Gopal Trading Company Vs. Ravindra Kumar Goyal (RP) and Ors. - The Adjudicating Authority had rightly concluded that the intent behind filing the Section 9 application was not genuine in view of the fact that the Appellant who had initiated the Section 9 application, for inexplicable reasons, absented themselves from further participation in the CIRP proceedings including abstention from the filing of claims.

 NCLAT (2026.03.17) in Gopal Trading Company Vs. Ravindra Kumar Goyal (RP) and Ors. [(2026) ibclaw.in 326 NCLAT, Company Appeal (AT) (Insolvency) No. 222 of 2026] held that;

• The plain reading of Section 65 also leaves no doubts in our minds that there is no need of any formal application for its invocation and the Adjudicating Authority is well within its rights to take suo-moto cognizance of any such development at any stage of the proceedings.

• The Adjudicating Authority had rightly concluded that the intent behind filing the Section 9 application was not genuine in view of the fact that the Appellant who had initiated the Section 9 application, for inexplicable reasons, absented themselves from further participation in the CIRP proceedings including abstention from the filing of claims.

• Be that as it may, we tend to agree with the Adjudicating Authority that when the family links are kept in mind along with the fact that the Appellant was also an ex-director of the Corporate Debtor coupled with non-pursuit of their claims arising out of debt owed by the Corporate Debtor clearly establishes that the purpose was not resolution of insolvency but to prevent recovery proceedings by CGST and GST Department.

Excerpts of the Order;

The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 (“IBC” in short) by the Appellant arises out of the Order dated 15.12.2025 (hereinafter referred to as “Impugned Order”) passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench-I) I.A. Nos. 1316(AHM)/2024 and 643(AHM)/2025 in C.P. (IB) No. 251/(AHM)/2022. By the impugned order, the Adjudicating Authority has allowed I.A. Nos. 1316(AHM)/2024 and 643(AHM)/2025. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant-Operational Creditor.

# 2. Coming to the brief facts of the case, Gopal Trading Company-Operational Creditor/Appellant had filed a Section 9 application under IBC which led to admission of the Corporate Debtor-Matrushri Fibres Private Limited into CIRP on 25.09.2023. The Interim Resolution Professional after verification and collation of claims constituted the Committee of Creditors (“CoC” in short). The IRP was later confirmed as Resolution Professional (“RP” in short). The CoC consisted only of two Operational Creditors viz. Assistant Commissioner of GST and Assistant Commissioner of State Tax holding 95.01% and 4.99% vote-share respectively. During the conduct of CIRP proceedings, the IRP had issued several communications to the suspended management of the Corporate Debtor seeking statutory financial records which did not elicit any response from the suspended management. The RP had also issued communications to the Appellant for deposit of CIRP costs which the Appellant did not initially deposit on grounds of financial constraints. This had led the RP to initiate contempt proceedings against the Appellant following which Rs. 2 lakh was deposited towards CIRP cost on 29.08.2024. On finding that the CIRP was not making much meaningful progress due to non-cooperation from the suspended management in making available necessary information/ documents/records of the Corporate Debtor, the Respondent No.1-RP preferred IA No. 1316 of 2024 against the members of CoC seeking directions for inter-alia the closure/termination of the CIRP; for direction to the CoC members to pay the RP fees and expenses incurred besides discharge of the RP from the CIRP of the Corporate Debtor. The Appellant was however not impleaded as party in IA No. 1316 of 2024. While the IA No. 1316 of 2024 was being heard, the RP-Respondent No.1 also filed an IA No. 643 of 2025, in which the Appellant was arrayed as a party, seeking directions of the Adjudicating Authority to declare that the Section 9 petition was initiated by the Appellant-Operational Creditor fraudulently with malicious intent and for purpose other than resolution of the Corporate Debtor and for levy penalty in terms of Section 65 on the Appellant. The Adjudicating Authority after hearing both IA No. 1316 of 2024 and IA No. 643 of 2025 disposed them of with a common impugned order terminating the CIRP of the Corporate Debtor alongwith direction to the Appellant to pay a penalty of Rs. 10 lakhs for fraudulent initiation of CIRP; pay CIRP related costs of Rs.6 lakhs which was in addition to the Rs. 2 lakhs which had already been paid earlier. Aggrieved by this impugned order, the present appeal has been preferred by the Appellant.

# 3. Submission was made by the Ld. Counsel for the Appellant that the Appellant was a small-time business entity which had already suffered business/financial losses and hence the cumulative burden of Rs. 18 lakhs toward penalty, RP’s fees and CIRP expenses imposed by the Adjudicating Authority vide the impugned order had caused grave and irreparable injury to the Appellant. Assailing the impugned order, submission was pressed that when the Adjudicating Authority had itself admitted the CIRP after due adjudication of the existence of the operational debt and default way back in 25.09.2023 and this CIRP admission order had already acquired finality, the impugned order by reversing its earlier order by holding the CIRP initiation to be fraudulent/malicious suffered from inconsistency and incongruity both in terms of fact and law. Stagnation of CIRP was the central reason on which the CIRP admission order was reversed by the impugned order. However, this stalemate was not caused by any act of omission or commission on the part of the Appellant but was entirely caused by persistent non-cooperation from the suspended management. Yet inspite of the purported non-cooperation from the suspended management, the RP did not take any coercive or corrective steps under Section 19(2) of the IBC to ensure cooperation of the suspended management. Hence, the RP being responsible for the slow and negligible progress of CIRP, it could not have held the Appellant responsible for contributing to the stagnation of CIRP and made liable to suffer penalty under Section 65 of IBC. Pressing further that the Appellant was not impleaded as a party in IA No. 1316 of 2025 which had been filed by the RP for closure/termination of the CIRP, the matter having been heard ex-parte against them, the Appellant was unfairly subjected to substantial and disproportionate financial liability by imposition of CIRP related costs and levy of penalty on the Appellant.

# 4. We have duly considered the arguments advanced by the Learned Counsel for the Appellant and perused the records carefully.

# 5. To commence with our analysis on the tenability of the contentions raised by the Appellant, we would like to begin by first outlining the prayers contained in I.A No. 1316 of 2024 and IA No. 643 of 2025. The prayers are as reproduced below:

I.A. No.1316 of 2024

“a. Pass appropriate orders to close/terminate the CIRP initiated against the Corporate Debtor and pass other and further consequential orders including in relation to discharge of the Applicant as Resolution Professional;

b. Pass appropriate orders directing the COC members of the Corporate Debtor to pay the RP fees and reimburse the CIRP expenses incurred by the Resolution Professional as mentioned at Annexure LL;

c. Pass any other order(s) that this Hon’ble Tribunal may deem fit.”

