The NCLT Chandigarh ruled that mere allegations of collusion and related party transactions do not suffice to substantiate claims of fraudulent initiation of corporate insolvency resolution process (CIRP).
NCLT on Fraud Allegations in CIRP
The National Company Law Tribunal (NCLT) in Chandigarh has ruled that allegations of fraud must be supported by cogent evidence for invoking Section 65 of the Insolvency and Bankruptcy Code (IBC). In this case, a plea from a director alleging fraudulent CIRP initiation was rejected due to a lack of substantiating evidence.
The Tribunal emphasized that the accusations of collusion and related party transactions must be proven with factual evidence, rather than resting solely on assertions. This decision reinforces the burden of proof on the party alleging fraud in insolvency proceedings.
This ruling serves as an important precedent for practitioners dealing with corporate insolvency, stressing the necessity of tangible evidence when alleging fraudulent conduct during CIRP initiation, thereby minimizing frivolous claims.
Citations
- NCLT Chandigarh Order (2026)
