Kochi Tribunal Holds Board Members Responsible for Missing Funds While Protecting Disputed Claims

The Kochi bench of the National Company Law Tribunal ordered six directors to jointly deposit an amount of ₹2.07 lakh along with accrued interest. This directive was issued in connection with recorded cash that could not be accounted for by the management. At the same time, the tribunal formally rejected a plea seeking the recovery of disputed receivables valued at ₹12.61 lakh invoking cooperative provisions under the insolvency framework. Under corporate insolvency legislation, the cooperation provisions are designed to compel management and personnel to assist resolution professionals in taking custody of company assets.

Traditionally, such provisions target tangible ledgers, physical cash, and cooperative document handovers rather than adjudicating complex or contested commercial debts. The old position often left recovery of disputed sums ambiguous during early cooperation pleas, whereas this ruling draws a firm line between undisputed recorded cash that warrants immediate deposit and contested receivables that require independent legal adjudication rather than summary cooperation measures. Insolvency professionals and corporate advisors must carefully segregate undisputed liquidity shortfalls from disputed commercial claims when filing cooperation applications under the insolvency framework.

Practitioners should advise client boards on individual and joint liabilities regarding physical cash entries appearing in company books while pursuing separate litigation for contested market receivables. Bottom line: Ensure accurate cash reconciliations during corporate distress to avoid direct monetary deposits mandated by the tribunal.