Falsification of corporate books under Section 71 IBC: impleadment removal means IA to be decided on merits.

Application sought punishment for alleged falsification of corporate books within the scope of Section 71 of the I&B Code; the appellate order records that prior impediment of non-impleadment has been removed so the interlocutory application must be decided independently on its merits. The operative effect is that the Respondents now stand impleaded and the trial forum is directed to adjudicate the IA on merits without being influenced by appellate observations, enabling consideration of alleged punitive liability arising from falsification within the insolvency process.

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Issues: Whether IA No. 1010/CHE/2022, filed under Section 71 of the IBC seeking initiation of prosecution and punishment, is free from procedural impediment of non-impleadment and must be decided independently on merits by the NCLT in view of the subsequent impleadment order dated 29.07.2025.

Analysis: The Appellate Tribunal examined the three interlocutory applications (IA No. 1010/2022, IA No. 1234/2022 and IA No. 1242/2024) together and identified that IA No. 1010/2022 sought punishment under Section 71 of the IBC for alleged falsification of corporate debtor records. IA No. 1234/2022 sought impleadment of the erstwhile Resolution Professional and the new Liquidator into IA No. 1010/2022. The NCLT's subsequent order dated 29.07.2025 impleaded those persons into IA No. 1010/2022, thereby removing the procedural obstacle that earlier affected consideration of IA No. 1010/2022. Given the removal of the impediment, the Tribunal concluded that IA No. 1010/2022 must now be considered on its own merits by the NCLT without being influenced by the Appellate Tribunal's observations in the present order.

Conclusion: In favour of Appellant. The appeal is disposed of to the limited extent that IA No. 1010/CHE/2022 is to be decided by the NCLT, Chennai, independently on merits now that impleadment has been effected and the procedural impediment no longer survives.

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