# In the matter of CG Power Solutions Limited CP (IB) - 27-MB-2022

> NCLT judgment dated 2022-04-27. Citation: TCN-2022-NCLT-03042. CG Power and Industrial Solutions Limited (Petitioner) initiated Corporate Insolvency…

- **Court:** NCLT
- **Order date:** 27 Apr 2022
- **Citation:** TCN-2022-NCLT-03042
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/cg-power-solutions-limited-cp-ib-27-mb-2022-0c3f5686

## Summary

### Background

CG Power and Industrial Solutions Limited (Petitioner) initiated Corporate Insolvency Resolution Process (CIRP) against CG Power Solutions Limited (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner claimed that the corporate debtor defaulted on payments amounting to Rs. 11,99,50,00,000. The petitioner had extended various loans to the corporate debtor between March 2013 and April 2017, totaling Rs. 1333 Crores, under several loan agreements. The corporate debtor's financial statements for the year ending March 31, 2021, recorded an unsecured loan from the holding company (the petitioner). The corporate debtor's current liabilities exceeded its current assets by Rs. 18,69,94,23,046 as of March 31, 2021, and its net worth was

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## Facts

CG Power and Industrial Solutions Limited (the Petitioner), a holding company, sought to initiate Corporate Insolvency Resolution Process (CIRP) against its wholly-owned subsidiary, CG Power Solutions Limited (the Corporate Debtor), under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Petitioner claimed a default of Rs. 11,99,50,00,000. The Petitioner had extended loans totaling Rs. 1333 Crores to the Corporate Debtor between March 2013 and April 2017 through various loan agreements. The Corporate Debtor failed to repay the outstanding amount as of March 31, 2021. The Petitioner issued a demand notice on November 23, 2021. The Corporate Debtor's financial statements ending March 31, 2021, reflected an unsecured loan from the Petitioner. As of March

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## Issues and analysis

### Issue 1: Whether the holding company can initiate CIRP against its wholly owned subsidiary under the I&B …

**Ratio:** The court relied on precedents such as Urban Infrastructure Trustee Ltd. vs. Neelkanth

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**Reasoning:** The court reasoned that there is no legal bar under the I&B Code preventing a holding

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**Interpretation:** The court interpreted the provisions of the I&B Code to allow a holding

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**Application:** The court applied the ratio and reasoning to the specific facts of the case,

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## Parties

- **Judges:** SUCHITRA KANUPARTH…; ANURADHA SANJAY…; +1 more
- **Appellants:** CG Power and…
- **Respondents:** CG POWER SOLUTIONS…

## Timeline

- **2013-03-01 — Loan Agre…**: The Petitioner extended various loans to the Corporate Debtor between March 2013 and…
- **2017-04-01 — Loan Agre…**: The Petitioner extended various loans to the Corporate Debtor between March 2013 and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(7) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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