# In the matter of Telangana State Trade Promotion Corporation Vs. A.P. Gems & Jewellery Park Private Limited & Anr.

> NCLAT judgment dated 2021-09-21. Citation: TCN-2021-NCLAT-00083. This case involves an appeal against an order dated 04.01.2021 passed by the National Company…

- **Court:** NCLAT
- **Order date:** 21 Sept 2021
- **Citation:** TCN-2021-NCLAT-00083
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/telangana-state-trade-promotion-corporation-vs-ap-gems-jewellery-park-private-li-4766d341

## Summary

### Background

This case involves an appeal against an order dated 04.01.2021 passed by the National Company Law Tribunal, Hyderabad Bench, regarding I.A. No. 555 of 2020 in CP (IB) No.143/07/HDB/2019. The appeal was filed by Telangana State Trade Promotion Corporation (TSTPC), challenging the decision that classified TSTPC as a 'related party' and directed the Resolution Professional to reconstitute the Committee of Creditors (CoC) accordingly. The dispute arises from a loan agreement and subsequent insolvency proceedings initiated by A.P. Gems & Jewellery Park Private Limited against the Corporate Debtor. The appellant, TSTPC, claims to be a financial creditor and contests its classification as a related party, arguing that it does not have significant influence over the

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## Facts

In 2002, the Government of Andhra Pradesh (GoAP) through APSTC (later bifurcated into Andhra Pradesh and Telangana units) issued a tender for developing a showroom/marketplace for Gems and Jewellery in Hyderabad. IOI Corporation Berhad of Malaysia (IOIM) was the successful bidder. APSTC and IOIM entered into a Memorandum of Understanding (MoU) on 12.06.2002. A.P. Gems & Jewellery Park Private Limited (the First Respondent/Corporate Debtor) was incorporated on 24.09.2002. APSTC alienated the property to the First Respondent. APSTC was allotted equity and preferential shares in the First Respondent. A loan was extended to the First Respondent. The Second Respondent/Phoenix Tech Tower Pvt. Ltd. granted a loan to the Respondent No.2 Company. The Second Respondent held

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority erred in concluding that the Appellant, Telangana State Trade …

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

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**Reasoning:** The court reasoned that the Adjudicating Authority did not err because the Appellant's

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**Interpretation:** The interpretation of 'related party' under Section 5(24) of the IBC is broad

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**Application:** In this specific case, the court applied the definition of 'related party' to

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## Parties

- **Judges:** M. Venu…; Kanthi Na…; +1 more
- **Appellants:** Telangana State…
- **Respondents:** A.P. Gems &…
- **Advocates:** R.S. Asso…; M. Naga D…; +7 more

## Timeline

- **2002-01-01 — Tender Notif…**: Government of Andhra Pradesh (GoAP) through APSTC notified a tender for development of a…
- **2002-06-12 — Memorandum of…**: APSTC and IOI Corporation Berhad of Malayasia (IOIM) entered into a ‘Memorandum of…

## 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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