Case Note & Summary
The appeal was filed by Jyoti Structures Limited against the order of the Adjudicating Authority dated 11.06.2026, which dismissed its application under Section 65 of the Insolvency & Bankruptcy Code, 2016. The appellant had undergone a successful resolution process and claimed to have paid the dissenting financial creditor, DBS Bank Limited, in four instalments as per the approved resolution plan. However, the respondent alleged material breaches of the resolution plan and sought liquidation of the corporate debtor. The appellant contended that the respondent's application was maliciously instituted. The Adjudicating Authority dismissed the appellant's application, stating that the respondent's claims required adjudication on the merits. The appellant argued that the delay in implementation was condoned in a previous order and that the respondent had received its dues. The Tribunal noted that the Adjudicating Authority conflated the terms 'fraudulently' and 'maliciously' and failed to properly assess the maintainability of the respondent's application. The Tribunal allowed the appeal, set aside the impugned order, and remanded the matter back to the Adjudicating Authority for a proper hearing on the maintainability of the liquidation application before considering the merits. No costs were awarded.
Headnote
A) Insolvency Law - Fraudulent Initiation - Criteria for Invocation of Section 65 - Insolvency & Bankruptcy Code, 2016, Section 65 - The court held that the Adjudicating Authority must ascertain whether the application was filed fraudulently or with malicious intent before proceeding with the liquidation application. The criteria for determining fraudulent initiation and malicious intent are distinct and must be evaluated separately. (Paras 5-7).
Issue of Consideration
Whether the Adjudicating Authority erred in dismissing the application under Section 65 of the Insolvency & Bankruptcy Code, 2016.
Final Decision
The appeal was allowed, the impugned order was set aside, and I.A. 390 of 2026 was remanded back to the Adjudicating Authority for hearing before I.A. 93 of 2025.
Law Points
- Insolvency resolution process
- fraudulent initiation
- malicious intent
- Adjudicating Authority
- Section 65 of the Insolvency & Bankruptcy Code
- 2016
