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Missing machinery was not treated as a mere accounting discrepancy in Dinesh Keshawrao Atkare and another v. Palak Swapnil Desai. NCLAT upheld a Section 66 contribution order because financing documents, inspection evidence, valuation reports and the absence of a credible contemporaneous explanation collectively supported fraudulent removal and substitution. The reasoning depends on that cumulative record. Judgment, paragraphs 32–51.
Case, figures and relief
| Point | Verified record |
|---|---|
| Tribunal | NCLAT, Principal Bench, New Delhi |
| Members | Justice Sharad Kumar Sharma, Arun Baroka and Indevar Pandey |
| Appeal | Company Appeal (AT) (Insolvency) No. 325 of 2025 |
| Order date | |
| Challenged order | NCLT Mumbai Bench-I, 18 December 2024, IA No. 479/2024 |
| Contribution upheld | ₹17,23,05,603.50 to the corporate debtor's assets |
| Additional costs | ₹5,00,000 on each appellant, to be deposited in the Prime Minister's National Relief Fund |
| Disposition | Appeal dismissed; NCLT order affirmed; liquidation and consequential steps permitted |
The contribution and costs are directions in the order, not amounts merely claimed by a party. The contribution restores the corporate debtor's asset position; the separate costs direction identifies a different recipient. Neither should be described as money awarded directly to the individual lenders. Paragraphs 52–54, original pages 27–28.
The asset identity began with contemporaneous documents
The documentary record showed finance for two six-colour C.I. Flexographic Press Machines, corresponding invoices and dispatch particulars, and hypothecation in favour of the financial creditors. The original financed assets were therefore identified through records rather than an unsupported assertion that valuable machinery ought to exist.
The suspended directors relied on an alternative-machine explanation and alleged oral discussion of a substitution. NCLAT found no contemporaneous documentation establishing the lenders' consent to that change. Earlier creditor possession did not, by itself, prevent examination of the machinery during insolvency. Paragraphs 33–35.
This distinction matters to both applicants and respondents. The financing specification, the asset actually delivered, a permitted substitution and the asset later found on site are different factual questions. A complete response should connect them through documents.
Inspection and valuation evidence supplied the comparison
The tribunal considered independent valuers' descriptions of substantially different, lower-value machinery, indications that machines had previously been removed and problems with missing or mismatched nameplates. It also considered whether the contrary expert opinion actually answered the inspection evidence.
The NCLAT did not treat each report as an isolated conclusive finding. It read the reports with the invoices, physical indications, absent substitution documents and the explanation offered by those in control. A dispute over technical description did not deprive NCLT of jurisdiction to decide a Section 66 application on the evidence before it. Paragraphs 36–41.
The article does not itself identify a machine from photographs or offer an independent engineering opinion. It reports the evidentiary comparison that the tribunal accepted.
A single disputed transaction was not automatically outside Section 66
The appellants argued that one disputed transaction could not establish fraudulent business. NCLAT rejected a numerical rule requiring a series of separate transactions. It nevertheless preserved the need for the statutory ingredients, including fraudulent purpose, and recognised that mere negligence or an isolated irregularity is not automatically fraudulent trading.
Here it considered the removal of valuable secured assets, replacement by lower-value machinery, unexplained documentary gaps and conduct concerning possession as one connected record. The holding is not that every missing asset or machine mismatch automatically triggers personal contribution. Paragraphs 42–47.
The difference between ordinary asset-accounting failure and the conduct proved under Section 66 must remain visible in any use of the decision.
Quantum objections and the operative result
The appellants challenged the amount, including on depreciation and realisable-value grounds. NCLAT found that those objections did not demonstrate an arbitrary or unsupported quantum warranting interference on this record. It also rejected a requirement that every detail of the physical removal be reconstructed through a complete forensic investigation before the application could be maintained. Paragraphs 48–51.
That does not abolish the need to prove quantum or permit a contribution figure to be copied mechanically into another case. It records why these appellants failed to displace this order. The appeal was dismissed and the stated contribution upheld; the additional costs were imposed separately. Paragraphs 52–54.
Building or answering the cumulative case
Veritect's analysis suggests a comparison schedule linking the financed asset, invoice and dispatch data, security documents, custody events, inspection observations and alleged substitution. Identify which fact each item supports and which gaps remain. For a respondent, a contemporaneous consent, replacement invoice or custody record may answer an allegation more directly than an unexplained assertion of a better machine.
The schedule is an analytical aid, not a new statutory evidentiary checklist. The tribunal must still determine the applicable ingredients, knowledge, purpose, contribution and relief on the complete record.
Questions practitioners may ask
Does a single discrepancy necessarily prove fraudulent trading?
No. The judgment expressly relies on cumulative evidence and preserves the requirement to establish the statutory wrong. It rejects an automatic exclusion merely because one transaction is involved.
Did the tribunal award the contribution directly to the banks?
The direction is contribution to the corporate debtor's assets. The costs were separately payable to the Prime Minister's National Relief Fund.
Was a complete reconstruction of removal required before filing?
The NCLAT rejected that requirement in this case. It accepted an adjudication based on the available documentary and circumstantial record, rather than mathematical reconstruction of every physical step.
Official source and limits
The official NCLAT judgment of 17 September 2026, particularly paragraphs 32–54, was checked against the original, including the rupee amounts and final directions. This note does not certify the absence of a later appeal, stay or modification, and it does not turn the civil insolvency contribution order into a criminal conviction.