# In the matter of G.S. Constro & Infra Pvt. Ltd. & Ors. Vs. Mr. Gajesh Labhchand Jain,
Resolution Professional of
M/s. E&G Global Estates Limited Company Appeal (AT) (Insolvency) No. 587 of 2021

> NCLAT judgment dated 2022-05-18. Citation: TCN-2022-NCLAT-00477. The case involves an appeal against an order passed by the National Company Law Tribunal…

- **Court:** NCLAT
- **Order date:** 18 May 2022
- **Citation:** TCN-2022-NCLAT-00477
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/gs-constro-infra-pvt-ltd-ors-vs-mr-gajesh-labhchand-jain-resolution-professional-0741f465

## Summary

### Background

The case involves an appeal against an order passed by the National Company Law Tribunal (NCLT), Mumbai Bench, which dismissed an application filed by the Appellants. The Appellants, who are investors and shareholders of E&G Global Estates Limited (the Corporate Debtor), claimed to be Financial Creditors. The NCLT rejected their claim, stating that they were 'Related Parties' and could not be treated as Financial Creditors under Section 5(7) of the Insolvency and Bankruptcy Code (IBC). The Appellants argued that they had infused funds into the Corporate Debtor with the understanding that 100% shares would be transferred to them and that they had also paid Rs.75 Lakhs to SIDBI towards part payment of the Corporate Debtor's loan. They contended that they were not

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## Facts

The Appellants are investors and shareholders holding 48% of the shareholding of ‘M/s. E&G Global Estates Limited' (Corporate Debtor). The Corporate Debtor needed funds to complete the ‘Resort Project'. The Appellants infused funds into the Company with the understanding that 100% shares would be transferred to them. An MoU dated 10/12/2018 was entered into between the parties, whereby the Appellants paid Rs.75 Lakhs/- to SIDBI towards part payment of the loan amount. A Loan Agreement dated 12/02/2019 was also executed between the ‘Corporate Debtor' and the Appellants. Out of the total loan amount of Rs.1,60,00,000/-, Rs.1,00,00,000 would be utilised for repayment of overdue instalments of SIDBI. A Resolution dated 18/01/2020 was passed to facilitate borrowings of

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## Issues and analysis

### Issue 1: Whether the Appellants fall within the definition of ‘Related Parties' under Section 5(24) of the …

**Ratio:** The legal principle applied is the definition of 'related party' under Section 5(24) of

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**Reasoning:** The Tribunal reasoned that the Appellants were Directors of the Company and were also

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**Interpretation:** The interpretation of 'related party' under the IBC is broad and includes

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**Application:** The Tribunal applied the definition of 'related party' to the facts of the

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## Parties

- **Judges:** Ashok Bh…; Shreesha…
- **Appellants:** G.S. Constro &…
- **Respondents:** E & G Global…; Gajesh Labhchand…
- **Advocates:** Ranit…; Maitri…; +1 more

## Timeline

- **2018-12-10 — MoU between Appellants…**: An MoU was entered into between the parties, whereby the Appellants paid Rs.75 Lakhs/- to…
- **2019-02-12 — Loan Agre…**: A Loan Agreement was executed between the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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