I.A. No.643 of 2025

“a. Pass appropriate order declaring that CP(IB) No. 251 of 2022 has been initiated by the Respondent fraudulently and/or with malicious intent for purpose other than for the resolution of insolvency of the Corporate Debtor and further this Adjudicating Authority be pleased to pass appropriate order levying penalty as per Section 65 of the IB Code on the Respondent;

b. Pass any other order(s) that this Hon’ble Tribunal may deem fit.”

# 6. Next, we advert our attention to the prayers urged by the Appellant as contained in the present appeal petition which is before us for our consideration which is as reproduced below:

“a. Be pleased to allow this Appeal.

b. Be pleased to quash and set-aside the Impugned Final Order and Judgment dated 15.12.2025 passed by the Ld. National Company Law Tribunal, Ahmedabad Bench, Court-I in I.A. No. 643/ 65/ NCLT(AHM)2025 IN CP(IB) No. 251/9(AHM)2022.

c. Be pleased to quash and set aside the imposition of penalty of Rs 10,00,000 and the direction fastening Resolution Professional fees and CIRP costs amounting to Rs 6,00,000 upon the Appellant, as directed under the Impugned Order;

d. Be pleased to pass such other or further or orders as may be necessary and expedient in the facts of this case.”

# 7. When we look at the prayers above, it is adequately clear that the Appellant has sought that the order of the Adjudicating Authority passed in IA No. 643 of 2025 be set aside. This order of the Adjudicating Authority which has been impugned held that the CIRP proceeding had been initiated fraudulently and/or with malicious intent for purpose other than insolvency resolution by the Appellant besides imposition of penalty of Rs 10 lakhs and fastening of fees of RP and CIRP costs amounting Rs 6 lakhs on the Appellant. The prayers in the present appeal, however, makes no reference to IA No. 1316 of 2024.

# 8. It is the case of the Appellant that the Adjudicating Authority had exceeded their jurisdiction in holding the initiation of CIRP to be fraudulent and malicious at a time when the same Adjudicating Authority had itself admitted the CIRP vide its order dated 25.09.2023 after recording existence of debt and default. In such circumstances, it was not correct on the part of the Adjudicating Authority to hold that the CIRP proceeding was fraudulently initiated. The Respondent No.1-RP had conducted the CIRP proceedings over a long period of two years during which several CoC meetings were also held. Thus, after CIRP had effectively run its course for two years, the invocation of Section 65 by the RP thereafter and holding the CIRP initiation to be fraudulent was arbitrary and untenable. It was also contended that Section 65 of IBC requires strict construction and IA No. 643 of 2025 could not have been admitted merely on the grounds of non-filing of claim by the Appellant-Operational Creditor. Further contention had been raised that when the Appellant had chosen to stay out of CoC proceedings and had also paid advance CIRP cost, they were being dragged into unnecessary litigation by the Respondent No.1 by filing IA No. 643 of 2025 under Section 65 of IBC. It was also their vehement contention that the Adjudicating Authority could not have directed the Appellant to discharge the CIRP costs as it is the CoC which is obligated to bear the fees of RP and CIRP expenses. The impugned order while imposing the penalty also failed to record reasons to justify imposition of such heavy penalty without disclosing the basis for quantifying the penal amount.

# 9. When we look at the material on record, we find that Respondent No.1-RP had filed IA No. 643 of 2025 in which a prayer had been clearly made that the CIRP initiation order having been fraudulently and maliciously initiated other than for purposes of resolution of insolvency of the Corporate Debtor, the Adjudicating Authority may order closure of the CIRP and levy penalty on the Appellant in terms of Section 65. At the very threshold, we would like to observe that insofar as IA No. 643 of 2025 is concerned, it is an undisputed fact that the Appellant had been impleaded as a party therein and therefore afforded an opportunity to appear before the Adjudicating Authority. The Appellant having also filed their reply in IA No. 643 of 2025 cannot claim any prejudice on grounds of breach of principles of natural justice.

# 10. Now we come to the main bone of contention as to whether the CIRP was initiated by the Appellant in a fraudulent/malicious manner which attracted Section 65 of the IBC. When we glance at the contours of Section 65 of the IBC, we find that this statutory provision embodies a clear legislative fiat that insolvency resolution process shall not be invoked fraudulently or with malicious intent for any purpose other than resolution of insolvency. This statutory provision therefore empowers the Adjudicating Authority to interdict the abuse of CIRP process at any stage, if the Adjudicating Authority is satisfied from the surrounding facts and circumstances on record, of fraud and/or malicious intent on the part of any party seeking admission of CIRP of the Corporate Debtor. Quite apart from the fact that Section 65 application can be entertained at any time or at any stage of the CIRP proceeding, the plain reading of Section 65 also leaves no doubts in our minds that there is no need of any formal application for its invocation and the Adjudicating Authority is well within its rights to take suo-moto cognizance of any such development at any stage of the proceedings.

# 11. When we look at the facts of the present case, it is an indisputable fact that the RP had filed the IA No. 643 of 2025 for declaring the CIRP as one tainted by fraudulent and malicious invocation. It is an undisputed fact that the statutory period of 180 days had already expired and the CIRP had entered into a phase of stagnation with no signs of registering further progress. It is the case of the Appellant that when the RP had continued on with the conduct of CIRP for a protracted period of 2 years, the RP could not have abruptly turned volte face thereafter to claim that the CIRP admission was fraudulent in nature.

# 12. We have already noticed in the preceding paragraph that in terms of the statutory construct of Section 65 of IBC, there is no ring-fencing in terms of timing as to when the Adjudicating Authority can initiate Section 65 proceedings. This coupled with the over-arching principle that the Adjudicating Authority is obligated to take necessary safeguard to ensure that the IBC framework is not abused or leveraged in any manner to perpetrate fraud, leaves no room for the Appellant to raise the bogey that the Adjudicating Authority could not have initiated the Section 65 proceedings after a period of two years. Merely because CIRP had been admitted and CIRP proceedings was thereafter continued by the RP, that clearly did not preclude the filing of a Section 65 application and the Adjudicating Authority is also not barred in any manner from adjudicating upon such Section 65 application.

