# In the matter of KSL and Industries Ltd IA 691-2019 in C.P. (I.B) 397-NCLT-AHM-2018

> NCLT judgment dated 2020-07-28. Citation: TCN-2020-NCLT-00957. The case involves an application (IA 691 of 2019) filed under Section 60(5) of the Insolvency…

- **Court:** NCLT
- **Order date:** 28 Jul 2020
- **Citation:** TCN-2020-NCLT-00957
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/ksl-and-industries-ltd-ia-691-2019-in-cp-ib-397-nclt-ahm-2018-ac36a7d6

## Summary

### Background

The case involves an application (IA 691 of 2019) filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking the appointment of a new Interim Resolution Professional (IRP) for the Corporate Debtor, KSL & Industries Ltd. The Corporate Insolvency Resolution Process (CIRP) was initiated based on an application filed by Abhinandan Multitrade Pvt. Ltd. & Anr. The initial IRP was appointed, and a Committee of Creditors (CoC) was constituted. Disputes arose regarding the composition of the CoC, specifically the classification and eligibility of certain creditors, leading to a stalemate in the appointment of a Resolution Professional (RP).

## Facts

The Corporate Insolvency Resolution Process (CIRP) was initiated against KSL & Industries Ltd. based on an application filed by Abhinandan Multitrade Pvt. Ltd. & Anr. An Interim Resolution Professional (IRP) was appointed, and a Committee of Creditors (CoC) was constituted. A dispute arose regarding the composition of the CoC, with concerns raised about the eligibility and classification of certain creditors, particularly Non-Financial Institutions and Corporates. The Applicant and other Financial Institutions alleged that the IRP admitted claims and assigned voting rights without proper verification, reducing the voting share of secured Financial Creditors. A forensic audit report indicated that some creditors were related parties of the Corporate Debtor. The

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## Issues and analysis

### Issue 1: Whether the IRP properly verified the claims of all creditors before admitting them to the CoC and …

**Ratio:** The IRP has a duty to verify the claims of creditors before admitting them to the CoC and

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**Reasoning:** The court noted that the IRP admitted claims without complete verification, which caused

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**Interpretation:** The interpretation of the IBC emphasizes the importance of due diligence and

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**Application:** In this case, the IRP's failure to properly verify claims led to a dispute over

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## Parties

- **Judges:** Manorama…
- **Appellants:** Allahabad…
- **Respondents:** KSL and Industries…; KSL & Industries…; +1 more

## Timeline

- **2018-09-06 — CP(IB) 397 of 2018…**: CP(IB) 397 of 2018 was…
- **2019-10-16 — 1st CoC M…**: The 1st CoC meeting was held, where the IRP provided the list of Financial Creditors and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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