Merely because proceeding under Section 13(2) and 13(4) of the SARFAESI Act, 2002 has been initiated by the creditor prior to filing of Section 10 application under IBC, cannot be a ground to hold that Section 10 application is filed with malicious and fraudulent intent as per Section 65 of the IBC – Getz Cables Pvt. Ltd. Vs. State Bank of India and Anr. – NCLAT New Delhi

In this judgment, Hon’ble NCLAT referring various judgment 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(2) and 13(4) of SARFAESI Act by the creditor against the Corporate Applicant. Necessary ingredients, which required to be proved under Section 65(1) of IBC are that proceedings are initiated fraudulently or with malicious intent for any purpose other than for the resolution of insolvency. Both expression – fraudulent and malicious has definite connotation.

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If any Public depositor applies showing due of the debt claiming itself as operational creditor and the Resolution Professional or the Tribunal do not accept the claim on the ground that they are not financial creditor, we allow the appellant to raise the question before the Tribunal and if any adverse decision is given by the Tribunal, it will be open to the appellant to raise the issue before NCLAT- Hind Motors India Ltd. Vs. Adjudicating Authority NCLT, Chandigarh – NCLAT New Delhi

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