# 13. Another defence taken by the Appellant is that they had at no stage acted in the manner which obstructed or delayed the CIRP process and that they had complied to all directions issued during CIRP including deposit of CIRP cost. It was contended that merely because the CIRP did not reach its logical culmination, this cannot constitute a valid ground for invocation of Section 65 of IBC. Moreover, the Appellant cannot be put to blame if the RP for his own shortcomings could not effectively proceed with the conduct of CIRP proceedings. It is the case of the Appellant that it was the RP who was responsible for the stagnation of the CIRP process since he failed to invoke the statutory remedy available to him under Section 19(2) of the IBC to take corrective steps against the suspended management of the Corporate Debtor for not cooperating with the RP in furnishing relevant information necessary for pursuing the CIRP proceedings.

# 14. The issue before the Adjudicating Authority was not what caused the delay in the CIRP proceedings but whether the CIRP proceedings had been fraudulently and/or maliciously initiated and was fit to be terminated in view of the same. The Section 9 application having been initiated by the present Appellant, the Adjudicating Authority has rightly focussed on the facts and circumstances on record to view the conduct of the Appellant.

# 15. We find that the Adjudicating Authority in the impugned order took notice of the fact that the Appellant had filed the Section 9 application on the basis of an outstanding operational debt of Rs 3.80 Cr. and that after the Section 9 application was admitted and moratorium had commenced, the Appellant surprisingly slipped into a hibernation mode and did not file any claim in pursuance of public announcement made by the RP. The reasons for not filing their claim have also not been disclosed before the RP by the Appellant. This glaring omission to file claims on part of the present Appellant had rightly arrested the attention of the Adjudicating Authority in finding the conduct of the Appellant to be unusual. This conclusion of the Adjudicating Authority was well justified as the standard and usual response of any operational or financial creditor is to file their claims as and when a Corporate Debtor is admitted into insolvency particularly so when it is their own Section 9 application which led to CIRP of the Corporate Debtor. The Adjudicating Authority had rightly concluded that the intent behind filing the Section 9 application was not genuine in view of the fact that the Appellant who had initiated the Section 9 application, for inexplicable reasons, absented themselves from further participation in the CIRP proceedings including abstention from the filing of claims. In this backdrop, the Adjudicating Authority did not commit any infirmity in proceeding to examine whether this omission on the part of the Appellant to file their claims was deliberate and whether this conduct was a pointer to the fact that the purpose of filing the Section 9 application was motivated by reasons other than corporate insolvency.

# 16. At this stage, it is also pertinent to note that the only claims filed in the CIRP process was from two entities viz. Assistant Commissioner of GST and Assistant Commissioner of State Tax, which were authorized to collect statutory taxes. The recovery of taxes by these two entities was no longer possible because of moratorium having come into play following the admission of CIRP. The outstanding tax liability also stands validated by the fact that the Tax Departments in their claims had submitted substantial amounts as statutory dues outstanding against the Corporate Debtor for past years. The Adjudicating Authority has therefore rightly noticed that the initiation of CIRP followed by moratorium barrier coming into existence under Section 14 coincided with pending recovery actions by the Tax Departments. Thus, what seems to underpin the reason for triggering CIRP proceedings was clearly to circumvent the tax liability. It is clearly evident from the timing of CIRP admission that the moratorium provision was being put to use by the Appellant to shield themselves from their tax liabilities and not as a genuine resolution tool.

# 17. This brings us to the ostensible reasons adduced by the Appellant for not filing claims. This was attributed by them to their ignorance of the scheme of IBC and CIRP procedures due to lack of education. We find that this plea has been duly considered by Adjudicating Authority in the impugned order. The Adjudicating Authority has correctly observed that if the Appellant could have pursued the Section 9 application with all vigour at their command and taken it forward to its logical culmination, it clearly denotes that the Appellant was fully aware of the IBC framework and its ramifications. Further, the Appellant by their own admission has also stated that they had issued a legal notice to the Corporate Debtor on 11.01.2022 as placed at page 399 of the Appeal Paper Book wherein they had called upon the Corporate Debtor to make payment of Rs 3.90 Cr. of outstanding operational debt. The issue of legal notice and lodging of police complaints by the Appellant also shows that the Appellant was meticulously preparing for the legal battle they had chosen to enter into. Given this background, the plea taken by the Appellant that they did not file the claims because of lack of legal awareness is an after-thought which lacks credibility. In this backdrop, the Adjudicating Authority cannot be said to have taken an arbitrary stand in not accepting this hollow plea of the Appellant to explain the non-filing of claims. Such opacity of reasons for invoking Section 9 and yet not filing claims justifies the finding returned by the Adjudicating Authority that the CIRP was initiated for fraudulent reasons which tantamount to a clear abuse of the insolvency framework.

# 18. The Adjudicating Authority has further noticed that the Appellant was related to the director of the Corporate Debtor and that this familial relationship was extremely close a relationship as they were real brothers. It has also been noticed by the Adjudicating Authority that the Appellant was also a director of the Corporate Debtor for some period of time. These facts have not been controverted by the Appellant except that it was pointed out that the Appellant was a director of the Corporate Debtor only for a very brief period. Be that as it may, we tend to agree with the Adjudicating Authority that when the family links are kept in mind alongwith the fact that the Appellant was also an ex-director of the Corporate Debtor coupled with non-pursuit of their claims arising out of debt owed by the Corporate Debtor clearly establishes that the purpose was not resolution of insolvency but to prevent recovery proceedings by CGST and GST Department.

# 19. Since Section 65 is designed to deter misuse and protect the integrity of the insolvency framework, the Adjudicating Authority was not off the mark in examining the overall conduct of the Appellant in the surrounding circumstances and in satisfying itself that the threshold elements of malicious intent was met in the facts of the present case. The Adjudicating Authority had not committed any error in imposing penal/compensatory amounts on the Appellant as Section 65 clearly provides for penal costs as a punitive measure in case of abuse of the process of law and to protect the integrity of the insolvency framework.

# 20. This brings us to the question of whether the Adjudicating Authority was correct in holding that the Appellant should bear the fees of the RP and the CIRP expenses. On the face of it, we quite agree with the Appellant that in terms of CIRP Regulations, such costs are ordinarily met from the assets of the Corporate Debtor or through CoC. Be that as it may, we are inclined to agree with the Adjudicating Authority that the present is however not a case where CIRP proceedings were taken up in normal circumstances. In the present case, the CoC consisted of only two tax entities who had filed their claims on the basis of their tax liabilities recoverable from the Corporate Debtor. The Tax Departments which were the only constituents of the CoC had not initiated the CIRP proceedings. The CIRP process also gradually slid into the path of turning non- viable with the CoC stopping to function altogether after a while. Hence for reasons of equity, the CoC in the present case could not be made to bear the financial implications of the CIRP proceedings for reasons of equity. The RP was thus left with no option but to carry on with his statutory obligations by funding the CIRP process from own resources. Given the absence of assets and a non-functional CoC coupled with prima-facie abuse of the CIRP proceedings by the Appellant for reasons other than seeking insolvency resolution of the Corporate Debtor having been established, the Adjudicating Authority in the present factual matrix, cannot be said to have faulted in exercising its residuary jurisdiction to hold that fees/expenses of RP shall be borne by the Appellant being the original Operational Creditor.

