Endless Services Limited faces INR 50 lakh penalty for fraudulent initiation of proceedings against SLR Techinfra Private Limited
In a significant ruling, the National Company Law Tribunal (NCLT), New Delhi Bench, has recalled the Corporate Insolvency Resolution Process (CIRP) initiated against M/s. SLR Techinfra Private Limited, penalizing the Financial Creditor, M/s. Endless Services Limited, with a hefty fine of INR 50 lakh. The tribunal found that the initiation of the insolvency proceedings was vitiated by fraudulent and malicious intent, thereby abusing the process of law.
The judgment, delivered on December 18, 2025, by Members Shri Manni Sankariah Shanmuga Sundaram (Judicial) and Shri Atul Chaturvedi (Technical), addresses the application filed under Section 65 of the Insolvency and Bankruptcy Code, 2016, by Mr. Shiv Kumar Bansal and Mrs. Sangeeta Bansal, erstwhile directors of the Corporate Debtor. They alleged that Endless Services Limited initiated CIRP based on forged documents and suppressed material facts to defraud the Corporate Debtor.
Key allegations included the fabrication of loan agreements referencing non-existent statutory provisions, misrepresentation of repayment status, and the manipulation of financial documents. The judgment highlighted that the Financial Creditor had knowingly furnished false information, omitted critical facts, and created distorted ledger entries to inflate its claims unjustly.
The tribunal emphasized that Section 65 of the Insolvency and Bankruptcy Code empowers the Adjudicating Authority to examine applications initiated fraudulently, even post-admission of proceedings. It further noted the fraudulent invocation of insolvency proceedings for purposes other than genuine insolvency resolution, citing previous cases that underscored the necessity of preventing such misuse of legal processes.
Consequently, the NCLT ordered the recall of the CIRP initiation order dated April 16, 2024, restoring the Corporate Debtor to its pre-CIRP legal status. The Resolution Professional was directed to hand over control to the erstwhile management, ensuring seamless restoration of operations.
The ruling sends a strong message against the fraudulent initiation of insolvency proceedings, reinforcing the integrity of the insolvency framework and deterring misuse for extraneous purposes.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Section 65 - Fraudulent or malicious initiation of Corporate Insolvency Resolution Process (CIRP) - Application filed under Section 7 of the Code vitiated by malicious and fraudulent intent - CIRP order recalled, Financial Creditor penalized, and Corporate Debtor restored to its legal status.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 65, 75
