Frivolous or vexatious proceedings penalty under insolvency law deters abuse of process before the adjudicating authority.

A penalty mechanism applies where any person initiates a frivolous or vexatious proceeding before the Adjudicating Authority under Part III of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority may impose a penalty on the person responsible, with a minimum penalty of one lakh rupees and a maximum penalty of two crore rupees. The provision is framed as a deterrent against abuse of process in proceedings under Part III.

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