The National Company Law Appellate Tribunal has held that the mere fact that the application is filed, consequent of which the recovery proceedings may be halted, cannot lead to the conclusion that the intent and purpose of the application are malicious and fraudulent.
The appellate tribunal had to consider whether the rejection of Section 10 application on the ground of invoking Section 65 is justified or not.
The tribunal observed that to allow Section 65 application, the fraudulent and malicious intent of the Corporate Debtor has to be proved from some materials on record.
Merely because proceeding under Section 13, sub-sections (2) and (4) has been initiated by the creditor before filing of the Section 10 application, cannot be a ground to hold that Section 10 application is filed with malicious and fraudulent intent.
The bench of Justice Ashok Bhushan (Chairperson) and Arun Baroka (Technical Member) held that, For proving fraudulent and malicious intent, something more is required to be pleaded and proved apart from initiation of proceedings under Section 13, sub-section (2) and (4) by the creditor against the Corporate Applicant.
The National Company Law Tribunal’s order was challenged after the State Bank of India filed an application under Section 65 of the IBC, praying for the dismissal of the Section 10 petition.
The Adjudicating Authority held that the Section 10 petition had been filed by the Applicant with malicious and fraudulent intent to delay and halt the recovery proceedings initiated by the Respondent Bank.