# 21. In result, we find no merit in the appeal and find no cogent reasons to interfere with the impugned order in any manner. The Appeal is dismissed.

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Anil Singh Vs. SREI Equipment Finance Ltd. and Anr. - Insofar as, Section 7 proceedings are concerned, there can be no quarrel to the observation that an Intervenor, who may not be necessary party or proper party, cannot intervene, but in a case where prayer of the Applicant under Section 65 regarding pleading to initiation of CIRP with fraudulent and malicious intent, the Adjudicating Authority ought to have looked into the allegations carefully.

 NCLAT (2025.08.25) in Anil Singh  Vs. SREI Equipment Finance Ltd. and Anr. [(2025) ibclaw.in 655 NCLAT, Company Appeal (AT) (Insolvency) No. 1069 of 2025] held that.-  

• In case, a proper application is filed, aspect whether the proceedings have been initiated in collusive manner will be looked into, in accordance with law and the appropriate orders have to be passed, considering the facts and circumstances of the case.

• Thus, it is clear that the Adjudicating Authority should be very cautious in admitting the Application so that Corporate Debtor cannot be dragged into Corporate Insolvency Resolution Process with mala fide for any purpose other than the resolution of the Insolvency.

• Before admitting the Application, every precaution is necessary to be exercised so that the insolvency process is not misused for any other purposes other than the resolution of Insolvency.”

• Thus, in view of the aforesaid discussion and law laid down by the Hon’ble Supreme Court and this court dismissal of the application by the Tribunal only on this ground that the application has been filed before the admission of the application under Section 7 is not sustainable.”
  Insofar as, Section 7 proceedings are concerned, there can be no quarrel to the observation that an Intervenor, who may not be necessary party or proper party, cannot intervene, but in a case where prayer of the Applicant under Section 65 regarding pleading to initiation of CIRP with fraudulent and malicious intent, the Adjudicating Authority ought to have looked into the allegations carefully.

• The IBC clearly prohibits any malicious or fraudulent initiation of CIRP and when in an application, it has been brought into notice by the stakeholders, the said application deserves consideration on merits. Rejection of the application only on the ground that Applicant has no locus, is unsustainable.

• It is not a case that Adjudicating Authority has returned any finding that Intervention Application has been filed to derail the CIRP. It was open for the Adjudicating Authority to consider the application under Section 65 on merits even at the time of hearing of Section 7 application.

Excerpts of the Order;

This Appeal has been filed challenging order dated 10.06.2025 passed by National Company Law Tribunal, Guwahati Bench, Guwahati rejecting Intervention Petition No.(IBC)/1/GB/2024 filed by the Appellant in Section 7 proceedings initiated by Respondent No.1 against Respondent No.2.

# 2. Brief facts of the case necessary to be noticed for deciding the Appeal are:

(i) A Section 7 application has been filed by SREI Equipment Finance Ltd. against the Corporate Debtor (“CD”) – Kitply Industries Ltd., on which CP(IB)/8/GB/2024 has been registered. The CD – Kitply Industries Ltd. was admitted to Corporate Insolvency Resolution Process (“CIRP”) by an order dated 01.05.2018 passed in company petition filed by IDBI Bank Ltd., in which CIRP a Resolution Plan was approved.

(ii) Kitply Industries Ltd. – CD was taken over by one Plytinum Marketing Ltd. through Special Purpose Vehicle formed and owned by SREI Multiple Asset Investment Trust. The CD after having taken over by Plytinum Marketing Ltd. is alleged to have taken financial facilities from Respondent No.1 – SREI Equipment Finance Ltd. and SREI Equipment Finance Ltd. has alleged default against Respondent No.2 in Section 7 application. SREI Equipment Finance Ltd. – Respondent No.1 itself underwent CIRP and a Resolution Plan proposed by National Asset Reconstruction Ltd. (“NARCL”) was approved on 11.08.2023.

(iii) In SREI Equipment Finance Ltd. an Administrator was appointed by the Reserve Bank of India (“RBI”). The Administrator filed an application under Section 66 of the IBC in the CIRP of Respondent No.1, seeking avoidance of various transactions, including transactions entered by Respondent No.1 with Respondent No.2. Section 7 application was filed by Respondent No.1 against Respondent No.2 on 04.05.2024.

(iv) On 17.09.2024, the Appellant filed an Intervention Application being Inv. Pet.(IBC)/1/GB/2024 on behalf of himself as well as representative of another 129 workers of Kitply Industries Ltd. – the CD. Intervention Petition was filed by the Appellant under Section 65 of the IBC read with Rule 11 of the NCLT Rules, 2016 praying for dismissal of Section 7 application and to impose cost on Respondent No.1 for fraudulently filing itself Section 7 petition. The said Intervention Petition was opposed by both Respondent Nos.1 and 2. The Adjudicating Authority by the impugned order rejected the Intervention Petition. Aggrieved by which order, this Appeal has been filed.

# 3. We have heard Shri Krishnendu Dutta, learned Senior Counsel appearing for the Appellant and Shri Sanjiv Sen, learned Senior Counsel appearing for Respondent No.1.

