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Judgment
This appeal is filed by the appellant on the ground the Respondent No.3 had filed insolvency petition No.585/ND/2024 before the Ld. Adjudicating Authority under Section 7 of the IBC initiating the corporate insolvency against Respondent No.1 i.e. M/s Mona Portfolio Ltd and the Ld. Adjudicating Authority accepted the plea of debt and default and had initiated the CIRP against the corporate debtor i.e. Respondent No.1 herein viz M/sMona Portfolio Ltd under Section 7 of the IBC vide order dated 05.12.2024.
It is argued by the learned counsel for the appellant during the filing of the petition under Section 7 of IBC, the Respondent in CP(IB)/585/2024 deliberately misled the Ld. Adjudicating Authority that the Respondent No.1 is not a NBFC and hence suppressed the material fact pertaining to the maintainability of petition and by such concealment, fraudulently induced the Ld. Adjudicating Authority to exercise its jurisdiction in initiating the CIRP against Respondent No.1 under Section 7 of the IBC.
It is argued by the learned counsel for Appellant the Respondent No.1 and Respondent No.3 both deliberately concealed the fact that Respondent No.1 is a financial institution, duly registered with the Reserve Bank of India under Section 45-IA of Reserve Bank of India Act, 1934 and engaged in non-banking financial activities and, therefore, is a NBFC. It is further argued Respondent No.1 being NBFC, no proceedings under Section 7 of the Code could have been initiated against it.
It was submitted Respondent No.1 being a financial service provider under Section 3(17) of IBC, and being a RBI registered NBFC, no application under Section 7 of the Code could have been maintainable before the Ld. Adjudicating Authority against Respondent No.1 as it stands expressly excluded from the definition of Corporate Debtor under Section 3(8) read with Section 3(7) of the Code
It was argued that Respondent No.1 miserably failed to object to the admission of Section 7 petition filed by the Respondent No.3 and rather actively supported and acquiesced in the initiation of CIRP, thus aiding the fraudulent act of Respondent No.3.
On a query upon locus of the appellant, since was never not a party in CIRP process before the Ld. Adjudicating Authority, reference was made by the appellant to CP(IB)/155/CH/2023 filed by Respondent No.1, M/s Mona Portfolio Ltd, against the appellant wherein Respondent No.1 had categorically stated that it holds the status of NBFC and is duly registered as NBFC under Section 45 of the RBI Act, 1934 and is holding status of NBFC and annexed registration certificate Annexure WS2 therein, which registration certificate was of dated 04.04.2001.
The appellant thus filed an application under Section 65 of the Code before Ld. NCLT which was dismissed vide the impugned order dated 20.01.2026 as under: -
IA-144/ND/2026: The sole basis of filing the present application by the Applicant is that in the petition filed against him before Chandigarh Bench of NCLT, the Corporate Debtor before us has taken a stand that it is non- banking financial company. Such stand taken by the Corporate Debtor in independent proceedings filed against the Applicant will not give him a locus to prefer the present proceedings. It was for the Corporate Debtor take a stand before this Tribunal regarding its status. The present application preferred by the Applicant on the aforementioned ground is not maintainable and is dismissed.
After we dictated the order, as above the Ld. Counsel for the Applicant asked us to read Section 65 and emphasised that there is no requirement of anybody being associated with the process for filing application under Section 65 of IBC, 2016. As can be seen from the provisions of Section 65 of the Code, if any person initiate the Insolvency Resolution Process fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such a person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees. Section 65 of the IBC reads thus:
"65. Fraudulent or malicious initiation of proceedings. -
1)If, any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for the resolution of insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.
2)If, any person initiates voluntary liquidation proceedings with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees but may extend to one crore rupees.
3)If any person initiates the pre-packaged insolvency resolution process-
a)fraudulently or with malicious intent for any purpose other than for the resolution of insolvency; or
b)with the intent to defraud any person, the Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.]"
In the present case it is not the plea raised by the Applicant that the creditor has initiated the IRP with malicious intent or for any purpose other than for resolution process. His plea is that the Corporate Debtor before us is an NBFC and such is the admission of the Corporate Debtor in the proceedings initiated before the Chandigarh Bench of this Tribunal. Such plea is not covered by Section 65 of the Code. The plea is misconceived and is rejected.
During the course of hearing it was admitted by Respondent No.1 and 3 that initially Respondent No.1 was a NBFC but its registration was cancelled by the RBI on 20.02.2019 and a press release to this effect was also issued on 20.03.2019. Such press release is annexed as Exhibit 4 with the reply of Respondent No.2.
We have gone through the same. Considering the fact, the appellant is only aggrieved of the fact the insolvency proceedings have been initiated against him at Chandigarh by M/s Mona Portfolio herein alleging that it was NBFC but whereas it is not, the appellant is at liberty to seek appropriate remedy before the Ld. NCLT at Chandigarh in CP No.155/2023 for wrong disclosure, if any. However, here as submitted Respondent No. 1 was never a NBFC on the date of initiation of CIRP under Section 7 of IBC by Respondent No.3, hence, it cannot be said there was a fraudulent initiation of the CIRP.
10 It is apparent the appellant is not aggrieved by the initiation of CIRP against Respondent No.1 by Respondent No.3 but is rather aggrieved by the CIRP initiated by Respondent No.1 against the appellant at Chandigarh on the basis of it being NBFC and hence is trying to intervene in the process which rather stood culminated and implemented, hence we are not inclined to interfere.
Thus we see no reason to differ from the impugned order passed by the Ld. NCLT. The appeal has no merit and is accordingly dismissed.
Pending applications are also disposed of.