NCLAT Declares Transactions Fraudulent U/S 66 Of IBC Due To Corporate Debtor's Failure To Diligently Negotiate One-Sided Clause In MOU

The NCLAT has declared certain transactions as fraudulent under Section 66 of the IBC due to the corporate debtor's failure to diligently negotiate one-sided clauses in an MOU. This significant ruling underscores the responsibility of a company in distress to act in the best interest of its creditors, even during negotiations. The NCLAT found that accepting overly one-sided terms, especially when facing insolvency, amounted to fraudulent conduct aimed at defrauding creditors. This decision serves as a crucial reminder for corporate debtors and their management to exercise due diligence and fairness in all transactions, preventing misuse of the insolvency process.