Creditors Filing False Claims Liable To Be Punished Under S.235A IBC: Centre Tells Delhi High Court

The Central Government has informed the Delhi High Court that creditors filing false or misleading claims during the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 can be prosecuted and punished under Section 235A of the Code.

Section 235A provides that if any person contravenes any of the provisions of the Code or the rules or regulations made thereunder for which no penalty is provided, such person shall be punishable with fine which shall not be less than 1 lakh rupees but which may extend to 2 crore rupees.

"Penalty could be imposed in an appropriate case by resort to the said provision even if there is no specific Section contained in the Code prescribing punishment in the case made out by the petitioner under Section 15(1)(e) of the Code," Central Government Standing Counsel Asheesh Jain said.

Section 15(1)(e) makes provision of penalties for filing false or misleading claims.

The development ensued in a writ petition filed by an Insolvency Professional, alleging that one of the creditors had impersonated herself as an employee/ consultant of the debtor and filed a false and misleading claim for Rs 2.80 lacs.

No Provision To Punish Creditors Filing False Claims Under IBC: Delhi High Court Issues Notice To IBBI, MCA

He claimed that such creditor, deliberately and intentionally filed the false and misleading claim with the petitioner, knowingly well that filing of false and misleading proof of claims under section 15 of IBC shall attract penalties but there is no such provision of penalties to enforce the said provision.

Taking note of the submissions made by the Centre's counsel, the Bench comprising Acting Chief Justice Vipin Sanghi and Justice Navin Chawla has granted 2 weeks' time to file a counter-affidavit.

Case Title: Dr. Arun Mohan Bansal v. Insolvency & Bankruptcy Board of India through Chairperson & Ors.

Click Here To Download Order