The National Company Law Tribunal (NCLT), New Delhi Bench, has recalled the insolvency proceedings initiated against SLR Techinfra Pvt. Ltd., holding that the Corporate Insolvency Resolution Process (CIRP) was triggered through forged and fabricated documents. Finding a serious abuse of the insolvency framework, the Tribunal imposed a penalty of ₹50 lakh on the financial creditor, Endless Services Pvt. Ltd., under Section 65 of the Insolvency and Bankruptcy Code, 2016 (IBC), and ordered restoration of the company’s management and assets to its erstwhile directors.
The order was passed by a Bench 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 mechanism had been invoked for purposes entirely alien to genuine insolvency resolution. The Resolution Professional was directed to immediately hand over control, custody, and possession of all assets and records of the Corporate Debtor to the former management.
The NCLT held that the Section 7 application filed by Endless Services was vitiated by suppression of material facts and reliance on documents that were demonstrably forged. A key document relied upon by the creditor, a purported loan agreement, referred to the Insolvency and Bankruptcy Code, 2016, despite being claimed as executed in 2014, well before the enactment of the Code. The Tribunal held that this internal inconsistency clearly established that the document was an afterthought created to mislead the Adjudicating Authority.
The Bench also found that the creditor had manipulated ledger entries and selectively withheld complete bank statements. It noted that a payment of ₹20 lakh, relating to a separate loan transaction involving another entity, had been wrongly tagged to the alleged dues of SLR Techinfra to artificially inflate the claimed debt and cross the statutory threshold for initiation of insolvency proceedings.
Rejecting the argument that allegations of fraud cannot 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 may be inferred from conduct both before and after admission, and that the Adjudicating Authority retains full jurisdiction to undo the insolvency process where its very foundation 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 tool or as a means to unlawfully wrest control of a company. Where initiation itself is fraudulent, the Tribunal held, the entire CIRP, including any pending resolution plan, must necessarily fail.
In strong terms, the NCLT observed that the insolvency framework cannot be permitted to confer legitimacy on actions driven by mala fide intent. Holding that Endless Services had committed a fraud on the Tribunal by initiating CIRP on the basis of fabricated agreements and manipulated financial records, the Bench recalled the admission order, closed the insolvency proceedings, and imposed a penalty of ₹50 lakh. The amount was directed to 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
Case Details:
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
