Division Bench holds management powers vest with IRP during insolvency; unauthorized office shift violates Section 17 of IBC, but no fraud or concealment found under Section 68
In a significant ruling dated 11th September 2026, the National Company Law Tribunal (NCLT), Ahmedabad Division Bench, adjudicated on the legality of a change in the registered office of M/s Nagpur Water Supply Company Pvt. Ltd. during its Corporate Insolvency Resolution Process (CIRP). The bench, comprising Judicial Member Mr. Shammi Khan and Technical Member Mr. Sanjeev Sharma, partly allowed the application filed by Rajendra Sanghi, Liquidator of the company, while rejecting the imposition of criminal penalties under the Insolvency and Bankruptcy Code (IBC), 2016.
The dispute arose when, after the initiation of CIRP and appointment of the Interim Resolution Professional (IRP), the suspended management of the corporate debtor filed Form INC-22 with the Registrar of Companies to change the company's registered office address without the IRP's authority. The Liquidator contended this action violated Section 17(1)(a) and (b) of the IBC, which vests management control exclusively in the IRP during CIRP and suspends the powers of the board of directors. The Liquidator also sought penal action against the respondents under Section 68 of the IBC for alleged fraudulent alteration of company records.
The NCLT acknowledged that the management of the corporate debtor's affairs vests with the IRP from the date of appointment, and any action by the suspended board, including changing the registered office, is impermissible under Section 17. The Tribunal held that the filing of Form INC-22 on 27th August 2021, effective from 19th August 2021 (after the CIRP initiation), was unauthorized and thus void. The Registrar of Companies was directed to take appropriate action regarding the form.
However, the Tribunal carefully examined whether the act amounted to an offence under Section 68, which punishes concealment or fraudulent dealings with the corporate debtor's property or records. The respondents explained the office shift was necessitated by practical concerns such as inadequate space and landlord communications, asserting no intent to defraud or conceal property. Importantly, neither the old nor new office premises belonged to the corporate debtor. The respondents had also disclosed the change prior to the Committee of Creditors (CoC) meeting and showed willingness to revert to the original address.
The NCLT noted that Section 68 is penal in nature and requires strict proof of intent to defraud or conceal the state of affairs. Mere unauthorized change without fraudulent intent does not attract penal liability. The Tribunal found no evidence that the respondents concealed or altered any documents with fraudulent intent and held that the available material did not satisfy the stringent requirements of Section 68.
Additionally, the Tribunal clarified that it lacks jurisdiction to impose punishment under Section 68, as offences under Chapter VII of Part II of the IBC fall under the exclusive trial jurisdiction of Special Courts designated under Section 236 of the Code, as affirmed by the NCLAT in Ajay Vij v. Abhishek Dutta (2025).
In conclusion, the NCLT declared the change of registered office effected by the suspended management during CIRP without IRP authority to be impermissible and nullified the Form INC-22. However, it rejected the prayer for penal action under Section 68 for lack of fraudulent intent or concealment.
This judgment reinforces the primacy of the IRP's authority during CIRP and underscores the need for strict adherence to statutory provisions governing corporate insolvency processes. It also clarifies the procedural safeguards against penal consequences where fraudulent intent is not established.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Management of corporate debtor during CIRP vests in the Interim Resolution Professional, and the powers of the board of directors are suspended. Unauthorised change in the registered office by the suspended management during CIRP is impermissible under Section 17 of the Code. However, penal action under Section 68 requires proof of intent to defraud or conceal the state of affairs, which was not established in this case.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 7, 13, 14, 15, 17(1)(a), 17(1)(b), 60(5), 68, 236; NCLT Rules, 2016 Rule 11