# 4. Shri Krishnendu Dutta, learned Senior Counsel appearing for the Appellant submits that the Adjudicating Authority committed error in not considering the application filed by the Appellant under Section 65. The Appellant as well as 129 workers of the Kitply Industries Ltd. – CD being stakeholders of the CD, have moved an application alleging fraudulent and collusive initiation of CIRP, which application deserved to be considered on merits. The Adjudicating Authority relying on the judgment of this Tribunal in Deb Kumar Majumder & Ors. vs. State Bank of India – Company Appeal (AT) (Ins.) No.44 of 2019, which has no application, has held that Appellant has no locus. The Appellants being the stakeholders of the CD, have every right to bring it to the notice of the Court about the malicious and fraudulent initiation of CIRP. It is submitted that Respondent Nos.1 and 2 are related party and Respondent No.1 controlled Respondent No.2 through Resolution Applicant in the earlier CIRP initiated against the CD. It is submitted that Section 65 application is maintainable pre-admission stage. It is submitted that this Tribunal as well as the Hon’ble Supreme Court in large number of cases have held that considering the provisions of Section 65 of the IBC, it is necessary by Adjudicating Authority to consider the application, if allegations of malicious and fraudulent initiation has been made. The Adjudicating Authority committed error in holding that in Section 7 proceedings, necessary parties to be heard are limited to the Financial Creditor and CD. Third parties do not possess any locus to be heard at the preliminary stage. The Adjudicating Authority further held that allegations under Section 65 relating to fraudulent and malicious initiation must be raised, if at all by the CD, through its authorized representative. The Adjudicating Authority held that Appellant, who is workmen through CD, neither proper nor necessary party for want of locus standi in the case. It is submitted that Adjudicating Authority took completely erroneous view of the matter in refusing to adjudicate the application filed by the Appellant under Section 65. The Adjudicating Authority erroneously distinguished the judgment of the Hon’ble Supreme Court in Beacon Trusteeship Ltd. vs. Earthcon Infracon Pvt. Ltd. & Anr. – (2020) SCC OnLine SC 1233 and other cases relied by the Appellant. Shri Krishnendu Dutta further submits that Administrator of Respondent No.1 has already filed an application under Section 66 of IBC, where transaction in question, which are basis for Section 7 application are alleged to be fraudulent and have been prayed to be avoided, which application is still pending consideration.

# 5. Shri Sanjiv Sen, learned Senior Counsel appearing for Respondent No.1 opposing the submission of the Appellant submits that an application filed by a lone workers of the CD has rightly not been entertained by the Adjudicating Authority. The purpose of application for intervention was only to derail the CIRP. The Adjudicating Authority has rightly taken the view that the Appellant, who is a lone workers of the CD has no locus to file any intervention petition in Section 7 proceedings. Shri Sen submits that pendency of Section 66 application filed by the Administrator of Respondent No.1 has no bearing on Section 7 application filed by Respondent No.1, which needs to be proceeded irrespective of pendency of Section 66 application.

# 6. Learned Counsel for the parties have placed reliance on various judgments of this Tribunal and the Hon’ble Supreme Court, which we shall refer to while considering the submissions in detail.

# 7. Section 7 application was filed by Respondent No.1 against Respondent No.2 on 04.05.2024 and Intervention Petition has been filed by the Appellant on 17.09.2024. The Adjudicating Authority has passed order on Intervention Petition, we thus need to notice certain facts and pleadings of the Intervention Petition to appreciate the respective submissions of the parties. The Intervention Petition has been filed by the Appellant and 129 other workers of the CD – Kitply Industries Ltd. The 129 workers have authorized the Appellant Anil Singh to file an application on their behalf. The copy of the Intervention Petition is filed as Annexure A-8 to the Appeal. At page 176 of the Appeal, names of 130 workers of the CD have been mentioned, on whose behalf the intervention is claimed. The Applicants pleaded in the application that they are workers engaged by Kitply Industries Ltd. at different locations and units and are presently working at the addresses mentioned in the cause title. In paragraph 1(iv), following is pleaded:

• “1.iv. The Applicants are vitally interested in the present proceedings as their livelihood depends on Kitply and any misconceived, collusive and untenable insolvency resolution process that may be initiated therein shall seriously affect the Applicants. The Applicants have locus to intervene in the Section 7 Petition and deserve to be heard before further Orders are passed therein.”

# 8. Under the heading facts of the case, the Applicant has pleaded the relevant facts for consideration. Referring to earlier CIRP against the CD in paragraphs-10, 16, 17, 18 and 19, following have been pleaded:

• “10. Ultimately the resolution plan proposed by SREI VIF was approved by this Hon’ble Tribunal by Order dated December 7, 2018. SREI VIF incorporated a 100% owned Special Purpose Vehicle in the name and style of Plytinum Marketing Private Limited (“Plytinum”) for taking over the 100% share capital of Kitply under the Resolution Plan.

• 16. Further, Plytinum, acting on the instructions and control of Trinity, appears to have caused the approval/sanction of ostensible financial assistance to Kitply from SEFL and SIFL for a limit of Rs. 130 Crore and Rs.120 Crore respectively.

• 17. Upon directions of Trinity, Kitply appears to have allegedly withdrawn a total sum of Rs.96.27 Crore from SEFL and Rs.81.65 Crore from SIFL, both of which are related to Trinity, and therefore also related to Kitply.

• 18. In other words, for financing and implementing the Said Plan, Plytinum allegedly infused only a sum of Rs.1 Crore as equity in Kitply and caused SEFL and SIFL to ostensibly provide loan of the alleged sum of Rs.177.92 Crore. From the said alleged sum of Rs.177.92 Crore, approximately Rs.165.00 Crore appears to have been fraudulently routed back to SIFL on the same day.

• 19. The said ostensible loans from SEFL and SIFL were fraudulently and collusively approved because Plytinum and Kitply are related entities and the ostensible loan allowed SEFL/SIFL to show unreal book profits. From the enquiries made by the Applicants, it is evident that the said transactions were fraudulent and circular transactions for the wrongful gain of SEFL and SIFL.”

# 9. The Applicant further pleaded that loan from SEFL and SIFL to Kitply was a fraudulent circular transaction. In paragraph 22 of the application, following has been pleaded:

• “22. It is of utmost importance to note that the Administrator of SEFL, appointed during the CIRP of SEFL, filed an application under Section 66 of IBC against Kitply and the erstwhile promoters of SEFL, alleging that the loan from SEFL and SIFL to Kitply were fraudulent circular transactions wherein the money from SEFL/SIFL was fraudulently routed back to SIFL. In other words, in the RBI initiated CIRP against SELF/SIFL the administrator nominated by RBI has come to a categorical finding regarding the fraudulent nature of the transaction.”

# 10. There are several other averments in the Intervention Application.

# 11. The Memo of Intervention Petition mentions that “Application for intervention and further reliefs under Section 65 of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of NCLT Rules, 2016”. The Intervention Application was supported by an affidavit of Anil Singh, the Appellant, where he claimed that he is the authorized signatory to the Applicant Nos.2 to 130. In paragraph-1 of the affidavit, following has been stated:

• “1. I am the Authorised Signatory of the Applicant Nos.2 to 130 herein. I am aware of the facts of the present case and I am competent to make, affirm and file the instant affidavit on my behalf and on behalf of Applicant Nos.2 to 130.”

