# In the matter of Veda Biofuel Limited IA Nos. 64,66,67 & 68-2020 in TCP (IB) No. 41-9-AMR-2019 {CP (IB) No. 423-9-HDB-2018}

> NCLT judgment dated 2020-05-26. Citation: TCN-2020-NCLT-01333. Priya Trading Company initiated Corporate Insolvency Resolution Process (CIRP) against Veda…

- **Court:** NCLT
- **Order date:** 26 May 2020
- **Citation:** TCN-2020-NCLT-01333
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/veda-biofuel-limited-ia-nos-646667-68-2020-in-tcp-ib-no-41-9-amr-2019-cp-ib-no-4-bf678549

## Summary

### Background

Priya Trading Company initiated Corporate Insolvency Resolution Process (CIRP) against Veda Biofuel Limited under Section 9 of the Insolvency & Bankruptcy Code, 2016. The NCLT Hyderabad Bench admitted the petition on 2019-02-12 and appointed Mr. Gonugunta Murali as the Interim Resolution Professional (IRP). The Committee of Creditors (CoC) appointed him as the Resolution Professional (RP) on 2019-03-14. The matter was transferred to the NCLT Amaravati Bench on 2019-07-29. Mr. Sisir Kumar Appikatla was appointed as the RP, replacing Mr. Murali, on 2019-09-27. The CIRP period was extended, and two prospective Resolution Applicants, Orion Ferro Alloys Private Limited and Mr. Madhusudhan Raju Chintalapati, submitted Resolution Plans. The RP invited fresh Expression of

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## Facts

Priya Trading Company initiated CIRP against Veda Biofuel Limited due to unpaid debts. The NCLT admitted the petition and appointed an IRP, later replaced by Mr. Sisir Kumar Appikatla. During the CIRP, two resolution plans were submitted by Orion Ferro Alloys and Madhusudhan Raju Chintalapati. Madhusudhan entered into an agreement with the former Managing Director of Veda Biofuel, Vijay Kumar Penmetsa, to invest in the company. A restructuring plan was proposed, giving Madhusudhan 50% and Vijay Kumar 30.81% shareholding. The CoC approved this restructuring plan, but the NCLT found it to be a backdoor entry for the former management, violating Section 29A of the IBC. The NCLT rejected the resolution plan and ordered liquidation of Veda Biofuel Limited. The key facts are

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## Issues and analysis

### Issue 1: Whether the Restructuring Plan submitted by Mr. Madhusudhan Raju Chintalapati can be considered a …

**Ratio:** Section 29A of the Insolvency and Bankruptcy Code, 2016, disqualifies certain

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**Reasoning:** The NCLT reasoned that the Restructuring Plan, involving the former Managing Director P.

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**Interpretation:** Section 29A aims to prevent individuals responsible for the corporate debtor's

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**Application:** The NCLT applied the ratio of Section 29A to the facts of the case, finding

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## Parties

- **Judges:** Janab Mohammed…
- **Appellants:** Orion Ferro…
- **Respondents:** Veda Biofuel…

## Timeline

- **2018-01-01 — Petition…**: M/s Priya Trading Company filed a petition (CP (IB) No. 423/9/HDB/2018) under section 9…
- **2019-02-12 — Petition Ad…**: NCLT Hyderabad Bench admitted the petition and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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