Fresh Relief On New Facts Not Fraudulent Despite Earlier Denial Of Similar Claim: NCLT Mumbai

On 11 June, the Mumbai Bench of the National Company Law Tribunal (NCLT) held that a party's failure to obtain a relief in earlier proceedings does not make a subsequent application seeking the same relief fraudulent or malicious when it is based on fresh facts and supervening events under Section 65 of the Insolvency and Bankruptcy Code.

Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar dismissed an application filed by Jyoti Structures Limited seeking rejection of DBS Bank Limited's liquidation petition. The Bench held:

“The fact that a party has previously sought a particular relief and failed to obtain the same does not render a subsequent application for the same relief, based on new and distinct grounds arising from supervening facts and circumstances, fraudulent or malicious. In view of the above, we are of the view that the Liquidation Application filed by the Respondent DBS Bank Limited cannot be prima facie held to be one filed fraudulently or with malicious intent within the meaning of Section 65(1) of the Code. The present application is dismissed accordingly.”

The Corporate Insolvency Resolution Process (CIRP) against Jyoti Structures commenced on 4 July 2017. The Committee of Creditors approved a resolution plan submitted by Sharad Sanghi with an 81.31% voting share, and the NCLT sanctioned the plan on 27 March 2019. DBS Bank, a dissenting financial creditor, challenged the plan before the National Company Law Appellate Tribunal and the Supreme Court, but it did not succeed.

The resolution plan reached implementation on 9 November 2021 after investors infused Rs 170 crore into the company. In 2025, DBS Bank filed a liquidation application alleging material breaches and non-implementation of the approved resolution plan.

The Tribunal noted that DBS based its liquidation plea on alleged breaches occurring during and after implementation of the resolution plan, which created a distinct cause of action from earlier proceedings in which liquidation had already been considered.

It rejected Jyoti Structures' contention that DBS acted with malice. It held that allegations of non-payment and breach of timelines required examination on merits. It also noted that DBS disputed the validity of payments claimed by Jyoti Structures and argued that demand drafts had become inoperative after remaining unencashed beyond their validity period.

Further, the Bench held that issues relating to substitution of investors, delays in equity infusion, selective settlements, and other alleged breaches of the resolution plan could not be adjudicated at the preliminary stage. It clarified that DBS's liquidation petition did not challenge the resolution plan itself but instead alleged its breach and non-implementation.

Accordingly, the NCLT dismissed Jyoti Structures' application and allowed DBS Bank's liquidation petition to proceed for adjudication on merits.