Application u/s 65 of IBC could be maintained even before Admission Insolvency petition: NCLAT

The National Company Law Appellate Tribunal (NCLAT) ruled that an application under Section 65 of the Insolvency and Bankruptcy Code (IBC) can be maintained even before the formal admission of Corporate Insolvency Resolution Process (CIRP) petitions. This decision came from an appeal against two orders by the National Company Law Tribunal (NCLT), which had rejected applications under Section 65. The NCLAT found that the NCLT’s interpretation of Section 65 was legally incorrect, as this provision aims to restrict fraudulent or malicious CIRP petitions. The ruling clarifies that Section 65 applications can be considered to prevent abuse of the insolvency process, even before the formal admission of CIRP petitions. This decision is significant for stakeholders seeking to challenge CIRP petitions on grounds of fraud or malice, ensuring that such concerns can be addressed promptly.