NCLT Amravati: Fraudulent Trading Under IBC Cannot be Determined Mechanically, Needs Clear Proof

The NCLT Amaravati Bench held that liability for fraudulent trading under Section 66 of the IBC cannot be determined in a mechanical or routine manner.

It emphasised that allegations of fraud require a high standard of proof, including clear evidence of dishonest intent.

The Tribunal noted that financial transactions must be carefully examined through detailed reconciliation of inflows and outflows, rather than selective or incomplete data.

It also observed that merely pointing to certain transactions is not enough to establish fraud unless supported by proper records and analysis, highlighting the need for a thorough factual assessment before fixing liability.

[Indian Renewable Energy Development Agency Ltd. v. Saradambika Power Plant Pvt. Ltd.]