Frivolous insolvency proceedings attract penalty for misuse of adjudicatory process under the corporate insolvency framework.

Section 64A of the Insolvency and Bankruptcy Code, 2016 provides for penalty for initiating frivolous or vexatious proceedings before the Adjudicating Authority under Part II. Where a person initiates such proceedings, the Adjudicating Authority may impose a penalty within the prescribed statutory range. The provision is designed to deter misuse of insolvency proceedings and to penalise institution of proceedings that are frivolous or vexatious in nature.

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