Section 68 of IBC : Section 68: Punishment For Concealment Of Property

Explanation using Example

Imagine a company, XYZ Pvt. Ltd., is undergoing insolvency proceedings. The Chief Financial Officer (CFO) of the company, in the months leading up to the insolvency commencement date, realizes that the company is in dire financial straits. To avoid the negative repercussions and possibly save his reputation, the CFO decides to hide certain assets of the company. He transfers a company-owned vehicle and some expensive equipment, worth over ten thousand rupees, to his brother's warehouse. Additionally, he alters the company's financial books to show a reduced amount of debt owed to creditors.

Once the insolvency resolution process begins, the Resolution Professional (RP) conducting the proceedings notices discrepancies in the company's financial records. Upon investigation, it is found that the CFO had intentionally concealed and transferred assets and falsified the books to misrepresent the company's financial status.

Under Section 68 of The Insolvency and Bankruptcy Code, 2016, the CFO's actions constitute an offence since they were done willfully with the intent to defraud the creditors and conceal the true financial condition of the company. As a result, the CFO could be subject to a minimum of three years of imprisonment, a fine ranging from one lakh rupees to one crore rupees, or both, provided that the court finds him guilty of the offence.