[IBC, 2016] : What is the scope of Intervenor's Intervention in proceedings under IBC, 2016 : A Case Study

 [IBC, 2016] : What is the scope of Intervenor's Intervention in proceedings under IBC, 2016 : A Case Study

◾ After the enactment of IBC, 2016, a new kind of dispute has arisen. An interesting case where the intervenor had questioned the Orders passed under IBC, 2016 is being discussed.

◼ In this case related to a proceeding under IBC, a Company filed application as intervenor. Arguments around claim of applicant were pointed out.

◼ While dealing with the arguments, it was held that "Section 65 of the ‘I&B Code’ deals with ‘fraudulent or malicious initiation of proceedings’ whereas Section 66 relates to ‘Fraudulent trading or wrongful trading’. As per sub-section (1) of Section 65, 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 pass appropriate order of penalty in terms with the said provision. The word ‘collusiveness’ have not been mentioned there but one can prove collusion to suggest that the proceeding relating to insolvency resolution process was initiated fraudulently in collusion or with malicious intent."

◼ It was also held that "for a petition under Section 65 of the ‘I&B Code’ or for alleged allegation of ‘collusiveness’, the party moving the application is required to prove the same. The Adjudicating Authority cannot pass any order in absence of any corroborating evidence or statement."

◼ The matter was clarified that "only after being admitted as a party to the litigation an Intervener can get entitlement for demand of a copy of a pleading. It is also a settled law that the ‘Corporate Insolvency Resolution Process’ is not a litigation."

Finally, intervenor's arguments were rejected.

Refer Nityank Infrapower & Multiventures Pvt Ltd v Invex Pvt Ltd [2018] GCtR 4304 (NCLAT)

Written by 

Vishal

Delhi

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