Dr. Vijay Vohra Vs Himalaya Food International Ltd (NCLT Chandigarh)
The application was filed under Section 65(1) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the NCLT Rules, seeking action against the financial creditor for allegedly initiating insolvency proceedings fraudulently and with malicious intent. The applicant, a promoter shareholder and director of the corporate debtor, contended that the Section 7 petition was filed for purposes other than insolvency resolution. He alleged that the financial creditor had fraudulently created credit facilities after the corporate debtor had become a non-performing asset, suppressed material facts relating to removal of charges over the corporate debtor’s assets, engineered financial transactions through collusive board resolutions, and used a temporary director to execute credit facility documents. It was also alleged that the financial creditor and corporate debtor were related parties with common directors and shareholders, rendering the Section 7 petition non-maintainable. The applicant further argued that satisfaction of charge in MCA records showed discharge of debt and that the financial creditor had concealed this fact while filing the insolvency petition.
The respondent opposed the application, submitting that the financial debt and default were established through bank transfers, remained unpaid, and exceeded the statutory threshold. It stated that the debt had been consistently reflected as long-term borrowings in the corporate debtor’s balance sheets, constituting acknowledgment of liability. The respondent also contended that the agreement forming the basis of the transaction had never been challenged, that the corporate debtor had earlier stated before the Tribunal that it had no objection to admission of the Section 7 petition, and that affidavits had been filed confirming the petition was non-collusive. According to the respondent, the Section 65 application was filed belatedly only to delay the insolvency proceedings.
