# In the matter of Beacon Trusteeship Limited Vs Earthcon Infracon Pvt Ltd & Anr. Civil Appeal No (s)-7641/2019

> SC judgment dated 2020-02-18. Citation: TCN-2020-SC-00071. The case involves a civil appeal against an order of the NCLAT. The appellant, Beacon Trusteeship…

- **Court:** SC
- **Order date:** 18 Feb 2020
- **Citation:** TCN-2020-SC-00071
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/beacon-trusteeship-limited-vs-earthcon-infracon-pvt-ltd-anr-civil-appeal-no-fc893c35

## Summary

### Background

The case involves a civil appeal against an order of the NCLAT. The appellant, Beacon Trusteeship Limited, and Respondent No. 1, Earthcon Infracon Private Limited (Corporate Debtor), entered into a Debenture Trust Deed (DTD). Respondent No. 1 issued debentures against a deposit. The appellant filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against Respondent No. 1. Respondent No. 2, an Operational Creditor, filed proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, based on a notice issued under Section 8 of the IBC. An application was admitted based on the admission made by Respondent No. 1, and the NCLT passed an order. The NCLAT dismissed the appeal against the NCLT order, leading to the present appeal before

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## Facts

Beacon Trusteeship Limited (appellant) and Earthcon Infracon Private Limited (Respondent No. 1, the Corporate Debtor) entered into a Debenture Trust Deed (DTD). Earthcon issued debentures worth Rs. 1,00,000 each against a deposit of Rs. 30 Crores. The DTD was amended twice to raise additional funds. Beacon Trusteeship filed a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Earthcon. Prior to this, Earthcon Universal Infratech Private Limited, Corporate Guarantors of Respondent No. 1, received a Demand Notice under Section 8 of the IBC. Respondent No. 2 (Operational Creditor) filed proceedings under Section 9 of the Arbitration and Conciliation Act based on a notice issued under Section 8 of the IBC. An application was admitted based on

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## Issues and analysis

### Issue 1: Whether the proceedings before the NCLT …

**Ratio:** Section 65 of the IBC addresses fraudulent or malicious initiation of insolvency

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**Reasoning:** The court noted the appellant's argument that the proceedings were initiated without

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**Interpretation:** Section 65 of the IBC is interpreted to provide a safeguard against the misuse

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**Application:** The court applied the principle by directing the Adjudicating Authority to

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## Parties

- **Judges:** Arun Mi…; INDIRA BA…
- **Appellants:** Beacon Trusteeship…
- **Respondents:** Earthcon Infracon…

## Timeline

- **2017-12-20 — DTD Amen…**: Debenture Trust Deed…
- **2018-12-24 — DTD Amen…**: Debenture Trust Deed…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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