# 12. The Intervention Application was also supported by documents, power of attorney, which contained the signatures of 129 workers, on whose behalf the application is stated to be filed. In the impugned order, the Adjudicating Authority in the very first paragraph has noted that application is under Section 60, sub-section (5) read with Rule 11 of NCLT Rules, 2016. In paragraph-1 of the impugned order, prayers made in the Intervention Application have also been noticed. It is useful to note paragraph 1 of the order, which is as follows:

“1. The present Intervention Petition has been filed by the Petitioners under Section 60(5) of Insolvency and Bankruptcy Code, 2016 (“Code”) read with Rule 11 of NCLT Rules, 2016 seeking the following reliefs:

a) CP(IB)/8/GB/2024 be dismissed in limine,

b) Penalty of Rs. 1 Crore be imposed on the Respondent No. 1 in the instant Application, for fraudulently filing the collusive section 7 petition against Kitply;

c) Issue notice to the Reserve Bank of India before proceeding any further with the hearing of CP(IB)/8/GB/2024

d) Stay of further proceedings in CP(IB)/8/GB/2024 till the disposal of the instant Application;

e) The Applicants be permitted to intervene in CP(IB)/8/GB/2024;

f) Ad interim order in terms of prayer (c) above;

g) Costs;

h) Any other order/directions that this Hon’ble Tribunal may deem fit and proper in the facts and circumstances as mentioned above.”

# 13. It is relevant to notice that although Intervention Application clearly mentions in the Memo that it is an application for intervention and further reliefs under Section 65 of the IBC read with Rule 11 of the NCLT Rules, 2016, but the Adjudicating Authority while referring to the application in paragraph-1 has mentioned the application under Section 60, sub-section

• (5) read with Rule 11 of the NCLT Rules, 2016. The Adjudicating Authority failed to notice that application specifically mentions relief under Section 65 of the IBC. Upto paragraph-1 to paragraph-5, the Adjudicating Authority has noticed the submissions and case laws related to the parties. In paragraph-6, the Adjudicating Authority has observed that Tribunal is to first examine whether the Intervention Petition is maintainable. In paragraph-6, following has been observed:

• “6. Heard the learned counsel for the parties and perused the available records. This Tribunal is of the view that we should first examine whether the present Intervention Petition is maintainable?”

# 14. In paragraph-9, the contentions of the Appellant/ Applicant has been noticed, which are as follows:

• 9. The present Intervention Petition filed by the employees/workers seeks dismissal of the main petition under Section 7 of the Code filed by Respondent No. 1 against Respondent No. 2. They allege that the initiation of CIRP is fraudulent, collusive, and based on nonexistent debt, aimed at legitimizing sham transactions and adversely impacting their employment and livelihood. The Petitioners submit that the matter warrants determination under Sections 65 and 66 of the Code, and that fraud must be adjudicated before any admission under Section 7.

# 15. In paragraph-12, the Adjudicating Authority has relied on the judgment of Deb Kumar Mujumdar Vs. State Bank of India. In paragraph 14, it has been held by the Adjudicating Authority that workmen of Respondent No.1 are neither the proper nor the necessary parties for want of locus standi in this case. In paragraphs 12 to 16, following has been observed:

• “12. Reliance is placed on the judgment of the Hon’ble NCLAT in Deb Kumar Mujumdar Vs. State Bank of India Company Appeal (AT) (Ins.) No. 44/2018 wherein it was held that at the stage of admission of an application under Section 7 of the IBC, only the Corporate Debtor is entitled to be heard, and no other financial or operational creditor has a right to intervene or be heard.

• 13. It is a settled position that at the stage of admission of a petition under Section 7 or Section 9 of the Code, the necessary parties to be heard are limited to the Financial Creditor and the Corporate Debtor. Third parties, including intervenors, do not possess any locus to be heard at this preliminary stage. Allegations under Section 65 of the Code, relating to fraudulent or malicious initiation of proceedings, must be raised, if at all, by the Corporate Debtor through its authorised representative. Entertaining multiple representations in such proceedings would defeat the objective of a time-bound insolvency resolution framework, as the transactions in question are between the Corporate Debtor and the Financial Creditor.

• 14. Therefore, the Petitioners, who are workmen to the Respondent no. 2 are neither the proper nor the necessary parties for want of locus standi in this case. Their interest is well guarded by the Code, irrespective of the outcome of Section 7 application before us. We have noted the submission of Respondent No. 2 carefully that it is a solvent entity actively engaged in its operations.

• 15. In view of the above, the application filed by the Petitioners does not rebut the basic ingredients under Section 7 of the Code, i.e. existence of a financial debt and default thereof. Hence, the intervention petition is not maintainable

• 16. Accordingly, this intervention petition, i.e. Inv. Pet. (IBC)/1/GB/2024 in CP(IB)/8/GB/2024 filed by the Petitioners is hereby rejected. List the main CP(IB)/8/GB/2024 for further consideration of the on 21.07.2025.”

# 16. We need to first notice the judgment in Deb Kumar Mujumdar Vs. State Bank of India (supra) relied by the Appellant. Copy of the judgment has been placed at page 404 Vol.-2 of the Appeal. In the above case, in section 7 proceedings, intervention was sought, which was rejected by the Adjudicating Authority, where it was held that Intervenor has no locus and the matter was adjourned for argument on 17.01.2019. This Tribunal held that at the stage of application under Section 7, no person has right to claim for hearing except the ‘Corporate Debtor’. Following has been observed by this Tribunal:

• “We agree with the observations made by the Adjudicating Authority at the stage of application filed under Section 7 that no person has right to claim for hearing except the ‘Corporate Debtor’. No other ‘Financial Creditor’ or ‘Operational Creditor’ or any other creditor is required to be heard except the ‘Financial Creditor’ who has filed an application under Section 9 of the I&B Code. The Adjudicating Authority is required to notice whether there is a ‘debt’ and ‘default’ committed by the ‘corporate debtor’ if the application under Section 7 is filed. On the other hand, if the application is under Section 9, the Adjudicating Authority is to notice whether there is a ‘debt’ and ‘default’ and whether there is a ‘pre-existing dispute’. However, the Adjudicating Authority should also keep in mind the provisions of Section 11 whereunder application under Section 7 or 9 is not maintainable if winding up proceedings has been initiated against the ‘corporate debtor’ as decided by this Appellate Tribunal in “M/s. Unigreen Global Private Limited vs. Punjab National Bank & Ors. – Company Appeal (AT)(Insolvency) No. 81 of 2017”. In the aforesaid background while we do not allow the appellants to oppose or support the application at the stage of admission, direct the Adjudicating Authority to decide the matter taking into consideration the fact brought by the appellant to its notice to find out whether a winding up proceedings has already been initiated against the ‘corporate debtor’ or not. If so required, the State Bank of India and M/s. Tantia Construction Limited should be asked to clarify the same.

