Debt Appears "Collusive", Says NCLAT While Dismissing Insolvency Application: Khaitan & Co. Analysis

The Legal Library section collates quality and in-depth reports on regulatory developments, court rulings and policy changes authored by India’s top law firms and consultants. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of law and policy..Khaitan & Co. Update.On July 27, 2022, the National Company Law Appellate Tribunal upheld the order of the National Company Law Tribunal, New Delhi dated May 17 2022 dismissing an application to initiate Corporate Insolvency Resolution Process on the ground that the debt appeared suspicious and collusive in nature. This judgement, in interpretation, possibly enlarges the scope of preferential transactions under Section 43 to the extent of vitiating transactions between related parties with the malicious intent of initiating CIRP proceedings under the Code. It further brings about a binding precedence with respect to related party transactions and resultant fraudulent initiation of CIRP, to a line of judgements that have allowed a discretionary observation over and above the two-year lookback period as prescribed under Section 43 of the Code. The parties are entitled to file a statutory appeal to the Supreme Court of India in terms of the Code against this judgment..Click on the attachment to read the full report:.DISCLAIMERThis alert does not constitute legal advice and is for information purpose only. This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Debt Appears "Collusive", Says NCLAT While Dismissing Insolvency Application: Khaitan & Co. Analysis

NCLAT has set a binding precedence with respect to related party transactions and resultant fraudulent initiation of insolvency.

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