Third-party challenge to insolvency petition fails absent proof of fraud or malicious filing under section 65.

A third party cannot invoke section 65 of the Insolvency and Bankruptcy Code to stop section 7 insolvency proceedings unless it proves that the petition was filed fraudulently or maliciously for a purpose other than insolvency resolution. On the facts recorded, the Tribunal found no proof of collusion, no shown breach of any binding injunction, no completed sale of assets, and no material establishing that the lenders had acted outside the framework agreement or RBI framework. Alleged prejudice to contractual or arbitral rights was held insufficient by itself. The intervention petition therefore failed because the burden to prove fraud was not discharged and the intervenor lacked locus to block the insolvency process.

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Issues: Whether the intervention petition under section 65 of the Insolvency and Bankruptcy Code, 2016 deserved dismissal for want of proof that the section 7 petition had been initiated fraudulently or maliciously for a purpose other than insolvency resolution.

Analysis: The grounds raised were examined against the material on record, including the framework agreement, the earlier arbitral and High Court proceedings, and the conduct of the lenders. The petitioning intervenor was treated as a third party to the insolvency proceeding, and the Tribunal found that the alleged injury to the intervenor's contractual and arbitral rights did not by itself establish fraudulent initiation of the insolvency process. It was also found that the framework agreement had been entered into within the RBI circular framework, no sale of assets had yet occurred, the lenders were not shown to have violated any binding injunction, and the allegation of collusion remained unproven. The burden to establish fraud lay on the party asserting it, and that burden was not discharged.

Conclusion: The section 65 challenge failed, and the intervention petition was rejected as the intervenor had no locus to prevent the section 7 proceedings on the facts proved.

Ratio Decidendi: A third party cannot block a section 7 insolvency petition under section 65 unless it proves that the petition was initiated fraudulently or maliciously for a purpose other than resolution of insolvency; mere apprehension of prejudice to private contractual rights is insufficient.

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