• If the appellants are aggrieved by the order passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, in such case, the appellants will challenge the same before this Appellate Tribunal and raise all the issues as raised in this appeal. The appeal stands disposed of with the aforesaid directions and observations. No cost.”

# 17. The present is a case where application was filed under Section 65 of the IBC alleging fraudulent and malicious intent for initiation of Section 7 application. The Applicants were not only seeking intervention in Section 7 application but prayed for dismissal of Section 7 application under Section 65. Learned Counsel for the Appellant has relied on the judgment of the Hon’ble Supreme Court in Beacon Trusteeship Ltd. vs. Earthcon Infracon Pvt. Ltd. & Anr. – (2020) SCC OnLine SC 1233, where Section 65 of IBC came for consideration. The Hon’ble Supreme Court held that it is necessary for the Adjudicating Authority in case such an allegation is raised to go into the same. After noticing Section 65 of the IBC, following has been observed in paragraphs 7 and 8:

• “7. Considering the provision of section 65 of the IBC, it is necessary for the Adjudicating Authority in case such an allegation is raised to go into the same. In case, such an objection is raised or application is filed before the Adjudicating Authority, obviously, it has to be dealt with in accordance with law. The plea of collusion could not have been raised for the first time in the appeal before the National Company Law Appellate Tribunal or before this court in this appeal. Thus, we relegate the appellant to the remedy before the Adjudicating Authority.

• 8. In case, a proper application is filed, aspect whether the proceedings have been initiated in collusive manner will be looked into, in accordance with law and the appropriate orders have to be passed, considering the facts and circumstances of the case. We have made it clear that we have not commented on the merit of the case. We set aside the impugned order passed by the National Company Law Appellate Tribunal [ See Beacon Trusteeship Ltd. v. Earthcon Infracon P. Ltd., (2020) 10 Comp Cas-OL 551(NCLAT).] and dispose of the appeal in accordance with the aforesaid direction.”

# 18. Learned Counsel for the Appellant has relied on several judgments of this Tribunal in support of his submission. The Hytone Merchants Pvt. Ltd. vs. Satabadi Investment Consultants Pvt. Ltd. – (2021) SCC OnLine NCLAT 598, was a case where Section 7 application was rejected by the Adjudicating Authority. The said order was challenged in this Tribunal. This Tribunal has noticed provisions of Section 65 of the IBC and held that if any person initiate CIRP fraudulently or with malicious intent, the application can be rejected. In paragraphs 38 and 39, this Tribunal held following:

• “38. Therefore, the Code prescribes penalties under Section 65 and 75. Furthermore, Section 65 explicitly says that if any person initiates the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent for any purpose other than for resolution of Insolvency or liquidation, as the case may, the Adjudicating Authority may impose a penalty.

• 39. Thus, it is clear that the Adjudicating Authority should be very cautious in admitting the Application so that Corporate Debtor cannot be dragged into Corporate Insolvency Resolution Process with mala fide for any purpose other than the resolution of the Insolvency. Therefore, to protect the Corporate Debtor from the mala fide Initiation of CIRP, the law has provided a penalty under sections 65 and 75 of the Code. Before admitting the Application, every precaution is necessary to be exercised so that the insolvency process is not misused for any other purposes other than the resolution of Insolvency.”

# 19. Another judgment of this Tribunal, which has been relied by learned Counsel for the Appellant is in Company Appeal (AT) (Ins.) No.1406 of 2023 in Devashree Developers Pvt. Ltd. & Ors. vs. Aravali Cylinders Pvt. Ltd., where this Tribunal held that application under Section 65 is maintainable after filing of the application under Section 7, 9 or 10 of the IBC. In paragraphs 11 and 12, following have been held:

• “11. The answer to the aforesaid question is captured in para 16 where this order as this Court has held that the application filed under Section 65 of the Code is maintainable after the application is filed either under Section 7, 9 or 10 of the Code and not after the admission. 

• 12. Thus, in view of the aforesaid discussion and law laid down by the Hon’ble Supreme Court and this court dismissal of the application by the Tribunal only on this ground that the application has been filed before the admission of the application under Section 7 is not sustainable.”

# 20. In the above case also, an application filed under Section 65 was rejected, which was revived by this Tribunal for fresh consideration.

# 21. Another judgment relied by learned Counsel for the Appellant is Airwill Intellicity Social Welfare Society through its President vs. M/s. Ascot Projects Pvt. Ltd. – (2023) SCC OnLine NCLAT 2112, where application for intervention was rejected, which was filed under Section 65. This Tribunal laid down following in paragraphs 19 and 20:

• “19. In the light of the above, we are of the considered view that when an allegation of fraud being played on the financial creditors and unit buyers of Intellicity Business Park was brought to the notice of the Adjudicating Authority through IA No. 739(ND)/2021 when it was considering section 7 application CP (IB) No. 2356(ND)/2019 with regard to corporate debtor Ascot Projects it ought to have been taken note of by the Adjudicating Authority and the Appellant should have been provided an opportunity to present its case in the Section 7 proceedings of Ascot Projects Pvt. Ltd. in view of the requirement of natural justice and to avoid miscarriage of justice to the Appellant who could have been adversely affected by the admission of section 7 application. We are conscious of the fact that a CIRP initiated through fraud and malicious intent would be a nullity before law.

• 20. Hence we are therefore of the clear opinion that the Adjudicating Authority should have allowed IA No. 739(ND)/2021 and permitted the Appellant to intervene and participate in the Section 7 proceedings with relation to the corporate debtor Ascot Projects Pvt. Ltd. This was necessary to avoid miscarriage of justice and would have allowed the Appellant to substantiate its allegation regarding ground as pleaded in IA No. 739(ND)/2021.”

# 22. There are other judgments relied by learned Counsel for the Appellant, where same proposition has been laid down, which needs no repetition.

