rupees, or with both.” VL Note : –

“Where any person furnishes information in the application made under section
7, which is false in material particulars, knowing it to be false or omits any material fact,
knowing it to be material, such person shall be punishable with fine which shall not be less
than one lakh rupees, but may extend to one crore rupees.” VL Note : –

“Where-
(a) an operational creditor has wilfully or knowingly concealed in an application
under section 9 the fact that the corporate debtor had notified him of a dispute in respect
of the unpaid operational debt or the full and final 2
[payment] of the unpaid operational
debt; or
(b) any person who knowingly and wilfully authorised or permitted such
concealment under clause (a)
such operational creditor or person, as the case may be, shall be punishable with imprisonment
for a term which shall not be less than one year but may extend to five years or with fine
which shall not be less than one lakh rupees but may extend to one crore rupees, or with both” VL Note : –

“Where-
(a) a corporate debtor provides information in the application under section 10
which is false in material particulars, knowing it to be false and omits any material fact,
knowing it to be material; or
(b) any person who knowingly and wilfully authorised or permitted the furnishing
of such information under sub-clause (a)
such corporate debtor or person, as the case may be, shall be punishable with imprisonment
for a term which shall not be less than three years, but which may extend to five years and
with fine which shall not be less than one lakh rupees, but which may extend to one crore
rupees, or with both.
Explanation. – For the purpose of this section and sections 75 and 76, an application
shall be deemed to be false in material particulars in case the facts mentioned or omitted in
the application, if true, or not omitted from the application as the case may be, would have
been sufficient to determine the existence of a default under this Code.” VL Note : –