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

> NCLT judgment dated 2022-04-27. Citation: TCN-2022-NCLT-03044. CG Power and Industrial Solutions Limited (Petitioner) initiated Corporate Insolvency…

- **Court:** NCLT
- **Order date:** 27 Apr 2022
- **Citation:** TCN-2022-NCLT-03044
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/cg-power-solutions-limited-cp-ib-27-mb-2022-a8dcb4cc

## 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, citing a default of Rs. 11,99,50,00,000. The Petitioner had extended loans to the Corporate Debtor between March 2013 and April 2017, totaling Rs. 1333 Crores, through various loan agreements. The Corporate Debtor consistently incurred losses, with current liabilities exceeding current assets by Rs. 18,69,94,23,046 as of March 31, 2021. The Corporate Debtor acknowledged the debt in its financial statements. The Petitioner issued a demand notice on November 23, 2021, but the Corporate Debtor failed to repay the outstanding amount.

## Facts

CG Power and Industrial Solutions Limited (the Petitioner), a holding company, sought to initiate Corporate Insolvency Resolution Process (CIRP) against its subsidiary, CG Power Solutions Limited (the Corporate Debtor), under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Petitioner claimed that the Corporate Debtor had defaulted on a debt of 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, through several 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, calling upon the Corporate Debtor to make payment. The Corporate Debtor's financial

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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:** A shareholder, director, or promoter can also be a financial creditor if they have

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**Reasoning:** The court relied on precedents from other NCLT benches, including Urban Infrastructure

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**Interpretation:** The definitions of 'Financial Creditor' and 'Financial Debt' under Sections

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**Application:** In this case, the Petitioner, CG Power and Industrial Solutions Limited, as the

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## Parties

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

## Timeline

- **2012-03-14 — Corporate Debtor…**: CG Power Solutions Limited incorporated…
- **2013-03-01 — Loan Agre…**: The Petitioner extended loans to the Corporate…

## 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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