Fraudulent initiation of insolvency proceedings can attract penalties and requires notice and proof of malicious intent.

The provision under Section 65 subjects persons who initiate insolvency resolution, voluntary liquidation, or pre packaged insolvency processes fraudulently or with intent to defraud to monetary penalties. The Adjudicating Authority may impose penalties where record shows fraud or malicious intent, but must record reasons and afford notice and opportunity to respond; mere filing under the Code without evidence of dishonest purpose does not justify dismissal or penalty. The provision aims to curb abuse while preserving procedural fairness.

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