# 23. Learned Counsel appearing for Respondent No.1 has placed reliance on judgment of this tribunal in Company Appeal (AT) (Ins.) No. 228 of 2021 in Dharam Vir Malhotra vs. M/s Kaur Sain Spinners Ltd. & Anr., which was a case where intervention was sought in Section 7 proceedings initiated by Central Bank of India against the CD. The application was rejected, against which an Appeal was filed, which too was dismissed. It is useful to notice paragraph 15 of the judgment, where following was held by this Tribunal:

• “15. After hearing the parties and going through the pleadings made on behalf of the parties, we observe that the application under Section 7 by a Financial Creditor against the Corporate Debtor was pending for consideration and for admission and in the meanwhile, the Appellants are seeking intervention, not on the ground that the Corporate Debtor defaulted in payment of amounts to them, but, on the ground that the Company Petition filed by the Central Bank of India, the Respondent No. 2 herein was not for legitimate reasons but it is a malicious prosecution that falls under Section 65 of the IBC. We have considered the submissions of Respondent No. 2 Bank herein and observe that the Appellants have been ostensibly setup by the Respondent No. 1 Company for the purpose of derailing the lawful action of the Respondent Bank under Section 7 of the IBC. Keeping in view of the aforenoted facts, we do not find any merit in the Appeal to interfere with the order impugned passed by the Adjudicating Authority. The impugned order dated 19.02.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench, Chandigarh) in IA No. 1/2021 in CP (IB) No. 351/Chd/Pb/2018 is hereby affirmed. The instant Appeal is hereby dismissed. No order as to costs.”

# 24. In the above case this Tribunal held that the Appellants have been ostensibly setup by the CD for the purpose of derailing the lawful action of the Bank under Section 7. Thus, the rejection of the application was on the aforesaid ground. Further, it is not clear from the application, whether the application filed by the Appellant was also under Section 65 or not. Be that as it may, the said rejection was on the findings as noted above, hence, is clearly distinguishable and does not help the Respondent in the present case.

# 25. Another judgment relied by learned Counsel for the Respondent No.1 is Company Appeal (AT) (Ins.) No.246 of 2024 – New Era Propcon Pvt. Ltd. & Anr. vs. SREI Equipment Finance Ltd., where an order of admission under Section 7 was challenged by the Applicant. One of the submissions raised by the Applicant was that the transaction, which is basis of Section 7 application is already pending adjudication before Adjudicating Authority in Section 66 application filed by Administrator of the SEFL. This Tribunal dismissed the Appeal holding that mere pendency of Section 66 application does not impede the hearing of Section 7 application. In paragraphs 8 and 11, this Tribunal observed following:

• “8. The submission of the Appellant is that the transaction which is sham or collusive can only create an illusion that money has been disbursed to a borrower. The present is a case where there is no dispute raised that money has not been disbursed. The disbursement of money is not an issue raised. The filing of Section 7 application by the Administrator of SEFL was on the basis that loan was sanctioned and in pursuance of the loan amount was disbursed. Copy of the Statement of Account was also filed along with the Section 7 application which also indicate that amount was disbursed. The observation made by the Hon’ble Supreme Court in Para 48 of the judgment in “Phoenix ARC Private Limited vs. Spade Financial Services Limited & Ors.” that where a transaction is sham or collusive, it would only create an illusion that money has been disbursed to a borrower is not applicable in the present case. Present is a case where disbursal is not an issue. The question whether the loan transaction is fraudulent transaction within the meaning of Section 66 is engaging attention of the Adjudicating Authority in a separate application filed by Administrator of SEFL which needs no consideration or observation in the present proceeding.

• 11. The above facts makes it clear that the debt and default is not denied only by the Corporate Debtor but the Appellants also. We fail to see any valid ground on which Appellants can question order of Adjudicating Authority admitting the Section 7 application.”

# 26. There can be no dispute to the proposition that pending of Section 66 application, questioning the transaction, does not impede the proceedings of Section 7 application. The above judgment of this Tribunal was on its own facts. The present is not a case where the Appellant is relying only on fact of pendency of Section 66 application filed by the Administrator of SIFL questioning the transaction. Rather, the Appellant in their application has given other facts, pleading that Respondent No.1 has control on Respondent No.2 through its related entities and the transaction, which is basis of Section 7 application is a circular transaction. Respondent No.2 once has already undergone CIRP and was taken over by related party of Respondent No.1 and the application under Section 7 has been maliciously initiated. We have noticed relevant observation of the Adjudicating Authority in the impugned order. The Adjudicating Authority has not proceeded to consider Section 65 application, it has only observed that the Appellant has no locus, it being neither proper nor necessary party in Section 7 application. Insofar as, Section 7 proceedings are concerned, there can be no quarrel to the observation that an Intervenor, who may not be necessary party or proper party, cannot intervene, but in a case where prayer of the Applicant under Section 65 regarding pleading to initiation of CIRP with fraudulent and malicious intent, the Adjudicating Authority ought to have looked into the allegations carefully. The IBC clearly prohibits any malicious or fraudulent initiation of CIRP and when in an application, it has been brought into notice by the stakeholders, the said application deserves consideration on merits. Rejection of the application only on the ground that Applicant has no locus, is unsustainable.

# 27. Shri Sanjiv Sen, learned Senior Counsel for Respondent No.1 submits that Intervention Application was filed by a lone workers, who cannot be allowed to scuttle the CIRP. We have already noticed that the Appellant filed the application and the application contained the names of 130 workers, who have authorized the Appellant to file the application on their behalf and whose signatures were there in the application. Thus, 130 workers who are stakeholders in the CIRP have come up with the application. The application was not filed by any stranger or third party, who has no stake in the CIRP. The 130 workers, who sought to file application were all workers of the CD – Kitply Industries Ltd. and were stakeholders.

# 28. Learned Counsel for Respondent No.1 further contended that it is open for the CD to raise the issue pertaining to fraudulent initiation of CIRP, which can be considered by the Adjudicating Authority. It is further submitted that allegations, which have been made by the CD, are the same, which are being sought to be raised by the Appellant/ Applicant. Be that as it may, the Appellant, who are stakeholders and workers of the Kitply Industries Ltd., when have raised the issues by filing Section 65 application, the said issues need consideration, as has been held by the Hon’ble Supreme Court in Beacon Trusteeship Ltd. (supra). It is not a case that Adjudicating Authority has returned any finding that Intervention Application has been filed to derail the CIRP. It was open for the Adjudicating Authority to consider the application under Section 65 on merits even at the time of hearing of Section 7 application.

# 29. In view of the foregoing discussions and our conclusions, we are of the view that order impugned cannot be sustained. In result, the impugned order dated 10.06.2025 rejecting Intervention Petition (IBC)/1/GB/2024 is set aside. The Intervention Petition (IBC)/1/GB/2024 is revived, which may be heard by the Adjudicating Authority and decided in accordance with law. It shall be open for the Adjudicating Authority to hear the Intervention Petition (IBC)/1/GB/2024 simultaneously with CP (IB)/8/GB/2024. We make it clear that we are not expressing any opinion on the merits of the Intervention Petition (IBC)/1/GB/2024 and it is for the Adjudicating Authority to consider the application and decide the same in accordance with law. The Appeal is disposed of accordingly. Parties shall bear their own costs.

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