Successive Fraud Plea Not Maintainable Under IBC After Finality Of CIRP Admission: NCLAT Chennai

The National Company Law Appellate Tribunal (NCLAT) at Chennai on Tuesday held that a party cannot file successive applications under Section 65 of the Insolvency and Bankruptcy Code, 2016 to indirectly reopen insolvency proceedings that have already attained finality.

A Bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain dismissed the appeal filed by N.K. Kurian, the suspended Managing Director of Mango Meadows Agricultural Pleasure Land Pvt Ltd, noting deliberate concealment of material facts and abuse of process.

The Bench held:

“The passing of the impugned order on 17.09.2025 cannot lead to give leverage to the Appellant for reopening the process of challenge to the commencement of CIRP, which has attained finality.”

Kurian had established an agricultural theme park project and availed a loan of Rs. 8 crore from Kosamattam Finance Limited in 2016 at 19% interest per annum. He claimed that due to external factors including the Kerala floods, Nipah outbreak and COVID-19 pandemic, the project suffered severe financial losses, resulting in default in repayment obligations.

Consequently, Kosamattom Finance initiated proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the NCLT, Kochi seeking initiation of CIRP against the company.

During the pendency of the proceedings, Kurian challenged the constitutional validity of Section 7 IBC before the Kerala High Court. The High Court rejected the challenge but permitted the appellant to raise objections before the Adjudicating Authority.

Instead of doing so, the appellant filed an application under Section 65 IBC alleging that the Section 7 proceedings were fraudulent and malicious. The NCLT dismissed the application and admitted the company into CIRP upon finding existence of debt and default.

The Appellate Tribunal noted that despite being granted liberty by the Kerala High Court to raise objections in the Section 7 proceedings before the NCLT, the appellant chose to invoke Section 65 alleging fraud, rather than directly contesting the insolvency proceedings.

The Tribunal further observed that Kurian had falsely stated that no appeal had been filed against the NCLT's order dated 25 January 2023 dismissing the Section 65 application filed by him and that the order had attained finality. In reality, the appellant had himself filed a company appeal challenging the same order, which was dismissed by the NCLAT on 13.04.2023. It observed:

“But for the reasons best known to the Appellant, in the entire memorandum of appeal or any of the pleadings raised by the Appellant in the instant company appeal, as it was presented before the Registry of this Appellate Tribunal, the Appellant has not made even a single mention to the effect that, he had preferred a company appeal, as against the order of 25.01.2023, and that has been dismissed on 13.04.2023.”

Coming down heavily on the conduct, the Tribunal remarked:

“In fact, this conduct of the Appellant of being unfair to this Appellate Tribunal by making a deliberate concealment of a material facts, such as the proceedings of CA(AT)(CH)(INS) No. 88/2023 which has a significant bearing on the proceedings, would disentitles him to be even heard before this Appellate Tribunal, apart from the aspect of imposition of a heavy cost, for deliberately misleading this Appellate Tribunal by concealing facts.”

The Bench held that once the Section 7 admission order had attained finality, particularly after dismissal of the earlier appeal, the subsequent application under Section 65 could not be entertained. It further noted that the reliefs sought in both Section 65 applications were substantially similar and such repeated filings amounted to abuse of process. It stated:

“…because a party to the proceedings cannot be permitted to abuse the judicial process by filing recurring applications, for the same cause of action or for the same relief, as it would vitiate the proceedings of the company petition and the judicial proceedings itself, owing to the fact, that once the earlier order has attained finality, the same cannot be permitted to be reopened by filing of a subsequent application.”

The Tribunal also recorded that the appellant had attempted to mislead the NCLT by concealing the earlier appeal. It concluded:

“The Appellant is not required to be heard even as he was not fair to the Ld. NCLT as well as to the Appellate Tribunal, by making material concealment in pleading and in placing documents on record.”

Accordingly, it dismissed the appeal and imposed costs of Rs. 50,000 on Kurian.

For Appellant: Senior Advocate E Om Prakash and Advocate Ashwin Shanbhag