# In the matter of Navayuga Engineering Company Limited vs. Umesh Garg & Ors.

> NCLAT judgment dated 2024-02-16. Citation: TCN-2024-NCLAT-00628. This case involves an appeal filed by Navayuga Engineering Company Limited against an order…

- **Court:** NCLAT
- **Order date:** 16 Feb 2024
- **Citation:** TCN-2024-NCLAT-00628
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/navayuga-engineering-company-limited-vs-umesh-garg-ors-9d2da383

## Summary

### Background

This case involves an appeal filed by Navayuga Engineering Company Limited against an order passed by the National Company Law Tribunal (NCLT), New Delhi, which rejected the Appellant's challenge to its disqualification under Section 29A of the Insolvency and Bankruptcy Code (IBC). The NCLT order pertained to a Corporate Insolvency Resolution Process (CIRP) initiated against Athena Demwe Power Limited, where the Appellant's resolution plan was deemed ineligible due to its alleged control over the Corporate Debtor at the time the Corporate Debtor's account was classified as a Non-Performing Asset (NPA). The Appellant contests this disqualification, arguing that it was neither in management nor a promoter of the Corporate Debtor when the account was declared NPA.

## Facts

The key facts are as follows:
1. Athena Demwe Power Limited, the Corporate Debtor, was incorporated to execute a hydro-electric project.
2. Navayuga Engineering Company Limited (Appellant) entered into a Memorandum of Understanding (MoU) with the Corporate Debtor and Athena Infraprojects Private Limited (AIPPPL) on 2013-03-15, agreeing to infuse 30% equity capital.
3. The Appellant, through its subsidiary Regina Infrastructure Pvt. Ltd. (RIPL), invested Rs. 235.35 Crores, holding 21.55% equity in the Corporate Debtor.
4. The Corporate Debtor's account was declared NPA on 2013-05-31.
5. A Joint Lenders Meeting in 2015-10-01 determined the Corporate Debtor needed financial assistance.
6. A subsequent MoU in 2016-03-23/28 stipulated the Appellant would become a 51%

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## Issues and analysis

### Issue 1: Whether Section 29A, sub-section (c) disqualify only those persons who were in management and …

**Ratio:** Section 29A(c) of the IBC disqualifies individuals or entities who were in management or

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**Reasoning:** The court reasoned that a narrow interpretation of Section 29A(c), focusing solely on the

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**Interpretation:** The court interpreted Section 29A(c) to encompass not only those in control at

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**Application:** The court applied this interpretation to the Appellant, finding that even if it

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## Parties

- **Judges:** Ashok Bh…; Barun M…
- **Appellants:** Navayuga Engineeri…
- **Respondents:** Athena Demwe…; M/s Zeus Infra…
- **Advocates:** Saurav Ag…; Medha Sa…; +10 more

## Timeline

- **2007-07-09 — Incorporation of…**: Athena Demwe Power…
- **2013-03-15 — MoU between Appellant…**: Appellant entered into a Memorandum of Understanding (“MoU") with Corporate Debtor and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 2(69) — Application](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-2)

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