Pranav B Prem

The National Company Law Tribunal (NCLT), New Delhi Bench, has recalled insolvency proceedings initiated against SLR Techinfra Pvt. Ltd., holding that the Corporate Insolvency Resolution Process (CIRP) was fraudulently and maliciously triggered on the basis of forged and fabricated documents. Finding a grave abuse of the insolvency framework, the Tribunal imposed a ₹50 lakh penalty on the financial creditor, Endless Services Pvt. Ltd., under Section 65 of the Insolvency and Bankruptcy Code, 2016 (IBC), and directed restoration of the company’s management and assets to its erstwhile directors.

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The order was passed by a coram comprising Judicial Member Manni Sankariah Shanmuga Sundaram and Technical Member Atul Chaturvedi, while allowing an application filed by the suspended directors of SLR Techinfra. The Tribunal recalled its earlier admission order dated April 16, 2024, observing that the insolvency process had been invoked for purposes wholly alien to genuine insolvency resolution. It directed the Resolution Professional to immediately hand over control, custody, and possession of all assets and records of the Corporate Debtor to the erstwhile management.

The Tribunal recorded that the Section 7 application filed by Endless Services was vitiated by suppression of material facts and reliance on documents that were demonstrably forged. It noted that a purported loan agreement relied upon by the financial creditor referred to the Insolvency and Bankruptcy Code, 2016, even though the agreement was claimed to have been executed in 2014—well before the enactment of the Code. The presence of such statutory references, the Tribunal held, clearly established that the document was an afterthought created to mislead the Adjudicating Authority.

The NCLT further found that the creditor had manipulated ledger entries and selectively withheld complete bank statements. It observed that a payment of ₹20 lakh, which related to a separate loan transaction involving another entity, had been wrongly tagged to the alleged outstanding liability of SLR Techinfra to artificially inflate the debt. This, according to the Tribunal, was done to cross the statutory threshold required for initiation of insolvency proceedings.

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Rejecting the contention that fraud allegations could not be examined after admission of CIRP, the Tribunal clarified that Section 65 of the IBC is not confined to pre-admission conduct. It held that fraudulent intent can be inferred from conduct both before and after admission, and that the Adjudicating Authority retains full jurisdiction to undo the process if the very foundation of insolvency is tainted by fraud or malice.

Relying on judgments of the Supreme Court and the National Company Law Appellate Tribunal (NCLAT), the Bench reiterated that insolvency proceedings cannot be used as a recovery weapon or as a tool to unlawfully wrest control of a company. Where the initiation itself is fraudulent, the Tribunal said, the entire CIRP—including any pending resolution plan—must collapse, as the superstructure cannot survive when the base is illegal.

In strong terms, the Tribunal observed that the insolvency framework cannot be allowed to “confer legitimacy upon actions tainted with malafide intent.” It held that Endless Services had abused the process of law and committed a fraud on the Tribunal by initiating CIRP on the strength of fabricated agreements and manipulated financial records.

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Accordingly, the NCLT recalled the admission order, closed the insolvency proceedings, and imposed ₹50 lakh as penalty on Endless Services Pvt. Ltd., directing that the amount be deposited with the Insolvency and Bankruptcy Board of India (IBBI) within 30 days. The Resolution Professional was discharged with immediate effect and directed to file a compliance report confirming restoration of management, banking operations, and records to the Corporate Debtor.

Appearance

For Applicant: Advocates Pankaj Agarwal, Shashwat Srivastava

For Ex-Director: Advocate Anisha Jain

Cause Title: Shiv Kumar Bansal and Anr v Endless Services Ltd.

Case No: IA (I.B.C) 2762 (ND) 2025 IN COMPANY PETITION NO. IB/565/PB/2021

Coram: Judicial Member Manni Sankariah Shanmuga Sundaram , Technical Member Atul Chaturvedi