Section 65 of IBC has to be read as enabling provision to reject an application even on proving of debt and default Section 10 Application is not to be obligatorily admitted – Wave Megacity Centre Pvt. Ltd. Vs. Rakesh Taneja & Ors. – NCLAT New Delhi
NCLAT held that when finding recorded by the Adjudicating Authority is that Section 10 application has been initiated fraudulently and maliciously, even if there is debt and default, the Adjudicating Authority is not obliged to admit Section 10 Application. Section 10 and Section 65, which are part of the same statutory scheme needs to be read together to give effect to the legislative scheme of the Code. In event CIRP is initiated by a corporate applicant fraudulently with malicious intent for any purpose other than the resolution of insolvency, holding it that it is obligatory for the Adjudicating Authority to admit Section 10 Application, will be contrary to the statutory scheme under Section 65. In event conditions under Section 65 are fulfilled, Section 10 Application can be rejected, even if debt and default is proved.